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Using FastStats to create and append a bespoke customer segmentation system

Company Overview

Norfolkline are part of the A.P. Møller – Maersk Group. They operate a freight, transport and logistics business along with their passenger ferry services across 3 main routes: Dover to Dunkerque, Liverpool to Dublin and Liverpool to Belfast. In 2007 Norfolkline appointed Callcredit to create and manage a central international marketing database to provide a single view across all the Norfolkline consumer data sources. Norfolkline’s main markets are the UK, Republic of Ireland, France, Germany, Netherlands, Poland and Belguim. Norfolkline’s previous database was an operational system designed for the Freight side of the business, so it did not provide the Passenger side with the required customer insight.

Objectives

During 2008 the highly competitive Cross-Channel market saw overall passenger volumes drop by 2.67%. Since the recession began customers have become increasingly price sensitive and are seeking low-cost holidays. With a view to combating this downturn, Norfolkline’s main objective was to increase their market share through new customer acquisition, customer retention and increased frequency of travel.

The customer insight generated from this project has paved the way for more cost effective and better targeted future campaigns.

Strategy

Norfolk exampleThe key objective in 2009 was to increase passenger numbers travelling on Norfolkline ferries through repeat bookings and new customer acquisitions. If Norfolkline were to achieve this objective, the first step was to better understand the dynamics and characteristics behind their existing customer base. A previous campaign had targeted a combination of existing customers through various communication channels, and cold prospects through inserts/door drops in the South East geographical area.

The results of this campaign were analysed and the valuable insight gleaned was then used to build a bespoke segmentation system. The new system would enable Norfolkline to refine subsequent campaigns, with differing offers and marketing channels dependent upon customer type, thus improving campaign targeting and appeal to consumers.

From this a direct marketing campaign was carried out via email, flyer/insert and direct mail with a financial incentive to ‘book now’ to increase passenger flow for the summer period. The campaign prioritised mailings for segments driven by 1-4 week breaks, particularly those travelling in the summer months.

Data and Data Strategy

Prior to the segmentation build, Norfolkline (through Callcredit Marketing Solutions) created a single view of party and used FastStats Discoverer to provide an easy to use front-end tool to gain insight into historical customer interactions. The first stage of analysis focused on defining the key behavioural and demographic characteristics of individuals who have travelled with Norfolkline, some of which can be seen below:

Example Key Findings

How does duration differ by party composition? 

» Families were the most likely to take long holidays
» One way trips were dominated by single travellers
» Groups of adults typically travel on short brakes 
How does party composition influence lead time? » Larger groups require more planning and longer lead times
» Customers travelling as singles were the most ‘spontaneous’
How does duration differ by season? » Longer trips are typically taken in summer months
» Short trips are prevalent in April or December
What influenced lead times the most? » Lead time booking was the longest during key holiday planning months, e.g. January to March, for families travelling for 2+ weeks
Was there any consistency between bookings? » Consistency between bookings varies by party composition and duration, allowing for easier marketing

The findings highlighted that individuals who interact with Norfolkline in similar ways, have similar wants and needs, and therefore are likely to be responsive to similar promotions and offers, allowing Norfolkline to focus and prioritise marketing activity.

Segmentation

The first stage of the segmentation was a top-line macro segmentation, identifying the natural splits within the data. These were ‘Multi-Bookers’ vs ‘Single-Bookers’ and within these categories the two key routes: Dover-Dunkirk and The Irish Sea.

A micro-segmentation was then developed within each macro segment to identify the key behavioural differentiators. Consistent principles were employed across all solutions, which allowed marketing strategies to be followed from single to multi booker. The key dimensions employed were:

Behavioural Dimension  » Who did they travel with? 
» How long did they travel for? 
Attitudinal Dimension » How much planning is involved? 
» What additional services did they employ?
Loyalty Dimension » How often did they travel? 
» How recently have they travelled?
Profitability Dimension » How valuable were they to Norfolkline now? 
» How valuable could they be to Norfolkline in the future?

These dimensions were combined to create the final multi-dimensional segmentation solution. The Multi-Booker Dover to Dunkirk is shown below (separate solutions were developed for Single Travellers and Irish Sea.)

dashboard

Dashboards were developed to provide an overview of the key demographics and behavioural characteristics of each of the segments, including suitable marketing strategies, such as cross-sell, up-sell or reactivation, as well as timing of communications.

Project Metrics

The customer segmentation was appended to the Norfolkline customer database using the FastStats Discoverer virtual variables. The segmentation has been utilised as a targeting solution to make selections in Faststats Cascade, creating multi-channel campaigns (direct mail, flyer/insert and email) using the multi-celled campaign functionality. The success of the solution was to be determined by a series of project metrics. Firstly, Norfolkline decided to use previous direct mail and insert response activity as a benchmark to measure against and analyse the effectiveness of the new campaigns. A comparison study would indicate any significant improvements in response rates. Norfolkline also analysed the revenues that were generated from the successive campaigns to measure return on investment.

The Integrated Pure360 email tool was used to provide real time reporting to understand open-rates and understand which subject lines were most effective – quickly demonstrating how small changes such as changing ‘Dover to Dunkirk’ to ‘Dover to France’ can impact on response rates.

Example of the Pure Real Time reporting:

pure360 dashboard

Project Results

Increased Response by Segment

Response analysis from the summer multi-channel direct campaign examined how effective it was in terms of who responded, focusing particularly within each segment. Response was highest within the segments travelling in the summer months typically as families:

  • The ‘Cruising Along’ segment saw an uplift of 2.5 times the average response!
  • The ‘Ferried Families’ segment saw an uplift of 1.5 time the average response!

As well as behavioural characteristics, demographics were also seen to be driving the response rates. Those segments having short lengths of residency and residents in Council Tax Bands A-D properties showed highest uplift. In contrast, response rates for the ‘Waved Off’ and ‘Often Offshore’ segments were much lower. The analysis identified that these different demographics, often older couples, were less likely to respond to a campaign to travel in the summer months.

response index

The results of this data analysis allow Norfolkline to tailor campaigns towards different segments with specific offers, such as segments likely to book a short break.

Increased Response through Multi-channel Targeting

Additional analysis was undertaken on the campaign to understand the most responsive communication channel for Norfolkline. A variety of channel combinations were tested but overall the results showed a response uplift of 50% when email communication was used in combination with another direct media.

Campaign Cost Savings

The results analysis has enabled Norfolkline to identify and match key segments to specific offers, reducing waste and ultimately increasing response. They have been able to prioritise their use of email marketing in an overall campaign. With email currently accounting for 45% of a campaign, and Direct Mail 55%, the switch from DM to email has resulted in a 19% reduction in campaign costs, as well as reducing the impact on the environment.

Strengths of Project

The customer insight generated from this project has paved the way for more cost effective and better targeted future campaigns. Regular reviews of this analysis will ensure Norfolkline’s target marketing is kept up-to-date with changing consumer behaviour, especially in these times of consumer uncertainty!

The results speak for themselves:

  • Response uplifts of up to 2.5 times
  • A 5% increase in market share
  • Response rates averaging at 7.9%
  • A peak in response of 26.6%

FastStats Discoverer has provided increased customer insight through advanced behavioural and demographic analysis, enabling Norkfolkline to create more effective campaigns, increasing revenues and market share.

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