E Source

Target marketing in the energy sector using PRIZM

The Company

E Source provides independent analysis of retail energy markets, services and technologies. Its clients include electric and gas utilities and other energy service providers, large corporate and institutional energy users, government agencies, energy service companies, manufacturers, consultants, research institutions and other organizations in nearly two dozen countries worldwide. One of its research services is the Green Energy Watch, which is designed to provide trends and cutting-edge information about marketing renewable energy to green pricing programs throughout the U.S., as well as to green energy marketers. Green energy is naturally replenished and uses renewable energy sources such as wind, hydro and solar energy. It also uses biomass, such as landfill gas and cow manure.

The Challenge

Green Energy Watch faced an ongoing challenge in its support of direct mail campaigns for its clients – increasing take rates and lowering its cost per acquisition ratio. A key strategy to effectively meeting this challenge was to utilize PRIZM, Claritas’ premiere lifestyle segmentation target marketing system, in selecting target groups, as opposed to random mailings.

The Case

Green Energy Watch marketers first compiled a list of 65,000 green energy users from its members' customer lists. Then, using PRIZM, the segments were identified and a profile was built. The profile showed that green energy users tend to be in the segments that are more urban and populated by people who are more highly educated and earn a high income. This target marketing profile was then incorporated into a series of test direct mailings, and the results in cost savings relative to response rates were telling. The PRIZM data was also utilized to develop different versions of direct mail pieces that played well by certain segments based the findings from the test mailings. The process, known as "versioning" allows the marketer to use messages tailored to a specific target marketing audience.

The Results

In a targeted mailing supported by PRIZM data, a Green Energy Watch client reported a 1.35 percent response rate compared to 1.02 percent in a random control group, and a cost savings versus the random mailing of 28 percent or $7.71 per customer. In another client mailing the results were equally as impressive with a response rate of 1.09 percent compared to 0.67 percent for the random group mailing. This translated into a cost savings of $26,000 or $22 per customer.