Increase Your Bottom Line With Precision Marketing

Consumers are craving greater relevancy, and increasingly using their power to disconnect from brands that don’t speak to them as individuals.

Marketers have greater powers than they realize to produce relevant, personalized communications. By using data and tools most already have in place, marketers can take a data-driven, content-rich approach to customer communications and achieve greater relevancy, evidenced by measurable returns.

This precision marketing process must begin by first deciding what problem you're seeking to address. Are you trying to reactivate dormant customers, for example, or achieve a greater response rate to a particular promotion?

Next, evaluate and leverage the data and campaigns you currently have in place. In many cases, your existing housefiles are sufficient to develop targeted segments for use in a test campaign. Begin small by establishing a customer segment with the desired level of engagement, then identify customers whose prior behaviors and engagement histories most closely match this first group. This new customer segment can then be divided into a target group and a control group.

Next, synchronize your campaigns and determine the best message for the channel. In a test case with Best Western International, the world’s largest hotel chain, we examined active reward members and identified 100,000 who were similar in their Best Western relationship to the most high-value customers with the propensity to either apply for a co-branded MasterCard and/or engage in the summer promotion of “More Rewards, Faster.”

Then we targeted half of the group with personalized messaging through monthly loyalty statements, leveraging the statement as a promotional document to inform loyalty program members of how much faster they could accumulate points during the promotional period.

Once a test campaign has been launched, the next step is to measure the results based on a wide range of criteria and, most importantly, bottom line measures. In less than eight weeks, Best Western enjoyed target group gains, including a 39 percent increase in number of stays and a 30 percent increase in revenue over the control group.

After the initial test, it’s time to refine and repeat the above steps to produce the same or different results, but also to understand why the results are what they are. Working with another large hotel chain, we analyzed customer data from their loyalty program to understand how more active customers respond to offers. Based on that insight, we identified a segment of dormant loyalty program members who had a high propensity to re-engage with the hotel.

We reached out to those dormant customers with a series of offers on their loyalty statements that normally only active customers would receive. Again, in less than eight weeks, the company realized a return on investment of 1,090 percent by tapping this new, previously inactive customer segment.

The results of these pilot tests validate the precision marketing model and illustrate its bottom line benefits. By leveraging customer analytics and data, these companies realized a significantly higher return on their promotional investment. In an environment where few retailers are realizing the full revenue potential of existing customers, leveraging the data you currently have to deliver relevant communications — as illustrated by the precision marketing framework — is critical.

Sandra Zoratti is vice president of global marketing solutions at InfoPrint Solutions Company, a joint venture between Ricoh and IBM. Reach Sandra at sandra.zoratti@infoprint.com.