by James Lawson.

6 Jan 2012: The trend to highly-targeted campaigns continues to dominate b2c marketers’ plans in the UK, along with maximising the value of their customer databases through intelligent cross-sell, retention and reactivation. Their data suppliers are right there with them: direct marketers can select and tag from complex multi-feed, multichannel datasets and access a growing volume of ultra-fresh records, often gathered in real time.

Qualify for selection

“Where budgets were previously slashed or completely quashed, there is now money available for direct marketing, which is encouraging and shows confidence in direct marketing beginning to return,” says Chris Sherlock, Director of Personal Solutions & Marketing Services at Equifax. “Cost is of course still a major factor and will continue to be for the foreseeable future. Direct marketing is still seen as a commodity in some companies, and procurement continues to be involved in any discussions relating to data.”

The current market indicators are mixed. Though UK marketing budgets were down overall in Q2 2011 for the third consecutive quarter, the latest IPA/BDO Bellwether survey reveals direct marketing budgets are up, increasing 2.5% in the three months to 30 June. A survey by Acxiom last month also found that around three-quarters of recipients were happy to receive either promotional mail or email from companies they know. Though this dropped significantly for prospects, postal mail still emerged as the most appropriate way of contacting potential new customers. 

Lower postal volumes and a continuing shift to email over the last few years have certainly helped direct mail stand out more. With the financial services meltdown and the many companies concentrating on extracting more cash from their existing customers, high volume prospecting campaigns are far less common.

“Clients want quality and they are happy to pay for it,” says John Pooley, Managing Director at The Data Partnership. “Gone are the days of producing as many leads as possible. The more you can qualify a lead, the happier the client. We’re changing the direction of the company to offering more bespoke leads.”

According to Pooley, qualifying a lead to nearly the point of sale lets the client use their best agents to close the deals. “This way, we remove much of the costly leg work and the client doesn’t need to rely on high volumes of data and consumer contacts to meet sales targets,” he says. “Effectively, this highly targeted approach kills two birds with one stone: response rates and sales rise, while the client’s cost of contact is reduced.”

So it’s no surprise that event-based marketing using triggers or referrals continue to be in high demand. More than ever, marketers are placing the emphasis on measurable results, and data that doesn’t make the grade in generating response simply won’t sell. Buyers want the tightest possible selections using indicators of real consumer lifestyle changes such as a new address, new baby, new phone number or a newly-issued credit card. This “less is more” approach inevitably pushes the cost per record up and volumes down.

“It’s all about recency,” says Lara Bonney, Sales Director at Abacus, emphasising that her company is striving to turn its file updates around quickly. “We have invested in updating as swiftly as possible and our data pool has grown by 10% year-on-year. We’ll be sticking to monthly updates but are encouraging our pool contributors not to delay submission.”

“Recency and relevancy are the two key things, as is embedding your data within a multichannel database,” agrees Chris McDonald, Managing Director of The Trading Floor. “The shift to online is continuing, and direct mail is working reasonably well as long as you contact those who are responsive in that channel. Clients are very careful and selective in the profiles they want to work with.”

Real attributes rather than modelled variables are also desirable according to McDonald. “You know they are real and at the address,” he says. His company’s People in Play file, which contains individuals that recently active online in some way, combines this data with the ability to pipe web and phone-derived to marketers in near real time – an internal decision tree selects the best action for each incoming lead based on the type of product involved and client specifications.

“The time delay can be anything from 30 days down to nanoseconds,” explains McDonald. “Every single client has bespoke requirements such as specific underwriting criteria and the business rules are extremely complex.”

Despite this, a top quality UK universe is still central to consumer targeting for any number of reasons: supporting accurate profiling, permitting high volume campaign roll out, enabling bespoke data pool builds and so on. There’s simply not enough trigger data out there to satisfy demand on its own.

“There’s still an acquisition piece going on,” states Michael Green, director of insight at Transactis. “Volumes and rates are steady, and there is huge interest in being able to respond quickly to customer behaviour. But building up enough volume in triggered data to give the right ROI is challenging.”

Even if, as McDonald says, “the volume market is on the way out”, The Trading Floor necessarily embeds its “hot” data within a UK consumer universe in order to make all its records fully accessible and actionable. Branded CORE, the 41m-strong file uses owner CallCredit’s UK consumer data onto which The Trading Floor overlays 28 million individuals taken from its contributor pool that have transacted online or on the high street, along with various other sources such as credit data.

