Since the deregulation of the telecommunications industry in the Eighties and growth of cable and mobile phone companies in the Nineties, BT has had to focus on retaining its dominant position in the market. The company has needed to remain competitive while companies such as Telewest, Cable & Wireless, Vodafone and Orange have fought it out with low-cost deals.
In 1996, BT began an intensive direct marketing (DM) campaign designed to hold on to its customers. Nigel Grimes, head of DM for BT UK, says: “BT does not necessarily always lead on price. We wanted to emphasise value for money and service, and communicate the fact that we are a cutting-edge, trustworthy company. One of the main aims of this DM campaign is to retain customers.”
Tequila Payne Stracy was appointed to the campaign in 1998. BT’s consumer division has two objectives: to make it the first choice telecoms supplier and increase revenue by promoting its full range of products and services.
The drive consists of a series of quarterly mail-shots to inform customers about discount schemes and generate transactions. These form part of a highly-personalised and complex customer relationship management programme designed to create dialogue with customers through regular mail-shots and follow-up telemarketing.
The campaign involves a vast amount of work. Angus Wrixon, associate director of Tequila Payne, says: “The operation involves six months’ planning and production work per quarter, two parallel account teams, huge amounts of data processing and zero tolerance of production defects or the disruption of delivery schedules.”
The mail-shots are sent out between bills to half of BT’s customers, who are chosen mainly on the basis of their call spend. The brochures contain a “personalised savings review” that recommends specific products and services. The tailored nature of this push means that it relies on in-depth research into customers’ calling patterns and close monitoring of their billing records.
The campaign is unusual for its size and level of personalisation. Each quarter’s mailing consists typically of eight to 12 million elements, with the message changing each quarter depending on the recipient’s circumstances and the products and services available.
Up to seven different variations have been sent out at a time, with the creative work tailored accordingly. The range of mailers, coupled with the multiple messages used, meant that in one mailing the campaign had about 40,000 variants.
The extensive number of permutations is made possible by combining the number of products and services BT offers with the company’s own customer segmentation. This is broken down into, for example, young families with no children, older families with at least one child, single people and mature customers.
Stringent quality procedures
Given the precise targeting on which the campaign is based, and the logistical complexity of ensuring messages are matched with relevant customers, accuracy is at a premium. Wrixon comments: “The personalised messages have to be checked in accordance with BT’s stringent quality assurance procedures.”
Grimes adds: “Not many companies execute that level of personalisation. We have used technology to its limits.”
Telemarketing is used after each quarter’s mailing to check that customers are using the best savings schemes for their particular needs and lifestyle. Grimes says: “If, for example, there are teenagers or Internet users blocking other people in the household from using the phone, we would suggest adding another line.” This aspect of the programme is vast in itself, with every customer who has been sent a mailer receiving a follow-up telephone call from BT’s internal call centre.
Between each quarterly mailer, BT sends customers an “Update” insert with every bill. This goes out to people who are not chosen to receive the mailer and is not personalised. Here again, distribution is on a large scale – 22 million mailings per quarter.
Wrixon says: “The ‘Update’ is a low-cost but highly efficient piece of communication. The medium – its inclusion in the bill – can be more powerful than DM.”
As the programme is ongoing, BT is able to monitor customer response and apply this data to refine the campaign’s targeting, and smooth research and production processes.
BT uses a number of means to measure the success of the campaign. First, the value of transactions is assessed – this is a straightforward measure of the response rate, and the sales generated for individual products and services.
Second, BT tracks the campaign’s influence on attitudes to and shifting awareness of both the company and the programme.
Here BT uses control groups to measure how effective the campaign’s frequent contact is. According to Wrixon, the results show that the more people are communicated with, for example, four quarterly mailings rather than one or two, the more they respond. This research also assessed the attrition rate to follow the campaign’s effect on the number of customers churning.
Lastly, BT measures the long-term loyalty effect of the campaign – the extent to which it influences customers’ phone usage and product holding. Through customer opinion surveys, BT receives feedback from customers about issues such as value for money.
Wrixon reports that the campaign achieves on average a more than 17 per cent response rate, a figure which is high for DM. He attributes this good response to the fact that the campaign is centred on information about savings schemes. He says: “The results reflect the fact that people respond when given the opportunity to save money. We optimised their calling circle and advised how they could actually save money by adding more telephone numbers.”