GUEST COLUMN

Targeted marketing: The turning point

Brands that have successfully used mass-marketing campaigns to build positive consumer images can make bigger financial gains from targeted marketing
key marketing objective is to increase retail geted marketers can identify customers with accufootfalls. Successful mass marketing rate contact information and transactional data. through mediums, such as TV, billboards This marks a turning point. Using this information and in-store advertising builds both an extensive and subsequently getting to know more about reach and a brand image that is positive enough to those customers drives a level of targeting and increase purchase consideration. But once a cusretail merchandising that goes deeper than what tomer has had a bite of your brand, marketers who mass marketing can achieve. specialise in targeted marketing are best suited to Models for success execute the next leg of the journey. Targeted marModelling helps targeted marketers make sense of keters work with smaller audiences and aim to customer-specific data collated for a huge number convert one-time customers to repeat purchase of customers. It would be prohibitively customers. They use data to identify expensive to make relevant offers to the best customers in the database, individual customers based on their and find more customers that look personal situations. So, targeted marlike your best customers. Even more keters create financial models based on importantly, they can identify those segments populated by such customer with the potential to grow their purdata. This allows them to create segchasing of your brand. As the chart ments of customers who have similar shows, the purpose of targeted marshopper profiles, and are equally likely keting is to lift and shift customer to respond. Then, marketers can target spending to lead customers to regular offers to specific segments instead of consumption, or retention. At the the entire customer database. retention stage, a company can Segmentation models yield lists of highattribute a regular spending behavvalue customers. Propensity models iour to certain customers and also help marketers determines, which cusclassify them as profitable. tomers might be interested in a new The marketing journey passes CAROLINE product line. through three clear stages: mass mar- PAPADATOS Individual customer spend curves keting, targeted marketing and cus- SENIOR VP, inform marketers of precisely when that tomer experience management INTERNATIONAL, customer is likely to have higher pur(where customers who are sold on LOYALTYONE chasing power and, hence, is best taryour brand are given more open geted. Trigger-based campaigns and appreciation and become real brand geo-targeting are other useful models. advocates). This journey is much like a funnel you advertise the brand to a large base of prospecIndia-specific challenges tive customers expecting a small number of them to proceed to product trial. An even smaller numTargeted marketing can help Indian brands get ber will become frequent repeat customers, and ahead in the competitive environments they only a handful will become brand advocates operate in, provided they surmount the followthrough social media and customer referrals. ing challenges: Balancing product marketing with targeted Know thy customer marketing: Indias best marketers are trained in In India, the common practice is to collect cusfast moving consumer goods (FMCG), and are very tomer birthdays as data points on which to build effective product marketers, focusing on brand relationship. But personalised marketing activities building, product awareness and market share mandate different sets of customer data and tools growth. When balanced with targeted marketing, than what mass marketers use. For starters, tarproduct marketers get the support they need to

ILLUSTRATION: AJAY MOHANTY

to at least one programme and 90 percent of consumers in Canada participate in loyalty programmes (source: the 2011 COLLOQUY CrossCultural Study), whereas participation in India is merely 42 percent. A data-driven loyalty programme is the engine that can carry marketers along their customer acquisition and retention journeys.

Prepare to give, to get

But, how does one do this? Reward attainability is the number one thing that changes consumer behaviour. Essentially, loyalty programmes do just that, by dangling a carrot (reward, incentive) within each customers reach in return for data. For instance, some customers want to exchange their points or vouchers for something that is tangible and functional, and to do so now. They want to monetise their relationships with your brands without delay. Another category of customers is aspirational. They are happy to hang on to their collected points until they can redeem them for merchandise, or something like a special, higherend item or a trip. A third category of redeemers are typically your very best customers. They collect points or vouchers for years and redeem them only for curated experiences like family vacations. All marketers must put a stronger focus on customer experience, in-store and through their communications. The 2009 COLLOQUY Loyalty Demographics study explored the value that different customer segments place on experience and recognition benefits like perks and privileges. It measured the gap between customer expectations and actual experiences in the programmes they participate in. The average gap between these two metrics was nearly 40 per cent. Knowing who your best customers are can help bridge this disparity. For instance, at Tanishq, Tatas jewellery brand, the best customers get opportunities to interact with senior management members and invitations to workshops regarding the nuances of jewellery making. These experiences are thoughtful and relevant to Tanishq customers. Thus, using customer analysis to define relevant experiences is not just a nice customer benefit, it is proven to increase activation rates, spend and loyalty.

A MARKETERS JOURNEY
Awareness Activation Retention Advocacy Attitude Referral Loyalty Shift Trial

Mass marketing in-store point-of-sale

Targeted marketing Customer experience management

Limited customer behavioural data: Many companies in India boast of huge customer databases, but more than 50 percent of names in those databases are either inactive or not accurate. Furthermore, the data that is accurate is not particularly predictive from the perspective of targeted marketing because it lacks detailed information on behaviour. Brands must create strategies to pick up genuinely useful data on what individual customers are buying, when and where they are buying and what they are redeeming over time.

Lift

pull the customer from awareness to retention and ultimately, advocacy. Limited locational data: Indian brands currently have limited access to data that informs them about their customers locations. However, with the explosion in the use of mobile devices, we can expect this to change in the near future. This will open up the option of using locational data to target a customer as she walks into a store or even into just the vicinity of a store. The only snag might be data privacy concerns, which are the biggest threat to location marketing in the West.

A new perception
A change in marketers perception about loyalty programmes can help the cause of targeted marketing in India. At its core, a loyalty programme is a means to capture data, not just to increase brand impressions. Each loyalty member receives a transactional device a physical or a virtual card that identifies consumer and helps track her order transactions. The good news also is that the Indian market is no where near saturated with loyalty initiatives like in other countries. For example, 74 per cent of consumers in the United States belong