Post on 07-Dec-2014
description
Jennifer Schulties Martha Stewart Living
Keith Bergendorff Publishers Clearing House
Mary-Jo Checco Alliant
To Increase Response, Payment and Retention
LifecycleModeling
can improve marketing results
at every customer touchpoint
1A single predictivemodel
direct mailalternate
media
upsell/cross-sell
acquisition
online store
reactivationretention
The right segmentation tool identifies the behaviors that drive profitability across the
business
Martha Stewart Living Omnimedia
Jennifer SchultiesSenior Marketing Manager
• Poor payment on sweeps• Deteriorating bottom-tier response on direct mail
• Shifting renewal behavior• Unfavorable insert card/onsert metrics
Martha Stewart Living Omnimedia
Business Challenges
Martha Stewart Living Omnimedia
Daily Sweepstakes
Payment
Pros• Partner-driven• Exposes brand to
new audiences• Traffic-driver for
site• Promotes trial issue
of magazine/ generates gross subs
Cons• Less targeted• Low payment on
sub offers
Daily Sweepstakes Payment
Martha Stewart Living Omnimedia
Solution:
Use “Mega-Model” to find “good” payers
What does a person who pays for a magazine look like?
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Mega-Model Insight:Have they paid for other products?
How recently?What kinds of products?
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Mega-Model Insight:• 45% of sweeps
responders were deemed “good payers” from the model
• “Good payers” pay twice as well as the “bad payers” overall
1 2 3 4 5 6 7
Good Payers Bad Payers
Payment Rates per Billing Effort
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Direct Mail Response
Martha Stewart Living Omnimedia
Pros• 32-pages of
content is compelling
• Free trial offer yields high gross orders
• Premium and combo offer on payment pushes high payment
Cons• Payment is delayed• Lowest tier not
performing well enough, but mail volume needed
Direct Mail Response
Martha Stewart Living Omnimedia
SolutionUse Mega-Model to find the worst responders
before they respond…
…and make them an offer they can’t refuse.
Martha Stewart Living Omnimedia
Direct Mail Response
Use Mega-Model score groups to strategically increase response by:
• Lowering prices• Adding premiums• Shortening terms
We’re talking about magazine subscriptions, of course…
And if that doesn’t work…
Martha Stewart Living Omnimedia
Direct Mail Response
Use score groups to selectively cut costs
• No premium• Shorter bill series
• Less expensive direct mail package
Martha Stewart Living Omnimedia
Direct Mail Response
• Removed premium (cost cutting) and took $1 off subscription price (incentive) on modeled names
• Test of bottom tier saw impressive gross response
• Payment suffered with lack of premium
Martha Stewart Living Omnimedia
Direct Mail Response
Additional Applications for Mega-Model
• Cut bottom tier from mail altogether
• Mine marginal compiled lists or other large universes for best names
Martha Stewart Living Omnimedia
Direct Mail Response
Renewal Behavior
Martha Stewart Living Omnimedia
Challenges• Everyday Food offered as a “combo” subscription with Martha Stewart Living
• Everyday Food shares in the revenue, but is perceived as FREE
• Even though acquisition offer is a combo, the titles are renewed individually
• Renewals of EF are good, but at a discounted price
Renewal Behavior
Martha Stewart Living Omnimedia
SolutionUse Mega-Model to:• Segment out best prospective renewers
• Offer a slightly higher price to help bridge the gap in revenue
Martha Stewart Living Omnimedia
Renewal Behavior
Mega-Model Test Results• Tested a 60% increase in price to best prospects (from $5 to $8)
• Higher price increased revenue by 11% vs. control, but reduced response by 30%
• Testing continues as we determine what our end-goals are (revenue vs. orders)
Martha Stewart Living Omnimedia
Renewal Behavior
Challenges• Declining response in subscription cards
• Rising paper costs• Still a large enough source of subscriptions, so don’t want to cut completely
Insert Efficiency
Martha Stewart Living Omnimedia
Mega Model Application
Group Net Index1 1202 1153 1144 1095 1066 1157 948 1069 10510 10511 9412 9613 9514 9715 9316 9117 9118 9619 7920 51
Take inserts OUT of the issue copies going to LEAST responsive names
Insert Efficiency
Martha Stewart Living Omnimedia
• Daily Sweepstakes Payment
• Direct Mail Response• Renewal Behavior• Insert Efficiency
One Model, Many Solutions,Higher ROI
Martha Stewart Living Omnimedia
Publishers Clearing House
