Sara Mawer and Paul Cresswell, Wegener Direct Marketing - Business Data Solutions

Analysis techniques needn't be complicated. There are some simple yet very important analyses that you can undertake on your existing customer base and your mailing responses in order to check that you are heading in the right direction.

 

How do you really know you are contacting the right kind of customer?

You've produced your promotional material, selected a list of potential customers to target and have burnt the midnight oil in a desperate attempt to get your latest mailing campaign out on time. But was the effort and cost all worth it? Are you 'hitting' the kind of customers who are likely to buy?

How do the businesses you are targeting 'fit' with your current customer profile? Are you reinforcing the way your business wishes to move forward?

Answers to these questions are hard to come by without undertaking analysis and profiling of your customers and of your mailing responses. Yet, being able to look at what is going on is vital to doing it all better next time, and to attracting more customers of the right type.

Analysis techniques needn't be complicated. There are some simple yet very important analyses that you can undertake on your existing customer base and your mailing responses in order to check that you are heading in the right direction - analysis by geography, business sector and company size.

The geography of customers and responses

Customer geography isn't often considered in the B2B world - your goal is to reach a national audience almost regardless of where customers come from. Yet mapping customers often produces clear patterns - particularly when comparing their distribution with that of all businesses in the UK. Where are you strong and where are customers thinner on the ground?

Concentrations of your customers in certain areas raises important issues.

For example:

• Have you got the right product range? In under-exploited market areas consider whether your current product range is entirely appropriate
• Is competition stronger in some areas than others? Strong local competition may explain weaknesses in certain areas. You might wish to assess your competitive position in this area - pricing, terms of business, delivery, and standard of service.
• Do weaknesses in customer distribution cluster in certain areas? Why are there fewer customers in certain areas than expected given the number of businesses there? Perhaps many are in declining sectors offering less potential.
• Are some areas under-performing? Poor performance may be inevitable in certain areas, but is the same really true for poorly performing areas in other parts of the country?

Your market may well be national, but without mapping your customers, how do you identify where your weaknesses lie?

Customer Concentration Index Fig 7.1

Profiling by Standard Industrial Classification

Simple profiling techniques can be used to examine your existing customers or to assess the results of a mailing campaign. Clever matching software can match your customer data against a 'business universe' file and append useful information to your records, particularly SIC business type (Standard Industrial Classification) and employee sizeband.

This idea of comparing a customer file with a benchmark base file such as a 'business universe' is all there is to profiling.

The 1992 Standard Industrial Classification (SIC) splits businesses into 498 categories - each with a 4-digit code. As a summary, you can look at the first 2-digits of the code - just 60 categories. You can then easily identify your best SICs i.e. the ones with the highest propensities to be your customers. And you can do the analysis using the 498 4-digit SICs instead of the 60 2-digit codes! Provided that finding 'more of the same' has any part in your marketing strategy, businesses belonging to the same SICs but not currently customers must be considered as being among the prospects 'most worth having'.

Ask some questions

See your industrial sector profile not just as a narrow picture of what is going on today, but use it to ask yourself some searching questions. The answers may shed important light on your future business strategy, for example:

• Are you over-dependent on certain sectors?
• Are any of these sectors in long-term decline?
• Which growing sectors could be stronger?
• Do you have anything to offer in sectors where you are currently weak?
• Could you develop new products for specific sectors?
• Are any of these sectors big enough to be worth the effort?

Sizing up your customers

Analysing the size of the companies you are dealing with is invaluable in understanding the kinds of businesses that have become customers. Standard size banding can be adopted, i.e. 1-4, 5-9, 10-19, 20-49, 50-99, 100-199, 200-499, 500-999 and 1000+.

Concentration index by employee size band Fig 7.2

 

Customers may be concentrated in business sectors with very large employers and some of your products suit only the very largest organisations. But it is equally possible that your marketing has been aimed at bigger players, you have targeted a large slice of sales effort at major accounts, or have no product offering for smaller operators. Selling through a field sales force and large accounts division may pick up major corporates yet miss smaller opportunities.

It may be unrealistic to change this focus. However, think it through. Over 70% of business locations employ fewer than 10 people. Concentrating on big players means greater dependence on fewer customers - more risk of losing a chunk of business in one go.

The prospects most worth having

Deciding which businesses are most worth targeting depends critically on whether your aim is to change course or simply to find more of the same. Even when there is a wish to diversify or to explore options for changing course, most clients still want to find more of the same - to maintain the existing business if nothing else.

Using information from customer profiling you can target the prospects most worth having. We can look in detail at SICs with significantly more than their fair share of your customers. But since size matters also, we need to allow a location's size and not just its SIC to affect its likelihood of being selected as a prospect which is 'worth having'. With loads of combinations of Geography, SIC and Sizeband, this is a job for statistical analysis!

A note on spend

The discussion here relates to customers. Similar analysis could be targeted on spend. Here, the focus is not on customer numbers but on the total spent by customers. Spend profiles measure customers' propensity to spend money with you.

Summary

It needn't be rocket science!

Techniques used to examine your existing customers, and to assess mailing response needn't involve rocket science. Although there are lots more analysis techniques available for use in the B2B world, simple mapping and profiling techniques go a long way to helping you devise a better strategy for targeting prospects. Moreover, they can help identify the right future direction for your business.

For more advice on getting the best results from your telemarketing campaigns and customer profiling, email us at marketing@wegenerdm.co.uk and we'll respond as soon as possible.

Glossary

Database	A collection of interrelated data, stored and indexed in a particular fashion which allows users to recall or analyse it easily.
Profile	A comparison of the distribution of two sets of data across a single common classification.
Prospect	A contact or company you would like to be selling your products and services to.
SIC	Standard Industry Classification codes, used to identify the business activity of a business site. This is best applied at site level, as organisations across different locations may well be operating in different businesses.
Sizeband	A classification of businesses or locations according to the number of employees. The Governments standard sizebands are: 0-4, 5-9, 10-19, 20-49, 50-99, 100-199, 200-499, 500-999 and 1000+.
Telemarketing	A questionnaire that the caller uses as a guide to obtain the exact information required from the respondent.