Cutting Through the Clutter

How did a Fortune 200 retailer discover prospects 200 times more valuable than known ones?
A leading nonprofit reduce its mailing costs by more than $500K in one year while improving response rates from 3.53% to 4.3%?
A Fortune 500 catalog retailer improve response rates by 22%?

All of these enterprises took advantage of analytics software – sophisticated computer programs that analyze customers by more than 700 attributes in order to improve acquisition and retention rates. With Americans receiving about 290 direct mail pieces a year and seeing 300 ads a day, using analytics software to target your future customer accurately is essential to for cutting through the clutter.

Savvy marketers are using analytics software to:

Identify which segments of a dataset would respond most favorably to print, television, or direct mail advertisements
Discover future buying predictors using the past purchasing behavior of a customer segments
Determine which brands prospects would most likely purchase
Identify key customer segments and new prospects
Improve acquisition and response rates

Infocore's iQ is a web-based solution we built for marketers looking to increase direct mail response rates. Employing sophisticated genetic algorithms, iQ identifies your best customers and prospects that closely mirror their key characteristics – a proven method that brings dramatic results.

Infocore used to subcontract analytic services to statisticians when our clients requested it. But iQ and other genetic-based analytics have allowed us to incorporate these services into our List Brokerage and List Management functions – a real value to our clients.

Analytics has been a staple of the direct mail industry for more than 30 years, but the business world has just started to embrace it en masse. It took so long to enter the mainstream because it was expensive (it cost roughly $5K to 25K per analysis), it was time consuming (it took roughly six to eight weeks for statisticians to compile an analysis), and competition wasn’t as fierce as it is today (so there wasn’t as great a need for it).

Exponential increases in computing power, however, have enabled the creation of a new generation of powerful tools like iQ. They allow marketers to conduct analytic tests for around $500 and discover answers in a matter of hours.

These tools have also brought greater insight and objectivity to the analysis process. Before analytics software, statisticians selected a handful of consumer attributes they believed were responsible for driving response. But the subjective selection of attributes skewed conclusions and often did not reveal subtler correlates and drivers.

iQ and other similar solutions, in contrast, crunch as many as 700 different consumer attributes. In a battle of the survival of the fittest, the consumer attributes most responsible for driving consumer response rise to the top.

The result is advanced scoring models that empower you to find prospects with a significant affinity for your offering in a matter of hours – and with a reduction in customer acquisition costs of 10% to 20%.

Analytics software is redefining direct mail. And the companies that succeed in this fiercely competitive world will be the ones that harness the power of analytics.

In part two of this article, we will look at appropriate and inappropriate uses of Analytics, and other strategies that can be used in concert with it to drive response rates.

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Wonder why direct mail response rates are falling? One of the reasons is the explosion of media outlets over the last few decades.

In 1960 the average American home had 5.7 television channels; in 2004, that number increased to 82.4
In 1960 there were approximately 8,400 magazine titles; in 2004, there were 17,300.
In 1960 there were 4,400 radio stations; in 2004 there were 25,000.

Despite this onslaught, direct mail has remained one of the most effective mediums in the hands of savvy professionals. Advertising Age notes: “In 2001, direct marketing was seen as the decidedly unsexy stepchild to general advertising… But the current era of accountability and demand for return on investment has changed all that: direct marketing now garners the greatest share – roughly a quarter of marketers’ budgets in the U.S.... surpassing even newspapers and broadcast TV.