Cruise Line

Boosting bookings with segmentation

Opportunity

Strong competition from specialty and "blue water" cruise products was eroding the passenger base of a major cruise line. Cabin revenue was slipping due to declining occupancy rates. In the past the cruise line had successfully used direct mail for marketing promotions. But recent marketing returns, as measured by marketing dollars spent per cabin booking, showed this approach was no longer profitable. The cruise line needed a more effective way to identify and target their most profitable customers and prospects.

Implementation

First the cruise line needed to identify its best prospects. The cruise line turned to Claritas to segment and profile its customer database at the block group level. Not surprisingly, the profiling showed that the cruise line's best prospects were neighbors of past passengers. To identify these prospects by neighborhood, Claritas appended block group codes to each customer and prospect record

The segmentation also revealed that one segment of the customer database accounted for nearly half of the cruise line's past passengers for one of its summer cruise destinations. The travel behavior of this segment was analyzed for the summer cruise period. The analysis included indexing all cruise purchase components by this segment, including itinerary, booking period, cabin class, per diem, the selected offer redeemed and specific buying patterns (such as travel agency bookings). This information was then integrated with the customer and prospect profiles.

This detailed customer profile was used to guide all aspects of the cruise line’s marketing campaigns. The components of the profile determined the offer, the timing, and the message. The profile also identified the print publications, Internet travel sites, radio stations and television shows the targeted segment preferred. These were the media channels through which the message was delivered. Last the “most profitable customer“ profile was matched against prospect lists to identify the most qualified lists.

The customer profile was also used to develop a “conversion index“ for the cruise line's general collateral fulfillment. Each request for cruise line literature is scored against the conversion index to see how closely it matches the most profitable customer profile. Here the premise “birds of a feather flock together“ comes into play. The requestor's address is profiled at the block group level. If this profile is a close match to the targeted customer profile, the request scores a high index. This indicates a strong prospect and the expensive full-colored cruise line brochure is mailed. Requests whose profiles do not match the targeted customer profile score a low index and the prospect is mailed a less elaborate, low-cost flier. This application of customer profiling has enabled the cruise line to streamline its marketing budget – freeing up more resources for lead generation such as cooperative marketing activities with travel agents.

Analysis revealed that 96 percent of cruise passengers purchase tickets through a travel agent. Claritas developed detailed thematic maps targeting the areas where the cruise line's best prospects were concentrated. The cruise line's sales staff used the maps in their presentations to travel agents to educate them about the benefits of customer segmentation and target database marketing. By sharing the knowledge of customer segmentation, the sales reps served as marketing consultants to their travel agent partners, which significantly enhanced these important relationships.

Results

The application of customer segmentation and profiling was a success! Using the information provided by Claritas' customer segmentation analysis, the cruise line launched a special direct mail promotion for one of its summer cruise destinations. Only those prospect households that fit the profile of their most profitable customers were targeted with the promotional offer. The result? Resounding success! Cabin occupancy rates jumped 15 percent and revenue increased by 20 percent. Follow–up analysis of the campaign indicated return on investment (ROI) over 40 percent.