Some British companies think sharing marketing data will help them find elusive links among chocolate-eaters, perfume-wearers and diaper-buyers.
Communicating with customers was once a simple matter for U.K. consumer goods manufacturers. Those that ran an advertisement on the daytime soap operas could rest assured that their message would reach a large chunk of the British housewives making up their target audience. But while five television channels once entertained the British Isles, more than 200 now vie for viewers' attention-alongside PCs, the Internet and mobile phones. And although today's consumers have more choices about how to spend their leisure time, that time is dwindling as they work longer hours. As a result, marketers are less likely to find the average consumer glued to the soaps at midday. In fact, with more women working and more men willing to pitch in with the grocery shopping these days, consumer goods manufacturers have a hard time finding the average consumer at all.
"The average consumer doesn't exist," says Phil Barden, relationship marketing director for Unilever UK. And without an average consumer to address, mass marketing is no longer as effective as it once was. Barden explains that although a woman's media preferences, hobbies and interests are often completely different from her husband's, "the typical marketer trying to construct a communication to that household will get it wrong and average the two." The resulting offer ends up being irrelevant to both. With a multitude of brands spanning a wide range of home, personal care and food products to peddle, Unilever, which has headquarters in both London and Rotterdam, Netherlands, can't afford to squander its annual marketing budget of 3.6 billion (roughly US$6 billion) on homogeneous, irrelevant messages. Instead, the company intends to supplement its mass marketing by communicating directly with individual consumers.
Although Unilever, the parent company of Lever Brothers & Co., Elida-Faberg, Birds Eye Wall's Ltd. and Van den Bergh Foods, had long prided itself on its knowledge of consumers, the company recognised that direct communication with customers-relationship marketing-would require even deeper knowledge. Unilever hit upon the idea of joining forces with noncompeting companies to pool their customer data. "If we learned about people's habits, attitudes and behaviours in completely different categories, we felt that, in theory, we could start to predict how people would behave in our own categories," says Barden. He notes that Firefly's collaborative filtering software, which is used on the Web sites of companies such as Barnes and Noble, operates on much the same principle: "If I know what videos you rent, where you take your holidays, what books you read and what music you listen to, I can make a reasonable prediction of what fragrance you'll wear." In January 1997 the company began discussing the concept of sharing customer data with Cadbury-Schweppes, Bass Brewers and Kimberly-Clark, three noncompeting companies in the United Kingdom's fast-moving consumer goods (FMCG) arena. By July of that year, the companies concluded that they did, in fact, share common consumers. And because their products, after all, ended up in the same grocery cart, they realised that they could likely group their brands meaningfully in promotions to customers. They agreed to form the Consumer Needs Consortium (since renamed the Jigsaw Consortium) and begin a pilot project to test the viability of building a national shared consumer database.
"The idea of cooperative market research is very, very old," says Tim Ambler, senior fellow at London Business School. "For example, the Nielsen Co. was founded on the basis of economics, that competing companies would pay Nielsen to go into grocery stores and count what's on the shelf." But the Jigsaw Consortium represents a new twist on the old concept because the companies are collaborating directly on the effort, says Ambler, and "they're looking with a broader [mandate] at things like the consumer of the future; they're not just counting boxes on shelves." Ambler sees the main benefit as pure cost savings: It's cheaper for the consortium to collect customer data once and send out joint mailings than it would be for each member company to do so on its own. But others view the effort to collect consumer information as a way for FMCGs to enhance their leverage against retailers, which are reluctant to share the transactional data they collect at the checkout counter. "I think it's brilliant that they're trying to get together. It's about time retailers had people capable of matching them in terms of quality of data," says Simon Gulliford, marketing director of Emap Consumer Magazines in London and an independent marketing consultant. "The major U.K. supermarkets would rather give their children away than release the data they've got-or charge crazy sums of money for the information." Prior to forming the consortium, the Jigsaw partners had each collected varying amounts of data from paper-based surveys, promotions and calls to their respective customer service centres. Unilever had built a database of about 1.5 million U.K. households, Kimberly-Clark had been marketing its Huggies diapers using its database of new mothers and Bass had just started to build a regional database of beer drinkers. Cadbury did not have a database, but its executives were eager to collaborate on data collection.
To launch the project, the companies pooled their data on customers in one region of England, merging it into a single database with the help of a third-party computer bureau. Initially, the partners worried about sharing their once-proprietary information. "Like any relationship, people were wary of revealing themselves," recalls Barden, who leads the consortium. But when they compared their data in the test region, they found very little duplication. The companies talked through their concerns and concluded that they all stood to gain by cooperating on the acquisition, analysis and application of U.K. consumer data-as well as to share all of their previously proprietary customer data.
The consortium tested different kinds of coupon mailings to find out how single-brand offers would fare versus multibrand offers, and results confirmed the wisdom of eschewing parochialism. "Rather than, say, six brands sending a piece of direct mail, you might get one piece of direct mail with offers made far more relevant and compelling by virtue of the knowledge [their brand managers] have shared," says Barden. "Households have actually seen the consortium approach as a benefit. The sort of comment we get back is, 'If this means I will get one piece of direct mail instead of six, that's great.'" Initial pilot results corroborated what may seem obvious: Large households with children tend to consume a disproportionate amount of Unilever, Kimberly-Clark and Cadbury products, which include Lever Brothers' Comfort Pure and Persil detergents, Elida-Faberg's Dove soap and Vaseline Intensive Care products, Birds Eye's fish sticks, Kimberly-Clark's Huggies diapers and Cadbury's chocolates. "Households with children may use their washing machines every day, ergo they will be big users of detergent and fabric conditioners," says Barden. "And it's not a huge mental leap to say they also eat a lot of food. If they've got babies, they're going to be using a lot of diapers. And the kids are probably going to eat a lot of confectionery, and they'll be using a lot of soap and shampoo." Mentioning the Pareto Principle, Barden says that although 20 percent of customers don't exactly account for 80 percent of sales, "It's getting toward that." Knowing which kinds of households are likeliest to buy their products helps the consortium members better target their direct mail campaigns.