Acxiom is another that is certainly investing in comprehensive UK data sets. Alongside its existing paper-based and online questionnaires, the company is targeting 1.6 million affluent UK households by the end of the year with a door-drop campaign driving people to complete an online survey. It has also just launched its 25 million-strong Email Prospect Universe.

“There is growth in demand for unique variables,” says Jonathan Clough, Head of Acxiom’s UK Data Products business. “It’s no longer enough to know what salary bracket households are in, for example; clients need specific information about people’s disposable income, which we can offer through our Affordability product.”

Cataloguers are still mailing in volume, and Abacus is shortly to release a new prospect data offering similar to its Abacus One selection service. This combines multiple models to determine the best names to select from its co-op database. The idea is that by looking for names that appear multiple times in each modelled selection – whether in the top deciles or not – less frequently mailed yet responsive records can be selected, as well as increasing the volume of names available for mailing.

“It’s a multi-profile model that lets you pull out names that aren’t normally mailed,” says Bonney. “With a single model, you don’t tend to have much success using names from lower-scoring tiers but those that crop up in multiple segments in multiple models are more likely to be responsive.”

The main theme outside prospecting is the use of market-wide transactional information to understand who the right customers to target for cross-sell or reactivation are and what to offer them. Abacus, Transactis and The Trading Floor are all active in this area, often working with clients in a consultancy role that goes far beyond list provision.

“A lot of companies have now built significant in-house files and are working on optimising the data they have,” notes Green. “We’re doing a lot of tagging of data and testing to find the most predictive variables using historical campaign data at the moment.”

The Trading Floor’s People in Play file has application in “real time” retention as well as in acquisition. If alerted that a customer is looking for a new insurance provider for instance, the incumbent insurer has a chance to fire off a retention offer – or perhaps reduce its renewal premium to the level of its competitors’ new business offers.

“It’s a very technical solution,” says McDonald. “We have identified that over half of those on the database are current customers of our clients. That is, they are out in the market as potential defectors.”

Overall, giving a broader picture of a customer’s activity outwith their relationship with a single company is the outstanding advantage of a pooled transactional database. The Abacus 360 service taps into the Abacus Alliance database, which holds the current purchasing behaviour of over 18 million UK multi-buying households.

This can indicate which lapsers to target for reactivation: if someone is spending with another mail order company but not yours, perhaps some form of offer might be in order? The file can also be used to tag client lists with transactional variables such as the number of purchases in the last year or category spend.

“If you know what people are doing elsewhere, it helps to narrow down the choice of who to contact,” says Bonney. “It can also indicate which catalogue and what mailing frequency would be appropriate. We can append scores to house files so that clients can make their own decisions.”

Transactis is also working to help clients react quickly to changes in customer behaviour, combining conventional offline targeting activity with behavioural information generated online. “The challenge is to bring that together,” says Green, though these two areas are generally far apart within UK businesses. “We’re beta testing a proposition with clients at the moment.”

The goal is to help clients to understand where their buyers are in the purchase cycle so that they can be prompted at the right time. For example, someone may run out of wine or face cream, but how do you know?

“We can help recognise activity through our syndicated pool,” says Green.“We can use that to understand what, where and when our customers are buying, and use that information to adapt communications.”

Syndicated data lies at the heart of the company’s new ClaimsID service. Launched in response to the increasing number of fraudulent claims for Goods Lost In Transit (GLIT) by home shopping customers, it brings together claims information from pool contributors to take the risk of fraud into account as part of the selection process. By accessing the central web-hosted database, marketers can screen out prospects with a suspicious number of GLIT claims as well as assisting with claim investigation.

“We want to bring that into acquisition activity by scoring and suppressing those with the highest propensity for fraud,” explains Green. “If someone has made 10 GLIT claims, then it rings alarm bells. It’s a real and growing problem as the recession really starts to bite.”

As an aside, Green also notes that Transactis has been working with HMRC in other fraud prevention activities. “There’s a more aggressive ambition to stamp out this kind of thing and data companies are getting more involved.”

Keep innovating

Consumer targeting continues to offer tough challenges: working out the channel mix, how to trim selections to the bone while maintaining or increasing response, or simply managing to hold onto the same budget as last year. What hasn’t changed is how important the correct data is.

If marketers are happy to put their hands in their pockets to pay for very responsive data, so much the better. Better that than trying to move a campaign into profit by holding out for further price cuts on prospect lists. “Data has a marginal effect on campaign cost in our sector,” says Bonney. “Far better to tell the client that they can pay a decent amount and get better response and income due to excellent modelling and selection work.”