PRIZM and Segmentation
for Any Size Budget
Mike Mancini
Michelle FauntLeRoy
Data Product Management
Nielsen Claritas, The Nielsen Company
Confidential & Proprietary • Copyright © 2009 The Nielsen Company
Agenda
• Segmentation and Precision Marketing
• Getting the Most Out of Your Segmentation Budget
– Case Study Example
•
•
•
•
Leverage Segmentation Throughout Your Organization
Maximizing Benefits of List Selects
Using Segmentation in Modeling
Plan to Grow with Nielsen
Segment
43
33 24 25
March 26, 2009
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Segmentation and Precision Marketing
•
Every industry wants to attract and retain
as many profitable customers as possible
•
Segmentation is the process of grouping
people or businesses based on shared
traits/activities/behaviors
•
Customer knowledge helps steer improved
operations
Segment
43
33 24 25
March 26, 2009
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Copyright © 2009 The Nielsen Company
#24
Segment
Product/s
with You
Customer
Knowledge
33 24 25 43
perspectives
Full Wallet
of Products
Financial, Retail,
Restaurant,
Automobiles
Channels
Location,
Phone,
Online,
Mail
Lifestyles and
Demographics
Media
Usage
HH Traits, Travel, TV, Radio, Print,
Hobbies, Sports, Outdoor, Internet,
Music
Handheld
March 26, 2009
Neighborhood
Composition
Consumer
Files
Penetration,
Vicinity,
Local specific
Finding Like-Type
Consumers
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Nielsen Claritas Segmentation Products
• PRIZM® is optimized by urbanization and affluence for a multitude of
consumer behaviors including media usage, automobile ownership,
communications, financial and insurance, and retail behavior
• P$YCLE® is optimized for Income Producing Assets, financial and insurance
behavior and consumption; identifies wealth
• ConneXions® is optimized for technology adoption and communications
behavior
March 26, 2009
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Segmentation Assignments
• Segment Assignment
–
–
–
–
–
Household: one segment for one household based on name and address
ZIP+6: typically single household
ZIP+4: single street face, 3-5 households
Census block group: market base, maps
ZIP Code: ultimate fill-in, maps
• Segment Distributions
– Each geography has a unique composition based on its underlying Z6/Z4
assignments
– Market ranking, planning, targeting
• Behavioral Profiles
– Propensity by segment for thousands of behaviors from Nielsen, MRI,
NPD, Polk, Simmons and more
– Segmentation Link Partner Network provides segmentation on wide
variety of hundreds of market research surveys and service bureaus
March 26, 2009
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Segmentation Market Share
20 of the top 25 U.S. Banking and Holding Companies
6 of the top 10 Investment Companies
4 of the top 5 Property and Casualty Insurance
Companies
The top 4 Life Insurance Companies
13 of the top 15 Retailers
6 of the top 10 Specialty Retailers
7 of the top 10 Restaurant Chains
8 of the top 10 Newspaper Groups
All National Long Distance Providers
6 of the top 8 Wireless Providers
5 of the top 10 Cable Network Groups
5 of the top 10 Energy and Utility Providers
March 26, 2009
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Fully Utilize Your Current Resources
• Enhance what you know about your customers
• Get more value by linking to internal metrics
• Customer transaction data provides a wealth of insight
• Other secondary segmentation tools are effective for internal
communication, helpful when putting together business cases
to demonstrate how to get the return on marketing campaigns
• It takes effort to get the full benefit of your segmentation
resources
• Don’t expect simple solutions to complex questions
• Don’t overly complicate solutions
• Spend the time to do the analysis
March 26, 2009
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Getting the Most Out of Your Segmentation
Budget
March 26, 2009
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Case Study: Selling Cupcakes to Customers
Coffee Shop Up-sell Strategy
• High end coffee shop wants to sell
gourmet cupcakes to existing client
base to increase revenue
• Identify target groups within
customer base to add new product
• Appeal to different prospects within
target groups
Analysis and Measurement
• Customer profile
• Customer + revenue profile
• Measuring lift
• Creating target groups
• Add more complex metrics
March 26, 2009
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PRIZM Customer Profile
Buy from Coffee Shop, 1 month
• PRIZM provides insight into households that are most likely, average, and
least likely to patronize my high end coffee shop
– Code customers (using directory or online or have Nielsen Claritas or partner
code)
– Use secondary research data (MRI, Simmons, Scarborough, etc.)
March 26, 2009
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PRIZM Customer Profile + Revenue
Customers vs. U.S.
