Micro-marketingResearch firms ID most-likely customers 7/16/2000 08:00:00 PM Eastern
Cable operators now have a pile of numbers-factoids at their fingertips-to tell them who is most likely to buy the Disney Channel and a cable modem, or drop cable entirely and defect to DBS.
Supplying those numbers in the cable business are primarily two companies-Claritas and Looking Glass. Both offer detailed demographic and behavioral information available on an annual subscription basis. But Claritas' PRIZM is the data base of choice for cable operators that, for the most part, didn't bother much with target marketing until satellite threatened to erode the cable universe, according to one veteran researcher. "Cable dominated," he says, referring to the industry in its early years. "They didn't have to do a lot of marketing. Cable TV marketing evolved in the' 90s because it had to."
Now several cable operators pay about $45,000 annually for every 1 million subscribers to subscribe to the PRIZM database, which can help an MSO identify those homes likely bite on high-speed data service, a kid's network, digital cable or even a satellite dish.
PRIZM stands for "Potential Rating in Zipped Markets," and combines information from local governments, Nielsen Media Research, magazine subscription lists, automobile registrations and other data sources. The resulting data are divided into 62 categories and applied to four-digit zip-code areas, which consist of five to 10 households, says Margie Lymperis, vice president of practice management at San Diego-based Claritas.
The information is further tailored to cable operators with a survey on interest in video services, cable modems and high-speed Internet access. The resulting information shows cable operators specifically where they should market certain services, she says.
Denver-based Looking Glass calls its product Cohorts, a system that divides all households in the country into 27 categories based on demographic and lifestyle information. So, in addition to age, income, gender, occupation and the usual laundry list of census statistics, Cohorts identifies PC ownership, foreign travel, music preferences, even what people like to eat and drink.
Since cost is one of the biggest reasons people don't sign up for cable or drop it, income would seem to be the most important piece of information. But that's not always true.
"That's one of the variables, but so are age, home ownership and the presence of children," says Scott Schroeder, COO at Looking Glass. "Households with children are more likely to keep cable. And they're more likely to be good prospects."
Marketing-profile categories are labeled fictitious characters, such as "Alec & Elyse," 53-year-old empty-nesters who make more than $100,000 a year.
"Take Alec and Elyse; they will certainly have cable. But they're not so likely to have Disney as a premium. They're going to watch A & E, CNN, CNBC and History Channel."
Access to the Looking Glass data base costs about $35,000 a year for every 1 million subscribers, says Schroeder. Cablevision is one of Looking Glass' customers. Cablevision's billing data and other in-house information is cross-referenced with the Cohorts system.
"That's where the rubber meets the road in this whole thing," says Katherine Lewis, senior vice president of strategic market planning at Cablevision. "The Cohorts group takes it to the next level after demographics. Demos don't give attitudinal information."
Cablevision also uses PRIZM to get information on nonsubscribers, but their most effective research is going out and asking people why they don't subscribe.
"We found we needed to be upfront about price disclosure. We get a better response telling people the family rate is $35," says Lewis. "We need to do a better job of telling people what channels are carried and what's on them."
Some of the most effective marketing tactics come down to common sense, like listening to background noise on a cold call, says Jane Bulman, senior marketing director at Comcast.
"At the very base level, it's 'Do you have kids? I hear kids in the background. I should sell you Disney.' We're trying to train the customer account executives to hear that," she says.
Comcast has used PRIZM data, but it tracks most of its own data, Bulman says. Ultimately, the information does cut marketing costs.
"After I started doing segmenting, I got the same number of gross sales in a campaign, but I would spend half as much. Say I have 100,000 nonsubscribing homes, but I target only 50,000 rather than all of them, because I know the most likely takers," she points out.
The most important piece of marketing information, however, remains the simplest, notes Pete Gatsoes, vice president of market intelligence at AT & T BIS: "Do they watch TV?"