Banking on planning

Proving the impact of relationship marketing in the packaged goods sector requires planning and tracking. By overhauling its database and recruiting a tracking panel, Garnier was able to discover the positive impact of its new marketing strategy – an incremental increase in spending that delivered a positive return on investment (ROI) within 36 weeks. The judges described it as, “a classic example of excellent planning.”

Since 1999, Garnier had been using direct mail, but in a tactical, one-off fashion. Data was transferred onto a database, but proving that the mailings had made a positive impact was difficult – consumers in this sector are highly promiscuous and there is strong price sensitivity.

A beautiful relationship

Following a brand relaunch, Garnier appointed WWAV Rapp Collins in 2002 to develop a relationship marketing strategy. This would focus on portfolio buying and total customer value, rather than single product purchasing.

The Beauty Bank was devised as a way of segmenting, valuing and tracking customers. A database audit was carried out to identify where new records and variables were required. Using a postcode sector ranking, a national door-drop was carried out to acquire data, which generated a rise in the response rate of more than one per cent.

A health and beauty questionnaire was then mailed to selected prospects. A response rate of 11 per cent produced detailed attitudinal and quantitative data.

Using the data acquired in this way, a lifestage segmentation was developed to drive relevant communications. A value segmentation was also built to identify frequency and value of spend, which produced 12 groups. Scoring derived from this segmentation identified the type of communication required and the relevant use of incentives.

Each product was scored in this way, then each category, with scores finally calculated into an overall Garnier score for each customer. Responses from previous campaigns were used to understand how different segments reacted to the use of incentives such as coupons.

Understanding how marketing communications would generate incremental spending was critical. A tracking panel was recruited, which provided purchasing data every four weeks. A control panel was also established which would not receive any communications.

The highest-value customer is always right

To demonstrate the value of the data analysis, a retention campaign was mailed to the highest-value customers in November 2002. Using insights from the database, two different executions were used – one for under-35s and one for over-35s. A target of 15 per cent coupon redemption was set – actual redemption rates across six products ranged from 24 per cent to more than 30 per cent.

The database has also been used for tactical promotions of new product launches, with a Lumia campaign generating a 16 per cent response rate. From the tracking panel, it has been shown that within 36 weeks – half the target period – significant incremental spending on Garnier has been achieved, creating a positive ROI.