Households
Customer Revenue vs. U.S. Households
• Customers by PRIZM plus Customer Revenue by PRIZM
• Revenue by PRIZM enhances insight into value
March 26, 2009
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PRIZM Customer Data Adds Lift
100
90
22 segments
34% HH
67% customers
2.00 is max lift
80
% total customers
70
30 segments
45% HH
75% customers
1.69 is max lift
60
50
40
30
PRIZM profile of customers
20
PRIZM customers + PRIZM revenue
Random Households
10
0
0
10
20
30
40
50
60
70
80
90
100
% total households
March 26, 2009
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Copyright © 2009 The Nielsen Company
Quintiles (5 groups) by PRIZM
50
45
45
Random Households
42
40
PRIZM profile of customers
35
PRIZM customers + PRIZM
revenue
% total
30
26
25
20
25
22
20
22
21
18
16
14
15
9
10
9
4
5
5
0
Quintile: 1
Quintile: 2
Quintile: 3
March 26, 2009
Quintile: 4
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Quintile: 5
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Copyright © 2009 The Nielsen Company
Target Group 1
Target
Group
Code
Households %
Comp
Customers %
Comp
1
02
Blue Blood Estates
1.0
2.5
251
2.8
284
1
04
Young Digerati
1.2
3.0
248
3.4
279
1
05
Country Squires
1.9
4.5
232
4.6
240
1
06
Winner's Circle
1.1
2.9
265
3.1
278
1
07
Money & Brains
2.0
4.8
238
5.9
295
1
13
Upward Bound
1.6
3.7
233
4.6
288
1
16
Bohemian Mix
1.8
2.9
163
3.0
172
1
17
Beltway Boomers
1.0
1.8
183
1.8
191
1
18
Kids & Cul-de-sacs
1.6
3.1
189
3.1
192
1
29
American Dreams
2.2
3.7
170
3.2
149
1
34
White Picket Fences
1.2
1.5
124
1.4
111
16.6
34.3
207
37.0
223
PRIZM Segment
1 Coffee Cupcakes and Kids
Index
Revenue %
Share
Index
• Coffee, Cupcakes & Kids represents 16.6% of households, 34% of
customers, and 37% of revenue
• High value target group includes customers with children
March 26, 2009
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Target Group 2
Target
Group
Code
Households %
Comp
Customers %
Comp
2
01
Upper Crust
1.5
3.2
212
3.4
220
2
03
Movers & Shakers
1.6
4.3
265
4.3
268
2
08
Executive Suites
0.9
1.7
188
1.6
180
2
09
Big Fish, Small Pond
2.3
2.7
120
2.1
92
2
10
Second City Elite
1.2
1.7
142
1.9
157
2
11
God's Country
1.6
3.1
197
2.7
173
2
12
Brite Lites, Li'l City
1.5
3.4
229
4.4
292
2
15
Pools & Patios
1.3
1.9
141
2.1
163
2
19
Home Sweet Home
1.8
2.5
133
2.9
156
2
23
Greenbelt Sports
1.5
2.2
151
1.8
123
2
24
Up-and-Comers
1.2
1.6
129
1.1
94
16.4
28.2
172
28.3
173
2 Cupcake Couples
PRIZM Segment
Index
Revenue %
Share
Index
• Cupcake Couples represents 16% of households, 28% of customers, and
28% of revenue
• High value target group includes couples without children at home
March 26, 2009
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On and Off-Target
P$YCLE Target Group Name
Households
% Comp
Customers
% Comp
Index
Revenue
% Share
Index
1 Coffee Cupcakes and Kids
16.6
34.3
207
37.0
223
2 Cupcake Couples
16.4
28.2
172
28.3
173
3 Special Treat
21.1
20.4
96
19.8
94
4 Off Target
45.9
17.1
37
15.0
33
100.0
100.0
100
100.0
100
• Coffee, Cupcakes & Kids bring in over twice the revenue as the average
household, and they are my best cupcake targets
• Cupcake Couples another valuable target
• Special Treat are average customers; let’s sell them a cupcake treat!
• Assess value of marketing to Off-Target group
March 26, 2009
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Use Internal Metrics
P$YCLE Target Group Name
Households
% Comp
Customers %
Comp
Index
Revenue
% Share
Index
Average
Monthly
Profit
1 Coffee Cupcakes and Kids
16.6
34.3
207
37.0
223
$4,904
2 Cupcake Couples
16.4
28.2
172
28.3
173
$3,751
3 Special Treat
21.1
20.4
96
19.8
94
$2,622
4 Off Target
45.9
17.1
37
15.0
33
$1,989
100.0
100.0
100
100.0
100
• Use internal metrics like monthly revenue or average monthly profit to plan
marketing campaigns
• Adding customer data is valuable and free!
