Building Better Database Modeling Outcomes
Using historical data, a regression model was created allowing a major national insurance marketer to target the prospects most likely to respond. The above table summarizes results with and without the model.
The above chart shows three of the demographic variables a major national insurance marketer used to achieve better results in their acquisition efforts and the potential differences by product.
We are all aware that, over time, marketers have gained access to a wealth of data regarding their customers and prospects. This includes purchase information, demographics, lifestyle interest categories and more.
We, as marketers, should view information as a strategic resource and must continue to uncover and utilize the power of that information. The data can direct us in making targeted offers to those most likely to respond and in building long-term relationships and trust as we deliver relevant messaging. Make sure you are collecting and verifying current information on a regular basis as you interact with customers, and use the services of outside marketing firms to help you fill in the blanks, track moves, etc.
Make sure your entire database is updated regularly. Revisions can include NCOA, PCOA, phone append/verification, email append/verification, demographic or firmographic appends.
Developing the database and filling it with information is only the beginning of database marketing. Segmentation and other research techniques help companies release the full potential of the data. It is this ability to divide the database into subsets containing common sets of characteristics and behaviors that will lead to marketing effectiveness and efficiencies.
The goal of all marketers is to maximize response, customer activation, retention and cross-sell opportunities. There are many techniques we can use. For clients who have not had much exposure in these areas, start with simple profiles or regression models with specific goals in mind.
Start Small, Think Big
Start simply, then add more complex modeling techniques to help achieve specific campaign objectives.
The following is an example of how a client company used each of these methodologies in its acquisition efforts.
- Customer Profiles: A customer profile provides a descriptive view of the customer base by comparing a sample of the client file to national averages using common demographic and lifestyle variables on a variable-by-variable basis. Profiles can be created for each product category the client offers.
A major national insurance marketer has used profile information to achieve better results in its acquisition efforts. The company currently markets six types of insurance products. The descriptive profiles provided information that was used for its list rental acquisition efforts. While dozens of variables were presented in the actual profile report package, the chart (at right) shows three of the demographic variables used and the potential differences by product.