Building Market Segmentation Models Jeremy Everham and Curtis Bixel
Denver Is a Leading Newspaper Market Total Paid Circulation#7 in the nation (Mon-Sat) 801,788 661,943 Source: ABC Audit 3/31/02 633,747 ABC FAS-FAX 9/30/02 #6 in the nation Sunday MONDAY-FRIDAY SATURDAY SUNDAY
Denver Ranks 1st in Household Penetration DAILY SUNDAY Source: DNA analysis of ABC FAS-FAX September 30, 2002 POST/NEWS Metro/NDM Household Penetration 51.7% 64.7% This is the #1 newspaper market in America.The Denver Newspaper Agency provides higher household penetration (paid circulation divided by occupied households) than any other newspaper in the nation - daily AND Sunday.
New Segmentation Ideas ACTIVE SUBS •New methodologies based on segmentationPAST SUBS •Infinite possibilities in “niche” marketing •Traditional mass marketing to retain penetration coupled with segmentation to increase smaller markets NEVER SUBS
Segmentation Opportunities• Past Subscribers: – Non-pays: • Segment between never-pays, and once-paid but no renewal. • Strategy will be to require payment in advance or limit their grace period, offer them lowest price with incentives to pay up front via credit card, and tie a promotion such as King Soopers discounts to 2 yr. credit card offer. – Do not calls: • Segment by interest to determine the largest interest/lifestyle groups. • Our strategy is to identify direct mail offers specifically tied to their interests.
Segmentation Opportunities• Past Subscribers: – Reason for Stopping: • Run counts by stop code on those who gave a reason for stopping • Look at the major segments to determine if we need a strategy for them. – 7 Day Sub cancellations: • Profiles by price, length of subscription, cancellation code, and anything else that will help us determine why 10%-12% of this important segment cancel • See if there are segments we could treat differently to improve retention
Segmentation Opportunities• Active Subscribers: – Sunday Only/Weekender Packages: • Profile using demos and lifestyle clusters to determine what this group looks like. • Identify spending thresholds for high, medium and low level renewal rates. – Heavily Discounted Rebilling: • Profile using demos and lifestyle clusters to determine what this group looks like. • Identify spending thresholds for high, medium and low level renewal rates..
Segmentation Opportunities• Active Subscribers: – Profile of EZ Pays: • Profile using demos and lifestyle clusters to determine what this group looks like. • We will then identify existing subscribers with the same characteristics for heightening marketing efforts to this group. – Duplication with other publications: • Look at subscriber activity with other publications such as NY Times to identify multiple subscriber households. • We will profile these to help us identify targets for marketing these other, non-DNA publications.
Telemarketing Workstation• Why Telemarketing Workstation? – Multiple Publications • The Denver Post, Rocky Mountain News, New York Times, etc. – Integration of Outside Data • Demographics, Clusters, Private Party Classified Ads – Segmentation and Response Tracking • Segment best acquisition leads • Track Household Response
Telemarketing Workstation• Weekly Calling Plan – 13 week NDM call cycle • Approximately 180,000 potential /wk – 10 week ONDM call cycle • Approximately 15,000 potential /wk
Telemarketing Workstation• Monthly Calling Plan – Extended vacations > 30 days old – Suspended accounts • With previous payment • Without previous payment - prepay only – Positive balance > $1.00 • Refund, restart, or donate to NIE
Telemarketing Workstation• Future plans – Use Demographic data for targeted acquisition – Use Classified data for targeted acquisition • Free ad w/subscription – Use Retention response data for Targeted Renewal Campaigns
Niche Campaigns:EZ Pay Example
Credit Card Subscriptions• A Market Facts survey conducted for the NAA and Visa USA, concluded: – Over one-third of newspaper subscribers want the option of paying with their credit cards – Those most interested in a payment card are younger, educated, higher-income males• A study in Presstime magazine showed a 50% higher retention rate for readers who pay with a credit card than for those who don’t.• Madison Newspapers report the retention rate on automatic credit card accounts is 94% after six months and 87% after one year.
