Which Customers Should I Mail? Using Purchase Data For Direct Mail Segmentation

When you’re creating a direct mail campaign, it’s important to determine the right prospects for your promotion. Gone are the days of using a blanket approach, the data we can collect today allows us to be a lot smarter about targeting.

Why Consider Who I Send To?

Effective targeting has various benefits, helping marketers to improve on KPIs and keep to strict budgets. Here are some of the factors you can influence by determining a specific audience:

Reducing Cost

Carefully selecting the right prospects rather than mailing to your entire customer list can cut down the cost of the overall campaign. You’ll reduce mailing expenses, as well as reducing production and print requirements.

Increasing Engagement

Sending the right messages to the right people should increase engagement, meaning you will get a better response rate.

Better ROI

If you target your campaign effectively, you should see an increased return on investment. Successful targeting should both reduce costs and increase engagement, so as a result the return on investment of the project should be higher.

How To Segment Your Data

Most businesses have some data about their customers they can use to help them form specific groups to target. Ecommerce records can be used to determine specifics about a customer’s order history or spending behaviour. Analysing purchase data is key to discovering who should be receiving which marketing campaigns.

Tools - Excel

Simply creating an excel spreadsheet can help you locate the details of the customers you are looking for. Using the sort and filter functions you can organise records dependant on a specific metric or dataset, and then isolate records that meet your criteria.

Data Cleansing

Once you’ve found a subset of customers suitable to send your latest mailer to, cleansing the data is good practice. Even if you’re using house records that you feel are up to date, customers may have recently moved address or changed their details.

Mailing to incorrect addresses when you have carefully targeted the right recipients will cloud results and impact on your budget, so it’s best to make sure any inaccurate records are removed.

Top Targeting Methods

The key customer groups to target based on purchase data are actually quite simple to define.

Recency

People who have ordered from you recently are more likely to order again. Keep it simple and try a direct mail campaign specifically for recent customers. What is classed as ‘recent’ will be specific to your business, but as a general guide try people who have ordered in the last 6 months.

Frequency

It comes as no surprise that customers who order from you frequently are more likely to respond to your marketing campaigns. Use your data to segment frequent buyers and you might get a better response rate coupled with multiple orders from each converted recipient. Once again, it’s best to use your own data to work out your customers average order frequency and classify frequent buyers as those who order more often than your average.

Level of Spend

How much a customer usually spends with is a good indicator of their future spending habits. Segment higher spenders if you’re hoping to sell a more expensive product or service. Calculate your average order value to make sure you know what falls above and below the norm.

Seasonality/Timing

Perhaps you sell a product or service that people only need at certain times in the year, or renew annually. If this is the case, don’t waste your budget mailing people at the wrong time. Focus on those who are coming up to their renewal or repeat purchase window.

Product Category

If you sell a varied range of products, and you’re planning a campaign that focuses on one product area, find out who has purchased that type of product before. After all, they are more likely to buy something similar!

Reactivation

Customers who haven’t bought from you for a while might be a tougher audience to crack, but a mailer might be just what they need to bring them back. Calculate your customer lifecycle and target ‘lapsed’ customers with a tailored offer.

The broad groups above provide a great starting point for segmentation based on purchase history, and testing and refining your approach will help you to learn what works best for you. Depending on the size of your data set you might stick to using the targeting methods above, or choose to define extremely specific groups based on a combination of different purchase indicators to mail to.

Test, Learn and Improve

Sending a targeted direct mail campaign is only the first step. Record your results and learn from them. If targeting recent buyers worked well, could you expand your ‘recency’ criteria from 6 months to a year? Or if you reduced it to only 3 months, could you cut costs even further and get an even stronger response rate?

The only way to answer the questions above is to test them out, the answer will be different for each and every business. Take a systematic approach to this process and you’ll soon find you’re honing your targeting down to a fine art.

Enjoy experimenting with purchase data segmentation, after all, its valuable information that you hold about your customers that nobody else does. Make sure you make the most of it!