But other findings have consortium members scratching their heads or rethinking their assumptions. Why empty nesters, for example, are exceptionally heavy consumers of tea, soup, chocolate and ice cream is somewhat less intuitive than the logic behind families with babies stocking up on diapers, detergent and fish sticks. The tests also showed that the primary Bass target audience-18- to 24-year-old men-overlapped little with the major consumers of the other consortium members' brands. As a result, Bass decided to drop out of the consortium (see "Beer + Football = Smart Marketing," Page 60).
In addition to testing various product groupings, the companies wanted to ensure that sending offers to targeted households would provide a favourable return on investment before committing the resources to build a national shared database. Any doubts were erased when tests of mailings targeted to specific households yielded a coupon redemption rate that was up to 10 times better than random mailings. "All the findings reinforced the value of relationship marketing," says Barden. "The more we knew about a consumer, the better the response would be." Rather than build the national database itself, the consortium chose to outsource the task to Consodata, based in Paris. That company was charged with constructing a data warehouse (which was slated for completion by the end of 1998) as well as with managing the data and populating the warehouse with new data gathered via surveys. Consodata also helped the consortium develop the communication packages both to recruit new consumers to the database and to entice those already in the database with new offers.
"Consodata can do counts to figure out how many Huggies users have two kids, a dog, read the Times and have incomes of 40,000 per annum," says Barden.
Then it can do cross-tabs to figure out what other products these consumers would likely want. "Putting two brands together would historically have been on more of a gut-feel basis-'I think Persil and Huggies [could be promoted together] to mums with babies,'" explains Barden. "Whereas now we know for certain that these links do exist. In the past a lot of these things would've been hypotheses. And now we can test the hypotheses." Armed with definitive knowledge instead of just third-party retail data from Nielsen or IRI, consortium partners can invest in more precisely targeted and therefore more efficient marketing promotions.
Barden insists, however, that consortium members are more interested in getting a better handle on consumers than saving money. "The driver for all of this has been getting a better and deeper understanding of the consumer," he says. "If that results in an activity, for example, where two brands did a piece of direct mail and shared the budget, then that's a spin-off benefit." So far, the consortium has concentrated on establishing benchmarks of which kinds of offers work and which don't, or, as Barden puts it, learning "what's good, what's bad and what's ugly." Consortium members have found that those are relative terms. "What's bad or ugly to somebody may be good to someone else," says Barden. Ultimately, of course, the companies aim to apply their new-found knowledge to convince consumers to buy products they don't already purchase as well as to increase brand loyalty-and purchases-of products they currently buy.
But London Business School's Ambler points out that joint marketing efforts may dilute the brand equity that the consortium members have worked so hard to build. "The advantage Kimberly-Clark will have with its toilet paper-which is a great deal more expensive than private-label toilet paper-is that it's very individualised and highly branded," he says. "If [a mailing goes out in which] it is grouped with Cadbury chocolates, it loses a bit of its personality and becomes closer to being like the Sainsbury or Safeway [private-label] brands." Ambler says the effect may be small, but "getting different brands into the same bed can undermine their individuality a bit." Nonetheless, Barden maintains that the consortium's activities are helping its members enhance their category management efforts by arming them with more information when they develop retail promotions. Grocery stores are not only loath to share the purchasing data they collect through loyalty programs, but the wide range of stock makes it difficult for those stores to track and analyse that data to the level of specificity needed for a successful promotion. "We can say to retailers, 'We understand intimately the people who are buying our brands, who live in your store areas and claim to shop in your stores,'" says Barden. "What we're doing to understand consumers helps us become better business partners with our retail customers." Senior Editor Alice Dragoon can be reached via e-mail at email@example.com.
Beer + Football = Smart Marketing
Bass Brewers dropped out of the jigsaw consortium once the minimal overlap between its target audience - 18 - to 24 year old men - and primary consumers of detergent, diapers and chocolate became clear. But one cross-marketing effort that grew out of Bass's affiliation with the consortium proved the value of careful targeting and cross-company promotion. Bass, which makes Carling, the U.K.'s best-selling brand of lager beer, sponsors the F.A. Carling Premiership, England's elite football division. The company found opportunities to partner with consortium members on its Carlingnet Web site (www.fa-premier.com). To catch up on the latest scores and team news, visitors must register to enter the Carling Club, which also lets them enter chat rooms and send e-mail to other club members. Visitors can send electronic postcards from the site, courtesy of Elida Faberg's male fragrance, Lynx, and take part in a virtual World Cup contest sponsored by Fuse, a Cadbury chocolate bar. Bass collects customer data periodically from Carling Club members and shares the results with Elida-Faberg and Cadbury. "All three brands were trying to appeal to a very elusive target, 18- to 24-year-old men," says Barden. "They used a very appropriate media (the Web) and had very appropriate content (football).
Consumers were quite happy to give data." -A. Dragoon
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.