Targeted Customer Marketing

(Multichannel Merchant) Targeted marketing to customers will drive increased sales and profits, but most companies are overwhelmed by the idea of marketing one to one. The reality is that one-to-one marketing isn’t that feasible or cost-effective in the print world. But marketing to six or seven categories or groups of customers is feasible—and can work well. The collaboration of circulation, marketing, and merchandising can result in targeted programs for distinct customer groups resulting in increased sales and profits.

The first step is to review the current house file and start grouping customers into distinct categories. This does not require resegmenting the file but rather creating profiles based on CRFM (channel/recency/frequency/monetary value), sales per book, and overall indexes. In the end, there should be 6-10 groups. These may include the following:

VIP or best buyers
loyal buyers (multibuyers only)—necessary only for very large files
recent buyers (usually past 12 months, depending upon the strength of the file)
first-time buyers
reactivation (older buyers)
retail buyers
Internet buyers (depending upon the strength of the file)

It is important to establish a definition of what types of buyers are in each category. Everyone in your company needs to understand whom you are marketing to. Also, by showing quantities, percentage of buyers, and average sales per book or an index ranking for each group, you can gain better perspective on the house file composition.

Once you’ve segmented your file into these distinct buyer categories, marketing and merchandising can create targeted marketing programs to increase the sales and results of each without giving away more than is required. There are several programs that could be considered or used for each group. For instance:

VIP or best buyers are producing most of the sales and profits for the company. They thrive on recognition of their loyalty to your company and products. So consider
thank-you letters and/or gifts for large orders
exclusive promotions and previews of new or limited-edition items
personalized ink-jet messages on catalog
loyalty programs rewarding buying behavior.

Loyal buyers are solid customers who continue to purchase at a strong and steady rate. Maintaining these customers is important to the future of the business. Do so with
continued catalog mailings
coordinated e-mail communications.

The goal with recent buyers is to upgrade them into loyal and VIP buyers. For the best results, opt for a fast, frequent, and varied contact strategy that includes
package stuffers in their orders
thank-you e-mails
order-stripping, a technique of pulling recent orders out of the order entry system, to contact customers in a timely manner after their initial order.

Buyers cannot be considered loyal until they purchase at least two or three times. So the goal with first-time buyers is to capture that second (and third) order. They are most likely to respond again after they purchase the first time, so be sure to send them
package stuffers in their orders
thank-you e-mails
incentives (such as dollars off their next order) delivered via a catalog cover dot whack or envelope mailing.

Inactive buyers have not purchased in some time. Reactivating them requires more work. To do so
optimize names through a cooperative database
notify them via e-mail that a new catalog is available and ask them to reply if they are interested in receiving the mailing (self-qualification)
send an electronic catalog to the customer instead of a print catalog
use a “last chance” dot whack or ink-jet message
include a promotion to encourage response
mail a less expensive prospecting catalog

For marketing and branding purposes it is important that retail customers receive the print catalog. To further drive sales
include an ink-jet message or dot whack about them store closest to the customer
highlight catalog- /Internet-only items
mail a postcard with a promotion or gift card for them and a friend to drive viral marketing
promote online ordering with in-store pickup.

Buyers who have purchased only through the Internet are most likely to purchase only through Internet in the future. Therefore
send personalized e-mail with targeted product recommendations
e-mail them electronic catalogs
e-mail them notification that a new catalog is available and ask them to reply if they are interested in receiving the mailing (self-qualification)
mail a catalog to Web buyers who haven’t subscribed, have unsubscribed, or haven’t opened an e-mail in more than six months.

It is possible to conduct targeted marketing when you use segmentation and results to drive broad groupings of customers. With the help of marketing and merchandising, you can create programs to target each of these groups with positive results.

Michelle Farabaugh is a partner with San Rafael, CA-based direct marketing consultancy Lenser.