EZ Pay Analysis• Database Strategy: – Develop a user profile utilizing demographics and lifestyle clusters – Identify existing subscribers with the same characteristics for conversion to EZ Pay or for new household acquisition• Database Tactic: – Identify and analyze EZ Pay subscribers in the database – Report on their demographics and PERSONICX codes.• Database Findings: – EZ Pay customers when ranked by index are predominantly young • New household acquisition opportunity - this cluster much different than the current core subscriber base - acquisition opportunity – EZ Pay customers when ranked by quantity are mostly middle-aged and affluent • Very similar to the existing core customer base - conversion segment
Target 1: Acquisition EZ PAY Group Cluster Marital Net CUSTOMERS Index# Nam e Nam e Age Status Incom e Rank Worth 23,244 17,60058 Beginnings Young Workboots 18-29 Sgl Low 58 <$100K 39 16061 Mixed Singles Urban Scramble 24-35 Sgl Low 56 <$100K 280 15729 Boomer Singles City Mixers 36-45 Sgl Middle 29 <$100K 70 13424 Taking Hold Career Building 24-29 Sgl Upper Middle 22 <$100K 287 13359 Gen X Singles Low Rent Digs 30-35 Sgl Low est 59 <$100K 363 12621 Taking Hold Children First 18-30 Sgl/Fam Upper Middle 23 <$100K 249 12345 Beginnings First Digs 24-29 Sgl Low Middle 46 <$100K 212 12352 Gen X Singles Still Landlorded 36-45 Sgl Low Middle 51 <$100K 256 12106 Cash & Careers Shooting Stars 30-45 Sgle/Cpl Wealthy 6 $100K-$249K 181 12016 Our Turn Country Single 36-55 Sgl Upper Middle 15 <$100K 97 119
Selected Targets for Acquisition• Urban Scramble: Young professionals and students, urban, well educated, just beginning to make money. – Interests: civic and human rights – Opinions: spend money without thinking, worry about themselves, health is important – Read: New York Magazine, The Economist – Finance: Pay bills by phone – 16,128 non-subs• Career Building: Under 30, single, well-compensated, mobile, active. – Interests: Mountain Biking, environmental organizations, college football – Opinions: Like magazines, trust what I read in newspapers, take risks – Read: Sports magazines, INC, webcrawler.com – Finance: Buying homes and condos, mutual funds, paying off education loans – 12,825 non-subs
Target 2: Retention EZ PAY Group Cluster Marital Net CUSTOMERS Index# Nam e Nam e Age Status Incom e Rank Worth 23,244 17,60004 Boomer Barons Skyboxes & Suburbans 36-55 Cpl Wealthy 3 $1-2MM 1,039 10817 Flush Families Apple Pie Families 46-55 Cpl Upper Middle 16 $100K-$249K 896 10702 Mature Wealth Established Elite 46-65 Cpl Wealthy 4 $2MM+ 612 10214 Aging Upscale Career Centered Singles 46-65 Sgl Affluent 12 $100K-$249K 588 10322 Our Turn Fun & Games 46-55 Cpl Upper Middle 19 <$100K 552 8607 Boomer Barons Leveraged Lifestyles 36-55 Cpl Wealthy 7 $100K-$249K 539 11327 Jumbo Families Soccer & S.U.V.s 30-45 Cpl Upper Middle 28 <$100K 537 9826 Cash & Careers Savvy Singles 30-45 Sgl Upper Middle 24 <$100K 532 11012 Jumbo Families Tots & Toys 30-45 Cpl Affluent 10 <$100K 503 11203 Mature Wealth Corporate Clout 46-55 Sgle/Cpl Wealthy 2 $1-2MM 500 92
Selected Targets for Retention• Skyboxes and Suburbans: – One of the best educated and wealthiest clusters, often with teens at home, living in the lap of suburban luxury. – 6,836 non-EZPay subscibers up for renewal• Apple Pie Families: – Well educated, married, dual income, upper middle class homeowners with mini-vans, age 46 to 55. – 5,508 non-EZPay subscribers up for renewal• Established Elite: – No kids, enormous disposable income, rank first for education, home values, and home equity. – 4,733 non-EZPay subscribers up for renewal
Selected Targets for Retention• Career Centered Singles: – Affluent, well educated suburbanites, dedicated to their careers and long-term homeowners in their community. – 3,730 non-EZPay subscribers up for renewal• Leveraged Lifestyle: – Established couples with teenage kids, mortgages, car loans, and the high incomes to support them, age 36-55. – 3,029 non-EZPay subscribers up for renewal
Marketing Strategy Discussion• New Household Acquisition – Target non-subscribers for acquisition via EZ Pay in the best clusters when ranked by index - young up-and-comers. (Target 1) – Direct mail test of 25,000 households – Marketing leverage points • Offer: price by the month/low price point/Starbucks gift card offer tied to payment by credit card • Branding: low price point/minimal cost
Marketing Strategy Discussion• Conversion of Existing Subscribers – Target current subscribers approaching renewal via EZ Pay in the best clusters when ranked by quantity; upscale, well-educated, established clusters. (Target 2) – Develop communication for branding EZ Pay customer benefits - letter sent prior to renewal offer, communicating benefits – Direct mail test of 25,000 households of best prospects – Marketing leverage points: • Offer: UA Mileage plus miles tied to payment by credit card • Branding: Heightened level of customer service (ease and convenience)