Customer Profiling and Analysis: Part 1 - An Introduction

Direct Marketing has always been about maximising the Return on Investment (ROI), however, in both the past and present many Direct Marketers have lost sight of this objective in the Customer Acquisition race. The current financial climate and 'Credit Crunch Britain' may just see the resurgence of ROI at the heart of Direct Marketing (DM) plans being developed by Marketing Departments across the country.

The single most significant way of maximising your ROI is to take advantage of the knowledge you hold on your existing Customer Database. Profiling and Analysis can take many forms from a simple comparison of your Customers against a Universe of Data to in-depth Transactional and Basket Analysis.

A simple Customer Profile is most commonly used to aid the acquisition of data, enabling the Marketing Department to pinpoint with more accuracy the best prospects to target. This reduces the cost of Prospect Acquisition without dramatically reducing the number of responses received, and therefore, increasing the ROI.

Direct Marketing Agencies holding a Universe of UK Businesses are able to enhance your Customer file with information such as SIC Code, Employee Size and Turnover etc. By comparing these variables with the same Universe file we are able to establish the types of businesses you have succeeded in attracting as customers and apply this knowledge to prospect selection.

A strong Customer Profile combines complicated calculations, which take into account statistical anomalies, with easy to view and easy to understand reporting for the client. The main benefits of a Customer Profile are:

• Increased understanding of your Customer Database
• Easy to understand reporting
• Improved Prospect Acquisition
• Reduction in cost of Prospect Acquisition
• Higher Response Rates
• Maximising the ROI

This entry-level Customer Profiling is ideal for small-medium companies looking to increase ROI whilst reducing costs in these economically difficult conditions. Rather than "retreating to the trenches" in these times of economic uncertainty, carrying out well targeted DM campaigns could see this period turn into one of opportunity.

In the next few weeks I will be looking at more detailed Customer Profiling, Customer Segmentation and Transactional Analysis.