March 26, 2009
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Leverage Segmentation Throughout Your
Organization
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Leverage Segmentation Everywhere
• Product Optimization
– Offer the right products to the right target groups
• Sales and Marketing Channel
– Optimize channel mix by understanding customers’ channel preference
• Site Selection
– Identify sites with best segments concentrated in surrounding trade areas
• Finance or Measurement Groups
– Use segmentation to find hidden gems in the low lifetime value groups
– Measure cost of acquisition versus the lifetime value
• Customer Service
– Offer high value service for most valuable target groups
– Route inbound calls based on target groups
• Media Strategy and Advertising
– Share target groups with ad agency so targets are not over simplified into
age and gender (female age 18-45)
March 26, 2009
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Maximizing Benefits of List Selects
March 26, 2009
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Using Lists for Cost Effective Lead Generation
• Generating a list using PRIZM, P$YCLE or ConneXions will enable
you to get a more precise target than demographic selects alone
• Combined with demographics or a specific behavior, PRIZM will
provide more performance lift
• PRIZM is on a variety of compiled lists
• Save money by knowing your targets before ordering lists
– Use segmentation ground counts to size the opportunity
– Use segmentation suppression
• Test and control
March 26, 2009
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Data Choices for List Selects
• Demographics
– Demographic data about consumers collected from multiple sources
• Behavior
– Data collected via magazine inserts, surveys, web sites and product
registration data such as: go to the theater, play tennis, take vitamins
• Financial Behavior Data
– Credit cards, personal loans, ACE, other consumer financial behavior
• Segmentation
– Household level for precision
– ZIP+4 level for cost effective saturation
• Other
– Telephone number, address, and residency information, email addresses
March 26, 2009
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Economic Environment Impacts Email
•
•
•
•
•
Increasing postage rates
Rising print and paper costs
Decreasing consumer response rates
Increasingly complex regulatory environment
Marketers reporting:
– Motivating customers to shop is becoming
increasingly complex
– New customer acquisition and retention is not
as dependable as it has been in the past
– Marketing across multiple channels is top priority
– Targeting and segmentation is key for campaign success
March 26, 2009
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Copyright © 2009 The Nielsen Company
Nielsen Claritas Partners with Top Service Bureaus
• Email Append (B2C and B2B)
– Append email addresses to existing customer addresses
• Reverse Email Append (B2C and B2B)
– Append client’s file of email addresses and return name and postal
address
• Email Update (email change of address)
– People change their email address regularly, therefore updates are
recommended
• Prospect Match and Deploy
– Select a prospect list. The service bureau deploys:
– P$YCLE and PRIZM selections available
– Results are shared after campaign deployment
March 26, 2009
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Using Segmentation in Modeling
March 26, 2009
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Using Segmentation in Regression
Modeling Produces Results
•
The winner of the Direct Marketing Association Analytic
Challenge used Nielsen Claritas segmentation products
•
•
•
Use segmentation products appropriately
A transformation of results needed in most instances
Use of appropriate segmentation product can result in more
accurate predictions
How should I
model with
segmentation?
March 26, 2009
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Transform The Variable
• Segment codes are not continuous variables
- Segment codes correlate with affluence but should not
be treated as a continuous variable
- Do not put the segment code itself into the model
• Segment codes should be transformed into useful statistics like
- Average balance
- Market penetration
- Rank of balance
- Rank of penetration
As tempting as it is –
DO NOT use the
segment
code itself in a
regression model
Better options exist!
March 26, 2009
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Choose From Available Products
• Choose the most appropriate
segmentation product for best
results
Standard Deviation = $518,406
–
–
Standard Deviation = $323,402
–
–
Understand how products are
created to avoid pitfalls
Correlation/linear trends are not
important
Separation is important
Match the product’s purpose
with goals
–
(i.e. cell phones with technology
segmentation product, 401k
accounts with a financial product)
Choose P$YCLE
because of distinctiveness
and product specifications
March 26, 2009
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Segmentation Modeling Tips
1. Break up the problem – keep penetration separate from
profit per purchase
2. Choose the segmentation product appropriately
3. Transform the segmentation product – don’t use the
segment code itself
4. Incorporate in-house information on the client (i.e. number of
purchases)
5. Test for over-fitting the model
6. Understand potential correlations
7. Consider interaction terms
8. Apply segmentation parameters to missing observations
9. Adjust/remove the unknown segments/clusters
March 26, 2009
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Plan to Grow with Nielsen
March 26, 2009
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Nielsen Segmentation Benefits
• PRIZM, P$YCLE and ConneXions are linked to Nielsen
currencies, third-party databases, and client data
• Nielsen surveys available in various formats with segmentation :
–
–
–
–
–
–
–
–
Nielsen Media Research Local / National / Hispanic People Meter
Nielsen Online NetView / MegaPanel
Nielsen Mobile Insights / Total Comm Survey
Nielsen IAG Advertising Effectiveness
Nielsen Consumer Home and Retail CPG Scanner Data
Nielsen Claritas Market Audit Survey
Nielsen Claritas Insurance Audit Survey
Nielsen Claritas Convergence Audit Survey
• Speed to market = cost and time efficiency
March 26, 2009
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Breadth of Consumer Insights – Link Partner
Network
Media
NPD Group
Apparel & Restaurant
Retail
Nielsen Claritas
Convergence Audit
Telecom
Auto
General
Lifestyle/
Consumer
Research
Direct
Marketing
Services
March 26, 2009
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Copyright © 2009 The Nielsen Company
Thank you
– Products Mentioned
– Nielsen Claritas PRIZM
– Nielsen Claritas P$YCLE
– Contact Us
– Nielsen Claritas ConneXions
– info.cds@nielsen.com – Nielsen Claritas Segmentation
– 800-737-7429
– www.claritas.com
March 26, 2009
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© 2009
The
NielsenCompany
Company
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Nielsen