Direct action wins the day

The Fourth Annual IDM/Experian Business Performance Awards attracted high-quality finalists covering a wide range of business disciplines.

Direct marketing has become a formidable part of UK business and in some industries has become the cornerstone of commercial growth and development. It is hardly surprising that in such circumstances the quality just gets better and better.

As we move into spring I find myself looking forward to reading the entries and joining my colleagues in selecting the top awards.

All of us share a common interest in ensuring that the prizes reward those entries that achieved the best possible balance between innovation, proven effectiveness and the use of a carefully constructed business plan.

Direct marketing is all about reaching out and touching customers. When properly crafted, customers welcome the opportunity of considering products and services which in many cases will be new to them.

For an entry to reach the list of finalists is no mean achievement and is an accolade in itself. All finalists have demonstrated that they are worthy of consideration for the Gold Award, which brings much esteem to the businesses, their agencies and to our profession.

The finalists this year covered the full spectrum both in terms of the business they came from and from the actual use of direct marketing. One entrant was a business centred on the use of a doorstep salesforce which transformed itself into a prosperous successful enterprise based on direct marketing. There was also a manufacturer that challenged a market-leading household name and succeeded in building a significant market share.

Competition in business is growing ever stronger, none more so than in financial services, and our finalists from the credit card business and private medical insurance showed clearly what can be achieved in very difficult markets.

It was great fun reading all the entries and the competition for the top prizes was intense. I am appreciative of all those who entered. The winner of the gold award this year comes from a different background from previous winners and joins a very select group. To them, and to all the other finalists, I offer my congratulations.

Trevor Hilliard, Managing director, Argos Financial Services

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Experian is delighted to continue its support of the IDM Business Performance Award. These awards have become synonymous with excellence in the gathering and application of data to improve business performance.

Direct marketing has long been heralded as the one of the most measurable disciplines within marketing communications. New media technology and techniques are making it even more accountable in a real-time and dynamic environment.

I was personally impressed with the high standard of all of this year’s entries; they demonstrated excellent strategic thinking, expertise in direct marketing and an effective application of the latest techniques. It is this combination of factors that will ensure that all of this year’s entrants are capable of sustaining continued growth and improved business performance.

David Coupe, Managing director, Experian’s Marketing services division

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GOLD AWARD WINNER

CLIENT: Saab Great Britain

AGENCY: Lowe Live

CAMPAIGN: Saab v Letting Go (24-hour test drive)

Saab faced the challenge of maintaining sales and increasing its market share in the premium car market – a sector in decline. By focusing all its marketing activity around a 24-hour test drive, the company was able to reduce its rate of decline relative to competitors and increase its overall share. Return on investment for its integrated campaign through 2000 was 4:1.

The judges praised the campaign as a good example of an integrated campaign. Saab used both onand offline media to encourage prospective clients to visit dealerships. The campaign had a powerful call to action which was central to all its communications, and by using direct marketing, Saab held its ground in a receding market. The judges recognised a great campaign that utilised the benefits of the product, and was more effective than its rivals’ despite a lower spend.

As the smallest manufacturer in the sector, Saab does not have the massive marketing budgets other car marketers have at their fingertips. This meant potential buyers were less aware of the brand and unlikely to consider it when choosing a premium car. Saab had the lowest awareness and consideration scores of any manufacturer in the sector.

During 1999, brand-building direct marketing, alongside press and outdoor ads, were used to raise awareness. The campaign aimed to generate prospective buyers by educating target consumers about Saab and introducing it into their repertoire of car choices. Awareness rose by five per cent to 29 per cent, its highest point in two years. However, only 17 per cent of responses were for test drives.

In 2000 Saab made a significant departure from its usual marketing tactics. It introduced the 24-hour test drive – a first in the premium car segment – and made this the focus of all communications. This leveraged the fact that test drives have a very high conversion rate for the marque: 4:1.

A major obstacle for Saab was its shortage of data for direct marketing. Most target information, such as existing premium and aspirer model drivers, had been exhausted and was performing badly. Response data from the 1999 activity was used as a prime source and Claritas and Experian developed models which combined attitudinal profiling with financial capability to buy a Saab. Affinity data was also used.

The creative concept for all media was the idea that “after 24 hours, you won’t want to give it back”. The first direct mail pack, sent in the first quarter of 2000 to cold and warm prospects, used “Letting Go” as its theme. A microsite was created on the Saab website where prospects could complete an online test-drive request form. The pack was also inserted into lifestyle magazines.

Specific product campaigns were run throughout the year. In the first and third quarters, for example, direct mail for the Saab 9-3 diesel challenged perceptions of diesel cars. This was supported by outdoor posters and press ads.

In the second quarter, mailings were sent for the convertible – Saab’s most popular model and the one with the highest proportion of female owners. Postcards were also distributed through gyms and bars. In the fourth quarter, the 9-5 Saloon was promoted, using the aspirational qualities of the car and the theme of “one day”.

