FEATURE 

Tactics and strategy

The acid test. Your marketing database is ready to use and you’re under pressure to show results. The answer, says Qbase’s Gary Olive, is a communications strategy based on customer segmentation.

By Gary Olive

Gary Olive’s data series 
May/Jun 2004The big idea - first steps in setting up a marketing database.
Jul/Aug 2004Data audit – what you have, what you need, how to get there.
Sep/Oct 2004Data protection - key to a sound strategy.
Nov/Dec 2004Database solution – DIY or use professionals.
Jan/Feb 2005Tactics and strategy - using the database to build business.
Mar/Apr 2005The great unknown - blue skying.

All your best efforts in getting the database up and running will amount to nothing if it is not subsequently used effectively as part of your marketing planning and campaign development process. Understanding your customer is the key to successful communications and a ‘profitable’ relationship. In the initial stages of implementation, time spent analysing and segmenting your database will be time well spent.

At a basic level you may segment your customers as subscribers and non subscribers. Within each of these definitions you could create further segments: multiple subscriber, subscriber 0-12 months, 13–24 months, on-line subscriber, off-the-page subscriber, etc. If the database is a true marketing database then the segmentation options open to you are far greater.

By doing this you are creating a point of differentiation between your customers. This differentiation will manifest itself in the way you subsequently communicate with them, be it the channel, the tone or the offer that you are making. By analysing your data you will be able to identify key factors that can help shape the way your marketing communications strategy evolves.

Strategic planning

At the strategic level there are likely to be two key issues concerning you. How do you reduce churn and how do you grow your market or, equally important, customer share?

Your lapsed subscription data will provide you with the opportunity to look at how your customers reacted to your offers for subscriptions renewal. There may be general trends, traits or sequences of events that stand out in your analysis that can provide a clear picture of which existing subscribers are unlikely to renew. This is predictive modelling and, when incorporated into your strategic planning, will help you reduce churn and increase your customer retention rates. This is because you can talk in a tone and present an offer which is based on a logical understanding of what is likely to trigger a positive response from your customer, rather than simply adopt a ‘one size fits all’ approach to the renewals process.

From the market or customer share perspective, again analysing your database will identify key factors to help you determine your acquisition strategy. Knowing what your customers look like will allow you to be more surgical in your prospect file selection and this will have the effect of reducing your overall ‘costs for names’ whilst increasing the response rate of your campaign(s). Again looking at how customers have been acquired will allow you to consider the best mix of communications channels to employ within your strategy.

Whether consciously or subconsciously, you will be applying the principles of direct marketing to your strategic communications processes. And this can only be a good thing as this discipline is a SMART way of doing business. Why? Because it’s:

* Specific:- it has clear business and/or financial objectives.
* Measurable:- success is tangible and measurable against the plan.
* Accountable:- costs are transparent and every pound accounted for.
* Realistic:- economics of the communication based on facts.
* Targeted:- delivery is straight to the required audience.

Tactical activity

Whilst strategic planning is implicit in marketing communications planning, we know that the best laid plans can and often do go wrong. The need for a reactive approach is required and on a tactical level your database will also come into its own.

You can identify your target audience very quickly and select the specific customers that you need to communicate with to address the tactical need. You are in command. If, for example, your subscriptions bureau was to suffer a catastrophic loss, you would still be able to communicate with your subscribers, issuing renewals, continuing the dialogue whilst recovery is completed. Similarly, you can observe the response curve to your renewals cycles, independent of your subscriptions bureau, and take action to ensure that customers take up your offer within a timeframe of your choosing and before you lose them for good. The database is capable of managing ‘trigger driven’ activities of this type. So, in addition to the ad hoc tactical activity that will arise, you can create the environment for ‘contingency’ planning.

You can apply the same principles to the way you manage your business customers, such as your key advertisers or your newsstand vendors. For example, if you know one of your independent vendors is returning an increasing number of copies of your publication month on month, you can create the parameters for the issue of automatic communications to that vendor. These might be words of support or they may be marketing initiatives designed to generate traffic to their premises for your publication. Knowing where your vendor is located and the composition of the local population will allow you to select suitable prospects, make them an appropriate offer and drive them to your vendor.

Whether needed at the strategic planning level or as a solution for overcoming some short term tactical issue facing you and your business, the marketing database is the most reliable tool that you will have in your repertoire and will provide the vital support that you are looking for.