Building Market Segmentation Models

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Building Market Segmentation Models
Jeremy Everham and Curtis Bixel
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Denver Is a Leading Newspaper Market Total Paid
Circulation
Source ABC Audit 3/31/02 ABC FAS-FAX 9/30/02
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Denver Ranks 1st in Household Penetration
DAILY SUNDAY
POST/NEWS Metro/NDM Household Penetration
Source DNA analysis of ABC FAS-FAX September
30, 2002
51.7 64.7
This is the 1 newspaper market in America.
The Denver Newspaper Agency provides higher
household penetration (paid circulation divided
by occupied households) than any other newspaper
in the nation - daily AND Sunday.
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New Segmentation Ideas
ACTIVE SUBS

• New methodologies based on segmentation
• Infinite possibilities in niche marketing
• Traditional mass marketing to retain penetration
  coupled with segmentation to increase smaller
  markets

PAST SUBS
NEVER SUBS
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Segmentation Opportunities

• Past Subscribers
• Non-pays
• Segment between never-pays, and once-paid but no
  renewal.
• Strategy will be to require payment in advance or
  limit their grace period, offer them lowest price
  with incentives to pay up front via credit card,
  and tie a promotion such as King Soopers
  discounts to 2 yr. credit card offer.
• Do not calls
• Segment by interest to determine the largest
  interest/lifestyle groups.
• Our strategy is to identify direct mail offers
  specifically tied to their interests.

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Segmentation Opportunities

• Past Subscribers
• Reason for Stopping
• Run counts by stop code on those who gave a
  reason for stopping
• Look at the major segments to determine if we
  need a strategy for them.
• 7 Day Sub cancellations
• Profiles by price, length of subscription,
  cancellation code, and anything else that will
  help us determine why 10-12 of this important
  segment cancel
• See if there are segments we could treat
  differently to improve retention

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Segmentation Opportunities

• Active Subscribers
• Sunday Only/Weekender Packages
• Profile using demos and lifestyle clusters to
  determine what this group looks like.
• Identify spending thresholds for high, medium and
  low level renewal rates.
• Heavily Discounted Rebilling
• Profile using demos and lifestyle clusters to
  determine what this group looks like.
• Identify spending thresholds for high, medium and
  low level renewal rates..

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Segmentation Opportunities

• Active Subscribers
• Profile of EZ Pays
• Profile using demos and lifestyle clusters to
  determine what this group looks like.
• We will then identify existing subscribers with
  the same characteristics for heightening
  marketing efforts to this group.
• Duplication with other publications
• Look at subscriber activity with other
  publications such as NY Times to identify
  multiple subscriber households.
• We will profile these to help us identify targets
  for marketing these other, non-DNA publications.

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Telemarketing Workstation
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Telemarketing Workstation

• Why Telemarketing Workstation?
• Multiple Publications
• The Denver Post, Rocky Mountain News, New York
  Times, etc.
• Integration of Outside Data
• Demographics, Clusters, Private Party Classified
  Ads
• Segmentation and Response Tracking
• Segment best acquisition leads
• Track Household Response

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Telemarketing Workstation

• Weekly Calling Plan
• 13 week NDM call cycle
• Approximately 180,000 potential /wk
• 10 week ONDM call cycle
• Approximately 15,000 potential /wk

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Telemarketing Workstation

• Monthly Calling Plan
• Extended vacations gt 30 days old
• Suspended accounts
• With previous payment
• Without previous payment - prepay only
• Positive balance gt 1.00
• Refund, restart, or donate to NIE

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Telemarketing Workstation

• Future plans
• Use Demographic data for targeted acquisition
• Use Classified data for targeted acquisition
• Free ad w/subscription
• Use Retention response data for Targeted Renewal
  Campaigns

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Niche CampaignsEZ Pay Example
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Credit Card Subscriptions

• A Market Facts survey conducted for the NAA and
  Visa USA, concluded
• Over one-third of newspaper subscribers want the
  option of paying with their credit cards
• Those most interested in a payment card are
  younger, educated, higher-income males
• A study in Presstime magazine showed a 50 higher
  retention rate for readers who pay with a credit
  card than for those who dont.
• Madison Newspapers report the retention rate on
  automatic credit card accounts is 94 after six
  months and 87 after one year.

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EZ Pay Analysis

• Database Strategy
• Develop a user profile utilizing demographics and
  lifestyle clusters
• Identify existing subscribers with the same
  characteristics for conversion to EZ Pay or for
  new household acquisition
• Database Tactic
• Identify and analyze EZ Pay subscribers in the
  database
• Report on their demographics and PERSONICX codes.
• Database Findings
• EZ Pay customers when ranked by index are
  predominantly young
• New household acquisition opportunity - this
  cluster much different than the current core
  subscriber base - acquisition opportunity
• EZ Pay customers when ranked by quantity are
  mostly middle-aged and affluent
• Very similar to the existing core customer base -
  conversion segment

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Target 1 Acquisition
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Selected Targets for Acquisition

• Urban Scramble Young professionals and
  students, urban, well educated, just beginning
  to make money.
• Interests civic and human rights
• Opinions spend money without thinking, worry
  about themselves, health is important
• Read New York Magazine, The Economist
• Finance Pay bills by phone
• 16,128 non-subs
• Career Building Under 30, single,
  well-compensated, mobile, active.
• Interests Mountain Biking, environmental
  organizations, college football
• Opinions Like magazines, trust what I read in
  newspapers, take risks
• Read Sports magazines, INC, webcrawler.com
• Finance Buying homes and condos, mutual funds,
  paying off education loans
• 12,825 non-subs

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Target 2 Retention
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Selected Targets for Retention

• Skyboxes and Suburbans
• One of the best educated and wealthiest clusters,
  often with teens at home, living in the lap of
  suburban luxury.
• 6,836 non-EZPay subscibers up for renewal
• Apple Pie Families
• Well educated, married, dual income, upper middle
  class homeowners with mini-vans, age 46 to 55.
• 5,508 non-EZPay subscribers up for renewal
• Established Elite
• No kids, enormous disposable income, rank first
  for education, home values, and home equity.
• 4,733 non-EZPay subscribers up for renewal

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Selected Targets for Retention

• Career Centered Singles
• Affluent, well educated suburbanites, dedicated
  to their careers and long-term homeowners in
  their community.
• 3,730 non-EZPay subscribers up for renewal
• Leveraged Lifestyle
• Established couples with teenage kids, mortgages,
  car loans, and the high incomes to support them,
  age 36-55.
• 3,029 non-EZPay subscribers up for renewal

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Marketing Strategy Discussion

• New Household Acquisition
• Target non-subscribers for acquisition via EZ Pay
  in the best clusters when ranked by index - young
  up-and-comers. (Target 1)
• Direct mail test of 25,000 households
• Marketing leverage points
• Offer price by the month/low price
  point/Starbucks gift card offer tied to payment
  by credit card
• Branding low price point/minimal cost

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Marketing Strategy Discussion

• Conversion of Existing Subscribers
• Target current subscribers approaching renewal
  via EZ Pay in the best clusters when ranked by
  quantity upscale, well-educated, established
  clusters. (Target 2)
• Develop communication for branding EZ Pay
  customer benefits - letter sent prior to renewal
  offer, communicating benefits
• Direct mail test of 25,000 households of best
  prospects
• Marketing leverage points
• Offer UA Mileage plus miles tied to payment by
  credit card
• Branding Heightened level of customer service
  (ease and convenience)