Saab used promotions with different incentives aimed at particular target consumers, from Swiss army pen knives to prize draws for skiing holidays, to sponsorship of Classic FM. Saab won the support of its dealership network by explaining the campaign and providing a dedicated fleet of cars to meet the increased number of test drives.

The volume of leads generated into test drives rose more than fivefold, from 3,469 in 1999 to 19,744 in 2000. Direct mail response rates rose to 3.1 per cent – with peaks as high as four per cent. Response was just 0.6 per cent the previous year. And a much greater proportion of these leads were from high priority prospects who intended to purchase within the next three months.

Forty-four per cent of all responses were made through the Internet. Click-through rates for banners reached 0.9 per cent, compared with industry averages of 0.4 to 0.7 per cent. During the campaign in the fourth quarter, click-through rates from banners and e-mail reached 13 per cent. The online test-drive form had a three per cent completion rate.

Significantly, the cost per response for the campaign fell by 41 per cent to £39. Despite a 4.63 per cent overall sales decline in the premium car market, Saab’s sales volumes fell by only three per cent. Its market share rose from 9.90 per cent to 10.05 per cent.

SILVER AWARD WINNER

CLIENT: Scottish Friendly Assurance

AGENCY: WWAV Rapp Collins Scotland

CAMPAIGN: Scottish Friendly Bond

A rigorous test-and-development programme of direct marketing (DM) has enabled Scottish Friendly to reinvent its business model since 1993. It has been able to expand its market geographically and demographically. DM now contributes 77 per cent of sales, despite a decline in consumers’ interest in saving.

The awards’ judges noted the sustained DM effort over a long period that gained momentum in the past three years. They believed that Scottish Friendly has been successful in a sector that requires time to build trust among clients. Results have been achieved through using loose inserts, a technique which the competition had failed to exploit successfully.

The core product offered by friendly societies remains the tax-exempt savings bond. Customers can put £25 per month into a plan without incurring Income Tax. Since 1992, legislation has allowed companies to offer a wider range of financial products, although the tax-free bond remains the main competitive advantage.

Demographic changes have meant that the core market has been reduced. Customers were historically recruited door-to-door – in 1993, this channel accounted for 91 per cent of sales. Scottish Friendly decided to use DM to reach new markets with its core product, moving upmarket nationally rather than regionally.

Loose inserts have been the central route to market as these were relatively unused by competitors. Inserts are also an ideal test medium.

With a low-value product, it was essential to achieve an acceptable return on investment. Initially, this meant recouping 100 per cent of marketing costs from first-year premiums. This has evolved towards objectives for volume-of-sales and cost-to-sales ratios.

An expanded product range has played a role in meeting these objectives. In 1997, the Child Bond – a savings plan for under-18s – was launched as a stand-alone product. In 1998, a ten or 15-year with-profits regular savings plan called Prosperity, and a lump sum with-profits bond (Growth and Security) were introduced.

Rigorous coding and tracking of response has been central to improving the effectiveness of campaigns. This led to an unusually low level of response which cannot be allocated to a specific campaign, at just 0.5 per cent.

An initial test saw 1.5 million inserts in national press, supplements and magazines. Total spend was less than £70,000. During the next seven years, key areas for testing have included media type, media title, frequency of insertion, region, response incentive, and creative treatment.

Scottish Friendly now uses about 80 million inserts each year in six-monthly campaigns. Three control creatives and three tests are in use. Magazines and product despatch have become the central media. Fulfilment strategies have also been tested, developing from a single pack to a three-stage programme. This has had a dramatic effect on conversion rates.

Total insert volumes have grown, while response rates have declined from over 0.3 per cent to about 0.125 per cent. But in the same period from 1993 to 2000, conversion rates have grown to over 20 per cent, while net percentage achieved (marketing spend against first-year premiums) has grown from 100 per cent to over 160 per cent.

Other media have also been introduced. Press advertising spend has risen to £500,000 in 2000, recruiting 11,000 customers. Cold DM is being tested, while a website introduced in 1998 contributed £500,000 of sales last year. Direct response TV (DRTV) is being tested, as are door drops.

A database of 500,000 enquirers and nearly 100,000 customers has been built. A segregation exercise was undertaken defining ten customer types in four categories according to current and future value.

DM contributed over £12m in sales last year, while the cost-to-sales ratio has fallen to about 50 per cent. Scottish Friendly has pushed its customer profile upmarket. As a result of the volume of leads generated, Scottish Friendly has restructured, recruiting new business staff and introducing a call centre.

