Publishers Clearing House’s Marketing Secret: Customize Offers with Real-Time Consumer Profitability Data
All customers are not created equal. And one aspect of Publisher's Clearing House's success that we did not have the space to get into in the cover story is the way it leverages real-time consumer profitability data to customize offers based on the consumer's calculated risk.
Many of Publisher's Clearing House's offers are bill-me, meaning the recipient can sign up to receive the subscription or product on the promise that the bill will be paid once its received. This is common in the publishing industry, and legally speaking it's not an offer of credit. But according to Rick Witsell, vice president of marketing and compliance at Alliant, which assists Publisher's Clearing House with consumer data, the offers are still a significant risk. The percentage of buyers who don't pay the bill or complete the offer has a large impact on the profitability of the offer.
Keith Bergendorff, assistant vice president of analytical services at Publisher's Clearing House, was part of the panel "Life Cycle Modeling: To Increase Response, Payment and Retention," at DMA 2011 along with Alliant vice president of customer engagement Mary-Jo Checco. There they discussed the methods Publisher's Clearing House uses to vet its bill-me offer recipients, and how that has effected campaign results.
Publishers Clearing House combines consumer credit data provided by Alliant with its own internal data to assign each prospect or new buyer a "behavioral profitability score." That score allows Publisher's Clearing House to determine how likely the prospect is to follow through on an offer and complete the transaction. According to Checco, "the scores are based on detailed transaction information contained within Alliant's proprietary cooperative databases. Each score predicts the consumer's expected profitability for PCH offers. PCH combines the Alliant information with their internal Web-based data and segments the names for specific marketing offers."
Scoring New Mail Buyers
This data allows Publishers Clearing House to make informed decisions regarding which prospects or new customers receive which offers. For example, in the past, Publisher's Clearing House would not send a follow-up offer to new mail customers until payment from their first orders had been received and processed. But getting the second offer to new mail buyers quickly is key to securing them as repeat customers. Waiting to receive payment for the first order and process it was costing Publishers Clearing House as much six to 12 weeks, which made the remarketing effort "anemic."
With the behavioral profitability data, Publishers Clearing House is able predict which new buyers will be most likely to follow through on the transaction. These buyers can be sent a follow-up offer quickly, without waiting for payment. The follow-up cycle for that group is now only three weeks, and Publisher's Clearing House said during the presentation that this has significantly increased order response and future value.
Applying It to the Web in Real Time
Publishers Clearing House uses this same data in real time on the Web. Traditionally, payment rates for online orders has been "abysmal," according to Bergendorff. Incorporating the real-time profitability data allows Publishers Clearing House to customize offers visitors see on its website after they have registered for the contest, game or site they're visiting. Bergendorff says, "The online lead-scoring program has really been a quantum leap forward for our e-commerce business."
"The initial numeric scores are sent to Publishers Clearing House within sub-seconds of each consumer's initial contest registration and are used to determine which offer(s) the consumers will see on their website," says Checco. Visitors with the highest predicted profitability will see offers for Publishers Clearing House merchandise. The second highest group will see magazine subscription offers, and the lowest scoring group will see offers from Publishers Clearing House partners and third parties. "The scores are maintained on Publishers Clearing House's database," Checco continues, "and used to help determine the future promotion path for each consumer who opts in to Publisher's Clearing House email promotions."
"Publishers Clearing House has always been one of the most sophisticated data users in our industry," explains Checco. "In our experience, PCH is one of the true leaders in creatively applying traditional direct marketing concepts to the digital marketplace—given their diligence, it doesn't surprise me that they are seeing tremendous success."