Keith BergendorffAssistant Vice President of Analytical Services
• Convert prospects into long-term customers
• Order response and payment rates for prospect mailings in decline
• Attaining profit goals requires shifting consumers to high-margin merchandise offers
• Extend PCH business across media channels
Business Challenges
Publishers Clearing House
Mail ProspectOrder
Screening
Publishers Clearing House
Challenges
• All PCH mail offers are Bill-Me so managing payment risk is essential
• PCH needs included:– Ability to qualify responders for Bill-Me offers– Improvement in pay rates on “sub-standard”
lists
• Tests of scoring lists prior to mailing ineffective
Mail Prospect Order Screening
Publishers Clearing House
Solution
• Required a tool to improve fulfillment decisioning
• Tested and rolled out with custom Alliant profitability model applied at order stage
• Combined profitability score with re-developed PCH internal payment model to create a “Behavioral Profitability Score”
Publishers Clearing House
Mail Prospect Order Screening
Publishers Clearing House
Mail Prospect Order Screening
RESULTS: “Mail Prospect” Behavioral Profitability Score
• Substantial increase in prospect mail volume– Back-end score allows expansion into mail lists
and segments not previously viable due to low pay
• Substantial increase in new paid buyer generation
• No significant deterioration in pay-up rate!
• Combined score generates significantly higher margin dollars than single internal scoring solution
Publishers Clearing House
Mail Prospect Order Screening
“One-Timer”Segmentation
Publishers Clearing House
Challenge
• Speed is a key factor in successfully re-promoting new mail buyers
– Response declines rapidly with time elapsed before first customer mailing
• Was not viable to re-mail new buyers until first payment received (6-12 weeks after order)
• Internal payment model anemic due to lack of predictive data for new buyers
Publishers Clearing House
“One-Timer” Segmentation
Solution
• Reapply Alliant profitability scores already appended to all responders
• New internal model uses Alliant scores to create a new One-Timer Behavioral Profitability Score
• One-Timer score allows for payment segmentation
• Huge improvement vs. previous internal model using only transactional data and demographics
Publishers Clearing House
“One-Timer” Segmentation
RESULTS: “One-Timer” Behavioral Profitability Score
• Enables mailing the highest scoring half of new One-Timers without waiting for payment
– Reduced interval between first order and first customer package from 6-12 weeks to 3 weeks
• Significant increase in overall order response and conversion to Repeat Buyers
• Lift in order response and future value more than compensates for decrease in overall payment rate
Publishers Clearing House
“One-Timer” Segmentation
Online ProspectScoring
Publishers Clearing House
Challenges
• Payment rates for online orders abysmal
• Publishers unhappy with paid subscription rates
• Can’t offer merchandise and make a profit
• Insufficient internal data to identify who is appropriate for Bill-Me offers
• Order screening improved pay rates, but it’s not good marketing to solicit orders and then reject them!
Online Prospect Scoring
Publishers Clearing House
Solution
• Apply scores from same Alliant profitability model in Real Time at sweeps registration
• Combine profitability scores with internal Real Time model to create “Ensemble Model”
• Use Ensemble Model score to segment offers– “Prime” names get merchandise offers– “Restricted” names get magazine offers– “Lows” receive partner offers only
Online Prospect Scoring
Publishers Clearing House
RESULTS: “Ensemble” Behavioral Profitability Score
• Targeted offers in online path and email deliver:
– Much improved profitability for merchandise sales
– Much improved pay rates for subscription sales– Minimal rejection of orders on back end– “Lows” routed immediately to partner email
programs, improving partner revenue
• Quality of new acquisition sources can quickly be evaluated via average profitability score
Online Prospect Scoring
Publishers Clearing House
• Mail Prospect Order Screening
• ‘One-Timer’ Segmentation
• Online Prospect Scoring
Profitability Scores +House Data =Increased ROI
Publishers Clearing House
Questions & Answers
Mary-Jo Checco
Jennifer Schulties
Keith Bergendorff
Lifecycle Modeling to Increase Response, Payment and Retention
Thank You!
Mary-Jo Checco
Jennifer Schulties
Keith Bergendorff
Lifecycle Modeling to Increase Response, Payment and Retention