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www.astech-intermedia.com “Operationalizing” Market Segmentation INMA Circulation Summit 8 March 2007

"Operationalizing" Market Segmentation

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Page 1: "Operationalizing" Market Segmentation

www.astech-intermedia.com

“Operationalizing” Market SegmentationINMA Circulation Summit

8 March 2007

Page 2: "Operationalizing" Market Segmentation

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

Page 3: "Operationalizing" Market Segmentation

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

Page 4: "Operationalizing" Market Segmentation

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

Page 5: "Operationalizing" Market Segmentation

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In Order to Customize…

• Offer• Channel• Timing• Creative

Page 6: "Operationalizing" Market Segmentation

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Business Drivers

• Newspaper circulation is in decline.• Telemarketing has been compromised.• Channel diversification is expensive.

Page 7: "Operationalizing" Market Segmentation

Slides available at www.astech-intermedia.com

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Data Drivers

• Transactional• Behavioral• Demographic• Geographic

Page 8: "Operationalizing" Market Segmentation

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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

Page 9: "Operationalizing" Market Segmentation

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

Page 10: "Operationalizing" Market Segmentation

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

Page 11: "Operationalizing" Market Segmentation

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

Page 12: "Operationalizing" Market Segmentation

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

Page 13: "Operationalizing" Market Segmentation

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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

Page 14: "Operationalizing" Market Segmentation

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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

Page 15: "Operationalizing" Market Segmentation

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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

Page 16: "Operationalizing" Market Segmentation

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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

Page 17: "Operationalizing" Market Segmentation

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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

Page 18: "Operationalizing" Market Segmentation

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

Page 19: "Operationalizing" Market Segmentation

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

Page 20: "Operationalizing" Market Segmentation

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

Page 21: "Operationalizing" Market Segmentation

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

Page 22: "Operationalizing" Market Segmentation

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

Page 23: "Operationalizing" Market Segmentation

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…”

Page 24: "Operationalizing" Market Segmentation

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

Page 25: "Operationalizing" Market Segmentation

Slides available at www.astech-intermedia.com

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Benchmark Your Capabilities

Data

Technology

Organization•Skills•Culture•Bandwidth

ChannelDevelopment

Page 26: "Operationalizing" Market Segmentation

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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

Page 27: "Operationalizing" Market Segmentation

Slides available at www.astech-intermedia.com

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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

Page 28: "Operationalizing" Market Segmentation

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Contributing Factors

• Strategic considerations• Data availability and access• Marketing technology• Channel development• Skills

Page 29: "Operationalizing" Market Segmentation

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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?

Page 30: "Operationalizing" Market Segmentation

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Contributing Factors

• Strategic considerations• Contact history• Data availability and access• Marketing technology• Channel development• Skills

Page 31: "Operationalizing" Market Segmentation

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Slicing the Pie

The 3 Mega-Slices

Subscribers

Never Sub

Former Subs

Page 32: "Operationalizing" Market Segmentation

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Slicing the Pie

The 3 Mega-Slices

Subscribers

Never Sub

Former Subs

Page 33: "Operationalizing" Market Segmentation

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

Page 34: "Operationalizing" Market Segmentation

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Slicing the Pie

Subscribers

Over 1 Year 1-6 Months

6-12 Months

< 1 Month

Page 35: "Operationalizing" Market Segmentation

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Slicing the Pie

Subs: Tenure < One Month

Office Pay

Easy Pay

Page 36: "Operationalizing" Market Segmentation

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Slicing the Pie

Subs: Tenure < One Month

Office Pay

Easy Pay

Page 37: "Operationalizing" Market Segmentation

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Slicing the Pie

Subs < Month - Office Pay

Telemarketing

SC Inserts

Door-to-Door

Web

Direct Mail

< Other

Page 38: "Operationalizing" Market Segmentation

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Slicing the Pie

Subs < Month - Office Pay

Telemarketing

SC Inserts

Door-to-Door

Web

Direct Mail

< Other

Page 39: "Operationalizing" Market Segmentation

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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

Page 40: "Operationalizing" Market Segmentation

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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

Page 41: "Operationalizing" Market Segmentation

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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%

Page 42: "Operationalizing" Market Segmentation

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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

Page 43: "Operationalizing" Market Segmentation

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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

Page 44: "Operationalizing" Market Segmentation

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

Page 45: "Operationalizing" Market Segmentation

Slides available at www.astech-intermedia.com

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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

Page 46: "Operationalizing" Market Segmentation

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???

How do I implement and manage customized communications with hundreds of segments simultaneously?

Page 47: "Operationalizing" Market Segmentation

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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

Page 48: "Operationalizing" Market Segmentation

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

Page 49: "Operationalizing" Market Segmentation

Slides available at www.astech-intermedia.com

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astech-intermedia.com

Page 50: "Operationalizing" Market Segmentation

Tom Ratkovich |[email protected]

ASTECH InterMedia, Inc.999 18th street, # 2240denver, colorado 80202

www.astech-intermedia.com

Thank You!