|
Effective housefile segmentation begins with sound strategy and defined goals.
The ability to market to customers with different needs, in different ways, requires what marketers call housefile segmentation.
But what you many not realize is that housefile segmentation isn’t so much a technique or a tool as it is the result of goals, strategy and research coming together.
Housefile segmentation fits into a strategy to grow the customer base, increase loyalty, and grow share of customer. In some ways, it drives the strategy, in other ways it reflects the strategy. For example, an organization with a goal of rapid growth would look more at lifetime value and future sales than an organization with a goal to maximize cash flow today.
Using the database to create effective housefile segmentation should help you answer basic questions such as: Who should be contacted? What offers are appropriate? Which customers are most valuable? When should contacts be made? Where are best customers coming from? Why are segments different? How should contacts be made?
Answering these questions, and fitting housefile segmentation together with strategy and goals, demands understanding. For these reasons, a “black box” approach to scoring or ranking customers, no matter how statistically accurate, is insufficient by itself.
Like great lines in a play, which don’t reduce the role of the actor, but rather make the actor more engaging, great research doesn’t reduce the marketer’s role. It enhances it, and allows you to engage the customer more effectively.
Each basic question has several components. Here’s what you should look for as you consider each of those questions.
Who Should Be Contacted?
To know who should be contacted, you need to be able to predict three basic behaviors:
1. How likely is he to respond?
2. If he responds, how much is he likely to spend?
3. Is he likely to continue to respond in the future?
As a general rule, dollars per name—or how much was sold on average to each name contacted—is a better measure than response rate alone. It is a combination of questions No. 1 and No. 2, and marketers who measure results both by response rate and dollars per name tend to rely more heavily on the latter.
An understanding of lifetime value will help target customers and potential customers who will pay off in the long run, even if response rates and dollars per name look sub-par in the short term.
The ability to market to customers with different needs, in different ways, requires what marketers call housefile segmentation.
But what you many not realize is that housefile segmentation isn’t so much a technique or a tool as it is the result of goals, strategy and research coming together.
Housefile segmentation fits into a strategy to grow the customer base, increase loyalty, and grow share of customer. In some ways, it drives the strategy, in other ways it reflects the strategy. For example, an organization with a goal of rapid growth would look more at lifetime value and future sales than an organization with a goal to maximize cash flow today.
Using the database to create effective housefile segmentation should help you answer basic questions such as: Who should be contacted? What offers are appropriate? Which customers are most valuable? When should contacts be made? Where are best customers coming from? Why are segments different? How should contacts be made?
Answering these questions, and fitting housefile segmentation together with strategy and goals, demands understanding. For these reasons, a “black box” approach to scoring or ranking customers, no matter how statistically accurate, is insufficient by itself.
Like great lines in a play, which don’t reduce the role of the actor, but rather make the actor more engaging, great research doesn’t reduce the marketer’s role. It enhances it, and allows you to engage the customer more effectively.
Each basic question has several components. Here’s what you should look for as you consider each of those questions.
Who Should Be Contacted?
To know who should be contacted, you need to be able to predict three basic behaviors:
1. How likely is he to respond?
2. If he responds, how much is he likely to spend?
3. Is he likely to continue to respond in the future?
As a general rule, dollars per name—or how much was sold on average to each name contacted—is a better measure than response rate alone. It is a combination of questions No. 1 and No. 2, and marketers who measure results both by response rate and dollars per name tend to rely more heavily on the latter.
An understanding of lifetime value will help target customers and potential customers who will pay off in the long run, even if response rates and dollars per name look sub-par in the short term.
Companies Mentioned:
 |
|
Secrets of Direct Marketing Testing
Strategic Catalog Marketing
Social Media ROI
Email Marketing that Works (2nd Edition)