SILVER AWARD WINNER

CLIENT: Kimberley-Clark

AGENCY: Relationship Marketing International

CAMPAIGN: Huggies Mother and Baby Club

Faced with a large rival that dominated existing customer recruitment channels, Huggies introduced an information-based club for pregnant women and mothers of young babies in May 1998. The key factor of using marketing partners has seen the club grow to be the largest of its type in the UK, with over 800,000 members since inception. Huggies was the fastest growing packaged goods brand in the UK last year, more than doubling its market share.

The judges applauded this example of how a new entrant, by using a direct marketing strategy, can penetrate a sector dominated by one major player. They recognised the strength of a campaign built on a unique proposition – an asset that is sustainable in the long term and difficult for rivals to replicate.

Huggies entered the UK in 1991. It had to overcome the market dominance of Pampers – the de facto choice for all mothers. As a result of aggressive advertising and sales promotions, Huggies had gained a 17 per cent market share by 1997. However, growth levelled with little improvement in the subsequent two years.

Lacking the size of its competitor’s advertising and promotional budget, Kimberly-Clark recognised that it had to “think its way to brand share increase”, rather than relying on increased spending. Pampers had an aggressive sampling programme through hospitals and heavy couponing in the early stages of motherhood, blocking obvious routes to cracking the market.

The target market was the 750,000 new births each year. The key marketing moment was after the first scan, when the reality of becoming a mother hits home. Research revealed that first-time mums felt elation, but also fear of the biggest physical and lifestyle change they can experience. They have a thirst for knowledge, but the huge range of information available was hard to digest and not available in a single source.

To increase trials and customer loyalty, these emotional needs had to be met, rather than relying on discounting to influence future buying behaviour. This meant gaining awareness and credibility prior to the first purchase of nappies.

A relationship programme was devised to deliver information at key times during pregnancy and early motherhood, giving the brand saliency in a non-sales environment. This was delivered through objective information sent to club members every eight weeks. Partner brands were selected as recognised experts in their sector to underpin the credibility of the information – research had shown that consumers would not trust a nappy manufacturer alone.

New mums are recruited through Emma’s Diary – distributed by GPs to pregnant women coming for pre-natal checks – and the Bounty Pregnancy Guide – distributed through hospitals at scans – and other baby press and word of mouth.

Key data captured at this stage includes due date or birth date, whether the mother is having the first or second baby, and their propensity to purchase Huggies at this stage. Birth date is used to target the right information and product offers at each stage. The content and tone of the packs is varied to reflect the different needs of first-time mums against subsequent pregnancies.

By asking about propensity to purchase Huggies, different sample and coupon values are used, offering a higher incentive to those with the intention to buy a rival brand. As a result of this data, 34 different packs are used in the programme.

Care has been taken to deliver a creative platform in which information can be absorbed and believed, while also catering for partner brands. Information is free, authoritative and relevant. The design is clear and comprehensive.

As a result of the Huggies Mother and Baby Club, 40 per cent of all mothers giving birth are registered members. Market share among members is 41.1 per cent against 25.2 per cent for non-members, while among first-time mums the share is 39.4 per cent compared with 29.1 per cent.

Market share has risen from 17 per cent in 1998 to 36 per cent in 2000 and the club has been recognised as one of three cornerstones for driving profitable incremental brand share, alongside product placement and product improvements. Return on investment is 125 per cent. The club has been established in France and will be introduced in Italy, Russia and Holland.

HIGHLY COMMENDED

CLIENT: BUPA

AGENCY: N/A

CAMPAIGN: BUPA Heartbeat

The private medical insurance (PMI) market had been in decline for four years, with a one per cent fall in the number of subscribers. To tackle this, BUPA rationalised its PMI product range into a single product and took a customer-centric approach to its business processes.

The judges recognised an example of a market leader going “back to basics” in direct marketing. BUPA radically changed the way its products are developed and sold. The judges praised this genuine example of placing customers at the core of its business and were confident that, although too early to measure, results will be impressive.

BUPA ran a four-stage development programme that had customer research at its heart. In stage one, two sets of qualitative research were undertaken among customers. The data showed that customers wanted: BUPA to keep its promises, access to BUPA when they needed, flexible and tailored products, and value for money.

A quantitative survey among 1,342 consumers was used to define the customer proposition. This revealed eight consumer groups with differing healthcare needs.

From this research, the customer proposition was developed. Senior managers proposed a tailored health plan and delivery service, which could be adapted at any point. This would be based on a proactive relationship with customers, positioning BUPA as a credible and trusted adviser.

This required a complete shift in the company’s business practices, pulling all strands of the commercial group together and creating a single customer database. A personal contact centre was established, with staff trained to manage customer relationships. It was also recognised that providing reassurance during any episode of care was an essential part of customer service.

The customer-focused processes were benchmarked during a research weekend using existing customers; the response was very positive.

The campaign was launched with the aim of generating 22,000 leads in three months from direct response ads and inserts, as well as a 500,000 direct mail shot. Response exceeded the target by nine per cent with a higher than predicted conversion level. Hits on the website also rose by 400 per cent, reflecting a decision to offer online applications for the first time in this sector.

