Database Marketing Fundamentals Targeting, Tracking, Evaluating Response July 22, 2009 Joanne Steller TRG Vice President, Strategic Communications

2 Direct & Database Marketing  Direct Marketing Messages sent direct into homes Drive purchases through “call-to-action” E.g.: Direct Mail, Telemarketing,  Database Marketing Deploy database for tailored communications Analysis-basis for targeting likely prospects Data Warehouse stores information

3 Successful Database Marketing Target Test Track Assess Response Refine / Repeat

4 Targeting: The Who Rules  Message Language Offer  Contact Channel Direct oPaper oElectronic Mass media  Carrier Personalized communication Catalog/brochure Paper/electronic/both?  Scope of Contact Quantity Frequency Timing

Slide 5 Numbers of Patrons Revenues

6 Targeting Techniques Geography Demographic Past Behavior Predictive Modeling

7 Geographic Selection  Where do patrons live? By zip and SCF Volume and % of Population By segment --different audiences /same regions?  Target opportunity areas Most likely to respond Eliminate waste – why mail Alaska? 12.0 Mi

8 Demographic Targeting PRIZM - Urban Uptown Young DigeratiBohemian MixMoney & Brains  Who are your patrons?  Do your offers appeal to certain life-stages?  Use demographics to filter or qualify your selection

Targeting Past Behavior  Buyer type segmentation Renewal Reactivation  Response analysis Key coding (manual) Response reporting (electronic)

10 Predictive Model Re-segmentation Example Segment: Long Lapsed N=25,000 Response=25 Response %=0.1% Avg. Order: $350 Total $: $8,750 Cost/Piece: $0.40 Expense: $10,000 Cost-of-Sale: $1.14 Segment: Enhanced Long Lapsed N=10,000 Response=20 Response %=0.2% Avg. Order: $350 Total $: 7,000 Cost/Piece: $0.40 Expense: $4,000 Cost-of-Sale: $0.57

11 Enhanced Targeting: Test  Mitigates risk Never 100% right/wrong  Refines approach A / B offers Measure both  Higher short-term cost-of sale More contacts, versions Lower per patron investments likely  Better long-term response

12 Evaluating Response for Improved Responsiveness  Compare: Who/how many contacted Who responded / how much achieved  Requires advance tracking plan Key codes before printing Target list order before distribution  Relies on assistance Collecting, tabulating key codes System or outsourced response analysis

13 Key coding: Do response analysis yourself  Assign code  Ask for, record code at point of order Ticket office Phone Online  Tabulate results  Evaluate results Number contacted vs. results achieved  Good basic technique Can be done in-house Little/no $$ expense Required time investment  Provides directional analysis Sound, just not exact Gaps: actual vs. reported results

14 Response Reporting: Deploy systems, services for analysis  After campaign Match-back, back test  Electronic examination HH contacted HH who bought  Detailed measurement Segmentation Units of sale Sales revenue  Service or system provided  Deep analysis possible Degree of response By segment / portion ROI – spend effectively

15 Response Rate Tracking Over Producers Non-Producers Under Producers