KDB gives customer downturn tips

Matthew Boot, chief analyst at KDB, has revealed how marketers can make the most of a customer downturn.

Knowing your customers is always the first rule of marketing, but during an economic downturn it becomes all the more important.

When times are good, marketers have more leeway in their approaches.

You may not be thinking of buying a new mobile phone and the analysis may not suggest that you are a particularly good candidate, but if you have plenty of disposable income and few worries about the future you may be willing to splash out.

Now that incomes are being squeezed, consumers will be much more watchful of their spending and speculative campaigns are likely to have a much lower yield.

With less margin for error, it will be increasingly important to ensure that marketing campaigns are targeted at the right people.

The difference between a good campaign and a bad one can be determined by the people it targets.

If incorrect or obsolete data are causing the material to be sent to the wrong people, or to the wrong addresses, the campaign will fail.

Of course, customers change on a regular basis.

We know from our own experience that what we want now is often radically different to what we wanted 12 months ago.

Yet when companies approach customer data, they can all too quickly forget the fact, imagining that their customers will want the same thing forever.

The reality, of course, is that consumer research gives a snapshot of a consumer base at a particular moment.

Customer bases change for a variety of reasons.

Changes in the national or local economy (such as the current downturn or job cuts at a local company) may impact upon consumers' disposable incomes.

There may also be a wholesale shift in the business' potential customer base.

20 years ago, mobile phones were only for highly paid professionals, but there are now more mobiles than consumers in the UK.

Marketers who failed to realise the increasing potential for mass ownership will have failed to ensure that they made the most of the opportunity.

Seasonal variations also have an effect on customers, and have a different effect on the behaviour of different segments.

The onset of the summer holidays or Christmas will change families' spending patterns, but have a different impact on childless professionals.

Failure to understand at what point of the year segments spend money on particular items will lead to inefficient campaigns.

Companies need to understand the importance of time-specific material if their marketing is to have its full effect.

As a result, customer insight needs to be an ongoing process rather than an isolated incident so that businesses can change with their customers.

Otherwise, they will find themselves approaching today's customers with last year's data and parameters.

The benefits of detailed customer insight are clear - the better you know your customers, the more likely you are to be able to know what they will want to buy.

It allows marketers to make their material not only more closely tailored to what customers want, but also to target their approaches to the right customers and prospects.

The ability to provide more targeted campaigns is important for several reasons.

Firstly, the expense of conducting large-scale campaigns will become increasingly prohibitive as their yield decreases due to the slowdown.

Marketers will be under increasing pressure to make their campaigns more targeted in order to increase yield.

During a boom, it is possible to conduct vast mail- outs with little segmentation and still experience a reasonable return on investment.

As finances tighten, this will no longer be the case.

Secondly, there is increasing public irritation at the nuisance level of irrelevant communication.

Companies who want to promote a responsible image and foster customer loyalty will be loath to cause tension with customers by contacting them in a way that does not suit them.

Irrelevant marketing material is not only a waste of money; it also leads the consumer to consider the company as being out of touch.

Thirdly, there is increasing pressure on marketers to consider the environmental impact of their activities, in particular their direct mail.

The more targeted a campaign is, the more companies can burnish their green credentials by reducing the amount of mail they send out, without sacrificing profit.

Good quality data gives marketers the knowledge of their customers that is essential to well targeted campaigns.

As the marketplace becomes increasingly difficult, campaigns will need to become smarter if they are to see the same returns they have over the last 10 years.

In the long term, this may be no bad thing.

The discipline imposed by economic difficulties can help to instil the sort of best practice that it can be too easy to ignore during a boom.

Good data habits adopted now will allow marketers to reap the rewards again when the economy recovers.

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