Live From NCDM: For KinderCare, Segmentation is Child’s Play

Anyone who has ever given a toddler a baseball glove or a 12-year-old the latest incarnation of an Elmo doll quickly realizes that children are not a homogenous demographic group. This realization is often accompanied by tears (of the gift recipient, not the giver).

KinderCare Learning Centers, a childcare services firm, may not have seen tears, but its initial forays into direct mail were notable for a similar lack of differentiation.

The Portland, OR-based company offers a variety of services, ranging from infant care to early reading programs to general academic tutoring for kids up to age 12. But its spectrum of offerings was not matched by a variety of direct mail pieces. Seven years ago, before it embraced database analysis, the company would basically shove copy of a print advertisement into an envelope and send it out. And the prospect lists it rented were chosen solely on the basis of “presence of children,” without regard for the age of the child.

That has changed. During the past year, KinderCare tested a variety of promotions, including a few that offered several hard incentives, such as a $10,000 college scholarship sweepstakes and discounts on learning programs.

But what parents responded to best was a Web-based offer to get more information about various programs — including which ones had immediate openings.

“People had a waiting-list mentality,” said Gary Brandon, director of brand strategy at database services firm Alcott Routon, which coordinates KinderCare’s data-driven marketing efforts. For this crowd, the seeming “me-first” option was irresistible.

The road to this point wasn’t easy. “We didn’t have an internal database or a lot of data,” said Lisa Clements, KinderCare’s manager of database marketing. “We did not do a great job of [capturing] information on customers, or people who came in for a tour.”

When the company first began exploring database analysis, information trickled in sporadically from perhaps 300 or 400 of its 1,200 locations. These days, KinderCare collects data on 90% of customers, or people who come in to one of its facilities for a tour, either through having the visitors fill out a guest registration form or by having each center’s director complete it.

“We incentivize based on conversion,” Clements said. “We find there is a 4%-5% lift if we follow up with them [after a visit].”

Not only does KinderCare close more sales among those who have expressed interest, the company has become more sophisticated in its prospecting efforts. It now uses a combination of market research, segmentation and predictive modeling to guide its efforts, and tailors creative offerings to reflect both desired services as well as those available in specific locations.

Alcott Routon demonstrated that 50% of the consumers in what database it had were generating 90% of its business — and the top 25% accounted for 65% of its revenue. KinderCare used a mapping program to see where these high-value customers lived, relative to its centers, and compared these areas to where the company had been targeting its mailing efforts.

By constantly updating these maps, KinderCare centers were able to track demographic shifts in target areas, and adjust mailing plans accordingly. The information also aided the company’s local advertising placement efforts.

Analyzing each center’s customer base has also influenced its collateral’s creative design. As it gained a better understanding of each locale’s ethnic makeup, KinderCare began using photography of actual enrollees in its mailings. And in areas that have older, more downscale centers, the company stopped sending out photos of slick, technologically opulent centers copy that were not reflected in its actual local offerings.

The benefits pitched on its pieces has changed as well, reflecting parents’ expressed desire for a learning environment, even more so than a loving environment, or a convenient location — or even a low-cost care option, as reasons for enrolling their children.

During the coming year, KinderCare anticipates refining its targeting procedures and prospecting segments. It also will address segmenting needs among its current customer base.

“Our churn has increased some,” Clements said. Retention is not an area we have put a lot of focus on.”

Clements and Brandon discussed the KinderCare database at the National Center for Database Marketing conference in Orlando this week.