Model-based marketing approach brings increase in new customers.
Failing to meet expectations after initial direct mail campaigns, Standard Heating & Air Conditioning's acquisition strategy needed a change. Persuading consumers in a highly saturated market who are receiving similar messages from competitors on an ongoing basis presented a serious challenge. In addition, limited historical direct response information was available.
Infinity Direct used look-alike modeling to identify prospects that looked most like Standard Heating's best customers, utilizing key consumer demographics, finances and property characteristics. The model was used for a yearlong targeted direct mail campaign. Prospects with higher look-alike scores were more responsive than those with lower scores. Scoring established greater differentiation within known attributes and Infinity Direct and Standard collaborated to target leads within the top 10 segments.
After the first year, there was enough response data to build a more robust predictive response model using multiple regression analysis that proved to be even more effective than the look-alike model.
This model-based marketing approach provided a two-tier successful marketing strategy over two years. During the first year, teams were able to gather an unprecedented amount of data for analysis by using the look-alike Model, which outperformed the previous method of targeting for the duration. After carefully evaluating the responses, Infinity was able build and implement a predictive response model. This model yielded a 75% – 156% lift in top performing deciles over the look-alike model. In addition to the lift in response, other successes included a 70% close rate for new units sold versus an industry average of 33%, a 16% increase in new customers over the previous year, and refining their targeting, which reduced the size of each mailing and improved ROI per campaign.