Today's consumers are reeling from overload — not enough time, too much work, too many choices and too many messages being thrown at them from all types of media. The only messages that have a chance of sticking in consumers' minds are those that appeal to them personally — those that are relevant to their lives and lifestyles.
People want to do business with companies that understand them, cater to them and care about them. As cable operators, we know this, so we develop and offer innovative products, like high-speed Internet, video-on-demand, subscription VOD and niche programming. And yet, while products, offers and promotions are important, we fail to take into consideration the uniquely different human beings within our marketplace. And we continue mass marketing.
With the competition from direct-broadcast satellite and the development of new products and services, the cable industry needs to start marketing innovatively. We have to speak to our consumers about these services in a style and language that is relevant to them.
Let's have a reality check. Are you sending the same message and offer to all of your customers and prospects? Did you implement an acquisition effort last fall with a back-to-school theme? Of the people who received this direct-mail offer, how many of them actually had children living in their homes? While everyone wants entertainment choices, people who don't have children aren't going to respond to a back-to-school offer or one that promotes the Disney Channel and Nickelodeon.
Versioning — or customizing your communications — is the marketing revolution that will help you increase response rates and maximize customer relationships. But how do you make your messages relevant?
You do it by understanding who your customers are as individuals: If they are single or married, what their income level is, whether they have kids, what they do in their spare time and how they behave as consumers. Once you recognize these unique consumer characteristics, you can leverage this information into successful marketing campaigns.
We're not talking about one-to-one marketing. To know your customers and prospects well enough to present each of them with the right offer in the right language at the right time is a great concept, but it's virtually impossible to implement cost-effectively.
Instead, we're talking about "one-to-some" market segmentation, which defines groups of consumers, where every member of a given group resembles other members in that group. And every member differs from members of other groups.
The groups are homogeneous enough for creating specific messages, and large enough to capture cost efficiencies in printing and mailing.
Forget about geodemography — neighborhoods might have been relatively homogeneous in the 1940s and 1950s, but they certainly aren't today. The key to market segmentation is the use of "household-based" segments, or grouping similar household types together. Today it doesn't matter where a home is located. What drives consumer behavior is the demographic, lifestyle, attitudinal and behavioral makeup of the household.
And, because the segments are household-based, virtually every household in your customer and prospect databases can be coded — which means that you're already sitting on a gold mine of information. Your database is a powerful tool to explain the buying patterns, product preferences and external consumer behaviors of your distinct customers. All of this information will help you create relevant messages and offers, and help you present them through the most productive sales channel.
Some household-level market segmentation also links you to other information, such as syndicated data, which provides much of the same information as internal surveys at a lower cost, and at quicker turnaround times. That's because the research is already completed and available for purchase.
Companies like Simmons Market Research Bureau, Scarborough Research and MRI afford marketers detailed consumer research findings at a reasonable cost. This information includes extensive consumer behavioral data on media and Internet usage, retail shopping patterns and lifestyles.
This means you can go beyond understanding your customers just in terms of how they interact with you. Now, you can know what cable channels they watch, what magazines they read, if they use the high-speed Internet or are likely to be a satellite-dish owner, and more. This information will help you build a media strategy, develop creative copy and create strategic marketing partnerships that are relevant to your customers and prospects.
According to Ronda Dorchester, a former marketing executive with one of the nation's top cable operators and now a principal of Sadler & Dorchester Marketing and Advertising, household-based segmentation is a great way for cable companies to differentiate themselves in today's highly competitive marketplace.
"This is what direct marketing is all about — marketing to the demographic and psychographic makeup of each specific household," Dorchester said. "When it comes down to return on investment, household-based segmentation definitely pays back."
That's because household-based market segmentation makes it possible for you to deliver the right message to the right household at the right time.
There's no doubt that versioning is a bit more expensive, and it takes an investment of time. But when you see your response rates skyrocket (from 20% to 300%, when measured against a control), your marketing dollars will look like an investment instead of an expense.