ADOTAS – It’s crucial to know your type… and also to know what type is normally drawn to you. I’m not really musing on the mistakes I’ve made in my romantic life, or at least, no more than usual. Right now, I’m actually talking about when a company wants to think about not only the customer base it seeks, but also the customer base it already has. Once a company assesses what kind of person follows its brand most closely, it can develop ideas for engaging those very real, demographically specific person in a ways that reflect that person’s life outside of his or her interactions with that brand. What follows is a case study conducted by RapLeaf and Marketing Informatics for the Maggiano’s Little Italy restaurant chain. Marketing Informatics used RapLeaf to acquire insight about their client’s (Maggiano’s Little Italy) customer email list and created customer profiles of the restaurants’ most fervent types of customer based on the data.
Below, you’ll find the full and unabridged case study:
How Maggiano’s Little Italy Is Turning Data Into Engagement
A name and an email address… times millions.
Maggiano’s Little Italy started collecting this information about guests back when email loyalty programs were in their infancy. Back when the theory was that you didn’t ask people for more than their name and email or you’d never get them to enroll. Back when response to email marketing was measured in double digits.
Over the intervening years Maggiano’s committed to developing Direct Marketing as their primary channel for sales lift and new guest acquisition. They used multiple sources of data, targeting analytics, many rounds of targeted direct mail, and careful analysis of results to develop a vigorous and successful feeder program. And yet, the Maggiano’s/Marketing Informatics team knew more about prospective customers than we did about the Loyalty Guests.
It was time to change that, and RapLeaf data was the trigger.
The Way Forward
Maggiano’s decided to morph their email list into a marketing database and evolve their CRM communication from couponing to engagement. That would be a multi-step process:
1) APPEND DATA WITH RAPLEAF DEMOGRAPHIC AND PSYCHOGRAPHIC ENHANCEMENTS. The problem we’d faced in appending this data before was that we needed postal addresses for the match back to the enhancements and only a very small percentage of the file had postal addresses. That’s a real problem today with email loyalty clubs and traditional enhancement sources.
To solve this problem we turned from those traditional sources to RapLeaf. RapLeaf has the capability of appending enhancements using email addresses as the matching link rather than postal address. This is a major evolution in the information industry. And while some other providers have similar capability, RapLeaf was the most comprehensive source. Plus, the mechanics of the append process were very simple and their customer service was spectacular.
So we appended the following RapLeaf data bundles to the Maggiano’s email data: Basic, Premium, Professional, Interests. To increase overall match rate, and to use in our direct mail targeting, we also appended physical address. Matches came in at around 50% of the file – a quantity that assured statistical significance for the modeling.
2) USE STATISTICAL MODELING TO IDENTIFY SIGNIFICANT GROUPS OF CUSTOMERS WHO SHARE SIMILAR TRAITS. For two years we’d been developing and using customer profiles for Maggiano’s direct mail targeting. These profiles were descriptions of “average” customers at both the national and individual restaurant location levels. And while these are very valuable for acquisition programs, analytics for CRM must be more granular. “Average customer” is not granular enough. For this task we now had to identify specific characteristics of the people who comprise the most significant customer groups or clusters.
To do that we turned to statistics. Beginning with simple summary descriptives, we moved through extensive cross-tabulations and significance trees to explore the data and understand what was there. We finished off with a cluster modeling technique, run separately for men and women. Here’s a chart that shows how the female population naturally grouped:
To translate, 69.4% of all records were “included,” i.e. they clustered statistically into 4 significant groups. 30.6% of all the records were “Excluded Cases” because they fell outside the 4 significant groups. That means that 7 out of 10 of Maggiano’s customers fell into 1 of 4 statistically related groups. But how did we move from this information to actionable intelligence?
3) CONVERT THE STATISTICAL CLUSTERS INTO FLESH AND BLOOD DESCRIPTIONS.
Here’s where the real fun began. Once we could classify each of the records into a cluster (or flag it as not-in-a-cluster), then we could explore each of the clusters. Here’s an example in which the cluster numbers are cross-tabulated against RapLeaf Homeowner/Renter/Unknown data:
As you can see, female clusters 2 and 4 are almost 100% homeowners. Are these women married or single? Are there children in the home? What is their family income? Are there any significant interests that they share? What makes them different from one another? As we answer these questions, a solid picture of real people always emerges. Statistics convert to characteristics and a comprehensive view emerges.
Following are samples of two of the many full profiles. In both cases, percentage of loyalty guests and percentage of US households is masked because of the proprietary nature of the information. The first description is of female statistical Cluster #1, the only cluster that was composed of nearly 100% single women:
Compare the description of Elizabeth to another, this one of Female Cluster 2 and Male Cluster 3 which were statistically related:
From the perspective of profiling the “average” customer for direct marketing among prospects, these three people are exactly the same. They fall into an above average income range. They are the same age range. Acquisition coupons are usually gender neutral. Treating them as part of the same profile produces solid results in such new customer acquisition programs.
But when you think about engaging these people and building relationships with them, profiling the “average” doesn’t cut it. But cluster segmentation modeling sure does. It opens a world of opportunity. How would you treat Elizabeth differently than you do Laura? With what would you incent each? What is it about the brand that appeals to each? How should you highlight that appeal?
Of course, once this stage is completed, it’s just the beginning. Among the steps that follow are these three simple ones (simple, but not easy):
4) DEPLOY THE CLUSTER INTELLIGENCE IN THE MASTER MARKETING DATABASE
5) CONDUCT RESEARCH IN EACH CLUSTER
6) ORGANIZE THINKING AND COMMUNICATION AROUND ELIZABETH, PAUL AND LAURA, AND THE OTHERS.
But those are all issues for later discussion.
The information in this case study about Maggiano’s Little Italy and its customers is shared by permission of Steve Provost, Michael Breed and the professionals at this great organization. Thanks to you, Steve and Michael, for the privilege of working with you and for the permission to share a glimpse into the organization that is a leader in your industry.
RapLeaf provides real time demographic data to help companies safely personalize experiences for their customers. As a consumer data company, RapLeaf’s technology provides instant insight to help businesses better understand their customers in order to personalize content, show them more relevant deals and offers and give them a better experience – online and off.
About Maggiano’s Little Italy:
Maggiano’s Little Italy specializes in Italian-American cuisine served in a warm and friendly atmosphere. Each restaurant is open daily for lunch and dinner with a convenient carryout service as well as delivery, and offers beautiful and accommodating banquet spaces for special occasions. Maggiano’s menu features both classic and contemporary Italian-American recipes – homemade pastas, signature salads, prime steaks, fresh fish, regular chef specials and specialty desserts, accompanied by a large selection of wines from acclaimed vintners as well as its own private wine label, Salute Amico. The food is made-from-scratch daily. Family style service or individual entrees are available.
About Marketing Informatics (Mi):
Marketing Informatics has been in the Direct/Database Marketing business since 1987. The company specializes in using database design and analytics to fuel “The Cycle of Engagement,” i.e. the cycle of new customer acquisition, loyalty program capture, enhancement and segmentation for CRM, and program measurement. Mi has been recognized with three awards from the Kelly School of Business, Johnson Center for Entrepreneurship, Inc. Magazine’s “Inc. 500 Fastest Growing Private Companies in America,” and other industry recognition.