Historically, shrinking marketing budgets and increasing pressure for improved results have been good for the direct marketing industry in a couple of ways. Not only does demand for our services and expertise go up but in order to deliver results, we must also become better DM practitioners ensuring every marketing dollar invested sees an adequate return.  Since direct marketing is all about reaching customers and prospects in an interactive and measureable way, critical to success is our ability to (1) target the right customer, (2) drive response effectively with the right offer/media/creative/timing and (3) rigorously track the results of our campaigns. 

 

When the Going Gets Tough, the Tough Go Direct! When times are good and budgets are flowing freely, we can afford to focus most of our attention on the second of these – driving response – and perhaps be a bit less vigilant about the others.  Today, however, as we strive to achieve more with less, it’s essential that we bring targeting and tracking back to the fore. I’d like to share with you a tool I developed to help marketing teams focus their attention on the right customers and build relevant strategies for driving the sales process.  It’s called the Target Audience Value Matrix™ (TAVM) and it works for any type of business, in any phase of development and in any part of the world. Defining The Big Easy The purpose of TAVM is quite straightforward – to give us a tool that brings the Pareto Principle (or 80-20 Rule) to life, i.e. to help us find the right target audience for the highest conversion to sales at the lowest marketing cost.   To do this, we need to define two concepts – Value and Readiness – and we can then create a customer map or matrix. 

Value:              How much a customer is worth - not necessarily only in monetary terms, but strategically as well. We can rank customers from Highest to Lowest Value or from Big to Small. Readiness: How ready a customer is to buy or conversely, how easy or difficult it will be to make the sale.  We can rank customers from Highest to Lowest Readiness or from Easy to Difficult to sell

For each of these factors, it’s important to differentiate between the top 30% and the rest of the group.  This divides your Target Audience into four segments with different characteristics and very different priorities. Big Easy – approximately 10% of the total Small Easy – approximately 20% of the total Big Difficult – approximately 20% of the total             Small Difficult – approximately 50% of the total

 

 

So, How Does This Work in Practice? For example, if you’re a bank or credit card company launching a campaign to increase holiday grocery store spending, you might define Value as a combination of past 12 months retail spend and available credit limit.  And, assuming your biggest competition is a preference for using cash to pay for groceries, you might define Readiness as a combination of recency and frequency of past grocery purchases on their credit card.  This would make your four distinct segments: Big Easy:                High retail spending with regular grocery purchases and lots of available credit Small Easy:            Low overall retail spending but regular grocery purchases with some available credit. Big Difficult:           High retail spending and lots of credit, but no regular pattern of using a credit card at the grocery store Small Difficult: Low (or no) past spending on retail or groceries And now, with these definitions, it’s clear that you’d employ a different strategy – and expect different results – from each of these segments.  

Segments	Expected Results	Sample Strategy	Priority
Big Easy	·         Highest sales per participant·         Highest level of participation·         Best ROMI	Send deluxe Direct Mail pack with standard offer (e.g. double points)	1
Small Easy	·         Lower sales per participant·         Highest level of participation·         Good ROMI	Send postcard or self-mailer with standard offer (e.g. double points)	2
Big Difficult	·         High sales per participant·         Low level of participation·         Low ROMI	Send postcard or self-mailer with special offer (e.g. double points + free gift)	3
Small Difficult	·         Low sales per participant·         Low level of participation·         Negative ROMI	Send email with standard offer (e.g. double points) or ignore altogether	4

 Of course, this process is relatively easy in the data-rich world of a credit card company, but the concept is also effective in less sophisticated environments.  An example is a trade association like DMAS conducting a membership drive.  For us, high Value comes from paying membership dues as well as attending lots of events.  High Readiness comes from having inquired about DMAS membership and/or having attended DMAS events in the past year.  Our TAVM definitions are: 

Big Easy:                Companies with large marketing departments who have either inquired about membership or have had several staff attend one of our events in the past year  

Small Easy:            Small companies who have either inquired about membership or attended one of our events in the past year  

Big Difficult:     Companies with large marketing departments who have not inquired about membership and have had at most two staff attend one of our events in the past year.

Small Difficult: Small companies who have not inquired about membership and have not attended any of our events in the past year. We focus on the first three segments by targeting Big Easy and Small Easy in an immediate multi-channel membership drive.  The Big Difficult segment, however, requires a longer term, more personal strategy involving highly-targeted, face-to-face meetings with a first-phase goal of engaging them in our activities and encouraging them to inquire about membership and become Big Easy’s! 

 

Get Tough – Go Direct! TAVM is a useful strategic tool but you’ll benefit most from it if you can continuously validate and refine your definitions by tracking and measuring campaign results at the customer level.  This can be tough, I know – especially in Asia – but it’s an essential ingredient for the process to work well.  This means you must think about measurement at the beginning of the campaign process, code all your marketing materials by customer, by offer, by channel, by creative version and make a consistent effort to ‘close the loop’ on all campaigns.  Those marketers who do will find the year ahead to be informative, instructive and a great direct marketing success.   

About DMAS

The Direct Marketing Association of Singapore (DMAS) is a not-for-profit trade organization established in 1983 to promote and protect its members' interests, facilitate the development of direct marketing infrastructure and share information and ideas on direct marketing.  Members are invited to attend monthly networking and educational seminars, share in best industry practices and take advantage of exclusive business opportunities. For more information, please contact Loh Yann Yang at yann@dmas.org or +65 6227 8055.  Lisa Watson is the managing director of Ibis Intelligence Services, chairman of the Direct Marketing Association of Singapore and co-chair of the Marketing & Communications Committee of AmCham Singapore.  She also sits on the Advisory Board of the International Council of the US DMA and is a frequent speaker at industry events as well as a contributor to trade publications around the world.