FINALISTS

CLIENT: PPP Healthcare

AGENCY: CKBT

CAMPAIGN: Best of Health

Lapse rates for personal private medical insurance (PMI) were rising within a stagnant sector. To maintain share and profitability, PPP Healthcare recognised the importance of customer-retention marketing. It aimed for a two per cent reduction in attrition over two years and an increase in the level of cross-selling of other products offered by PPP Healthcare.

A personalised loyalty programme was introduced using propensity models with behavioural and transactional data.

Relevant information, third-party partnerships and a health information telephone line were all used, with a quarterly direct mailing programme.

Database segmentation helped to reveal key customer clusters and lapsing indicators. As a result, the lapse rate was reduced by 24 per cent in the first year.

FINALISTS

CLIENT: BSkyB

AGENCY: Finex

CAMPAIGN: Sky Transition 2000

Moving analogue subscribers onto digital services was a key business objective for Sky. The success of its digital launch encouraged it to pursue a quicker transition process, aimed at reducing the number of analogue subscribers among its 4 million customers to under 400,000 by summer 2001.

An integrated campaign using direct mail, outbound telesales and TV advertising was used. The customer database was segmented to phase the campaign and maximise return on investment. This led to 1.9 million customers being assigned to 81 separate cells.

The campaign exceeded the target for moving analogue customers to digital, while also helping to reduce churn to 10.5 per cent.

FINALISTS

CLIENT: Jigsaw Consortium

AGENCY: Publicis Blueprint

CAMPAIGN: VoilÃÂ!

VoilÃÂ! is a direct marketing programme based around a magazine that is mailed three times a year to target customers on the Jigsaw database. It allows the consortium members – Unilever, Kimberly-Clark and Cadbury – to have complete control over the medium in which they promote their brands through editorial content and advertising.

The programme exchanges fresh ideas and special offers on products for personal data on consumers. The commercial objectives are to increase profits by increasing the share of purchase among high-value consumers. With a circulation of 1 million, driven by a scoring model applied to the whole Jigsaw database, the impact has been significant – 42 per cent of recipients of VoilÃÂ! say they have bought something as result of reading the magazine.

FINALISTS

CLIENT: Egg

AGENCY: Lowe Live

CAMPAIGN: Egg card launch

Egg was launched in 1998 as an Internet-only proposition, leading on its savings product. Using its brand attributes – modern thinking with a youthful, technology-friendly and approachable image – Egg wanted to appeal to a younger and more affluent market. The Egg Card was launched in 1999 to achieve this positioning.

With a tight launch schedule, a campaign was developed, which created a distinct personality for Egg Card. DM was used as it offered the best fit between the target audience and creative executions. Targeting involved selecting variables against a range of lifestyle and affinity lists to identify two distinctive prospect groups. Banners and inserts also ran alongside launch TV ads.

The campaign succeeded in generating 700,000 new customers.

FINALISTS

CLIENT:John Grooms

AGENCY:Alchemy Direct

CAMPAIGN:John Grooms Christmas Appeal

Charity donors want to keep giving, but they also want to feel good about doing so, rather than feeling obliged to. This creates a serious issue around the creation of appropriate communications. In preparing the Christmas 2000 supporter appeal for the John Grooms charity, these considerations led to an innovative approach.

This was the first time that values-based marketing was applied in the charity sector. Using individual questionnaire information to create a postcode-level system, seven social value groups were applied to the support base. The result was a 59.5 per cent uplift in income compared with a control pack.

Further testing of values-based copy targeted to these segments generated an uplift of 78.6 per cent. The return on investment was 6.05:1.

FINALISTS

CLIENT: Forte Hotel Group

AGENCY: DP&A

CAMPAIGN: Moments Membership Scheme

The hotels market is saturated with points-based loyalty programmes, most of which are undifferentiated and with poor communications elements. The target for these schemes is frequent-travelling businessmen who account for 65 per cent of average hotel revenue. Half of this group say their choice of hotel is heavily influenced by reward programmes.

Forte Hotels decided to consolidate its six existing loyalty schemes into a single programme. Moments.com was launched with a higher points rate, no limits on time or location of redemptions, and a data-capture programme to ensure individual preferences can be met.

It has recruited 200,000 participants, of which 72 per cent are active, with an average transaction value of £307 – 74 per cent higher than non-scheme members.

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JUDGES

Nigel Ludlow

Managing director, The Economist Intelligence Unit

David Jones

Chief executive, Next

Graeme McCorkell

Marketing consultant

David Coupe

Managing director Experian, Marketing services division

Annie Swift

Publisher, Marketing Week

Simon Rushton

Managing partner, Statumen

Catherine Taylor

Marketing director, Yahoo! Europe

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