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www.astech-intermedia.com
“Operationalizing” Market SegmentationINMA Circulation Summit
8 March 2007
Slides available at www.astech-intermedia.com
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Putting Segmentation in Perspective
“If there’s one strategy that should guide your marketing tactics for the next 12 months, it’s micro-segmentation. What we used to call the ‘average’ customer no longer exists. Customers increasingly see themselves as unique individuals, and perception of this newfound individuality has exploded in the past 10 years. Connecting effectively to a country of individualists requires a keen ability to speak to the specific needs of a larger number of smaller groups. This trend will only increase over the coming years, and likely never reverse.”
Michael Greenberg, Loyalty Lab
Slides available at www.astech-intermedia.com
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Putting Segmentation in Perspective
“If there’s one strategy that should guide your marketing tactics for the next 12 months, it’s micro-segmentation. What we used to call the ‘average’ customer no longer exists. Customers increasingly see themselves as unique individuals, and perception of this newfound individuality has exploded in the past 10 years. Connecting effectively to a country of individualists requires a keen ability to speak to the specific needs of a larger number of smaller groups. This trend will only increase over the coming years, and likely never reverse.”
Michael Greenberg, Loyalty Lab
Slides available at www.astech-intermedia.com
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What is Market Segmentation?
Seg A
Seg B
Seg C
Seg DSeg E
Seg F
Seg G
Seg H
Seg I
Seg J
Slides available at www.astech-intermedia.com
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In Order to Customize…
• Offer• Channel• Timing• Creative
Slides available at www.astech-intermedia.com
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Business Drivers
• Newspaper circulation is in decline.• Telemarketing has been compromised.• Channel diversification is expensive.
Slides available at www.astech-intermedia.com
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Data Drivers
• Transactional• Behavioral• Demographic• Geographic
Slides available at www.astech-intermedia.com
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Technology Drivers
• Marketing automation systems• Integration of data quality, consolidation, analytics, reporting,
segmentation, output creation, campaign execution and evaluation
• Digital communications• E-mail• SMS• RSS feeds• Podcasting• Etc.
• Print technology• Telephony
Slides available at www.astech-intermedia.com
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MARKETING
DATA CENTER
Inte
rnal /
Exte
rnal
Data
Data-Driven Marketing Automation
Planning/Reporting
Segmentation & Analysis
Modeling & Data Mining
Multi-Channel Campaign Management & Online Marketing
CLEANSE-STANDARDIZE
INTEGRATE-ENRICH
•Circulation Transactions
•Advertising Transactions
•Telemarketing Dispositions
•Customer Service
•Web Interactions
•Demographics
•Contests/Events
•New Movers
•Postal Delivery Data
•Advertiser Customer Files
Slides available at www.astech-intermedia.com
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Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
Ch
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ecti
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Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
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Two Key Assumptions
• Retention begins with acquisition• Marketing ROI is optimized in a “process”
environment
Slides available at www.astech-intermedia.com
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Subscriber Marketing is a Process
Analysis
Planning
Implementation
ControlPrioritize Segments
Market Segmentation Strategy
Acquisition Strategies
Identify Prospects
Campaign Execution
Campaign Tracking
Process Responses
Process Leads
Slides available at www.astech-intermedia.com
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Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
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ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
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ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
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ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
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ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
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ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
r P
ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
r P
ersp
ecti
ve.
Project or Process?
Project• Short-term focus• IT-dependent• Measurement constrained• Discontinuous improvement• Cost-constrained• Resource-intensive• Economic inefficiencies
Process• Long-term focus• IT-supported• Metrics-based• Continuous improvement• ROI-driven• Automated• Economies of scale
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
r P
ersp
ecti
ve.
Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
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Begin at the End
• Establish realistic, measurable goals• “Improve 52-week retention by 10% in the next 12 months”
• Outline the strategies to achieve those goals• “Increase direct debit orders to 50%”• “Increase direct mail starts by 25%”• “Increase first-time renewals by 40%”
• Define the tactics that support the strategies• “Offer Easy Pay incentives to new subscribers based on PRIZM…”• “Drop five tailored packages of 5,000 pieces per month to segments
defined by the following criteria…”• “Implement a new subscriber communications plan that is
customized to subscription characteristics and includes these elements…”
Slides available at www.astech-intermedia.com
Ch
angi
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ersp
ecti
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Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
Ch
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Benchmark Your Capabilities
Data
Technology
Organization•Skills•Culture•Bandwidth
ChannelDevelopment
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
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ersp
ecti
ve.
Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
Ch
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Slice the Pie
Seg A
Seg B
Seg C
Seg DSeg E
Seg F
Seg G
Seg H
Seg I
Seg J
Slides available at www.astech-intermedia.com
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Contributing Factors
• Strategic considerations• Data availability and access• Marketing technology• Channel development• Skills
Slides available at www.astech-intermedia.com
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Sample Strategic Considerations
• Is there a particular demographic target for which growth is imperative?
• Females, Hispanics, Boomers, Gen X/Y, etc.
• How are circulation objectives weighted…towards volume or profitability?
• Are we delivering our customer’s customer?• What is the competitive environment?• Do we seek a short-term bump or sustainable
growth?
Slides available at www.astech-intermedia.com
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Contributing Factors
• Strategic considerations• Contact history• Data availability and access• Marketing technology• Channel development• Skills
Slides available at www.astech-intermedia.com
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Slicing the Pie
The 3 Mega-Slices
Subscribers
Never Sub
Former Subs
Slides available at www.astech-intermedia.com
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Slicing the Pie
The 3 Mega-Slices
Subscribers
Never Sub
Former Subs
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subscribers
Over 1 Year 1-6 Months
6-12 Months
< 1 Month
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subscribers
Over 1 Year 1-6 Months
6-12 Months
< 1 Month
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs: Tenure < One Month
Office Pay
Easy Pay
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs: Tenure < One Month
Office Pay
Easy Pay
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs < Month - Office Pay
Telemarketing
SC Inserts
Door-to-Door
Web
Direct Mail
< Other
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs < Month - Office Pay
Telemarketing
SC Inserts
Door-to-Door
Web
Direct Mail
< Other
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs < 1 Month - Office Pay - Source TM
No Permanent Stops
Three or More Perm Stops
1-2 Permanent Stops
Slides available at www.astech-intermedia.com
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Slicing the Pie
Subs < 1 Month - Office Pay - Source TM
No Permanent Stops
Three or More Perm Stops
1-2 Permanent Stops
Slides available at www.astech-intermedia.com
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Total Market: 100%
Subscribers: 43%Active less than one month: 7%
Office pay: 60%Telemarketing start: 35%
3 or more permanent stops: 40%
Size of segment relative to total market: 0.25%
Slides available at www.astech-intermedia.com
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Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
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Associating an Action
Segment Description:Active subscribers; tenure less than 30 days; office pay;
telemarketing start; three or more permanent stops
Action:Offer – Permanent 30% discount if converted to auto debit
Channel – Telemarketing
Timing – 14 days after start
Slides available at www.astech-intermedia.com
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Associating an Action
Segment Description:Never subscribed; placed private party ad in last 7 days;
web user; lives in targeted geo-demographic neighborhood
Action:Offer – Free classified ad with weekend subscription
Channel – E-mail
Timing – 7 days after ad placement
Slides available at www.astech-intermedia.com
Ch
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Every Household Belongs to a “Slice”
Seg A
Seg B
Seg C
Seg DSeg E
Seg F
Seg G
Seg H
Seg I
Seg J
Slides available at www.astech-intermedia.com
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???
How do I implement and manage customized communications with hundreds of segments simultaneously?
Slides available at www.astech-intermedia.com
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ersp
ecti
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Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
Ch
angi
ng
You
r P
ersp
ecti
ve.
Seven Steps to Getting Started
1. Define the ground rules
2. Define specific, quantifiable goals
3. Benchmark your capabilities
4. Develop the segmentation framework
5. Associate actions with defined segments
6. Put the right metrics in place
7. Eat the elephant a bite at a time
Slides available at www.astech-intermedia.com
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astech-intermedia.com
Tom Ratkovich |[email protected]
ASTECH InterMedia, Inc.999 18th street, # 2240denver, colorado 80202
www.astech-intermedia.com
Thank You!