USING INTERNATIONAL POSTCODES

Understanding the power of postcodes

John Taylor, Managing Director, Geoplan

Postcodes have been available in various formats on the international stage for decades and have become a familiar tool for some of the most tried and tested DM campaign techniques. While many of us have used them on a relatively basic level to ensure efficient and accurate delivery of direct mail, what’s less well known is the scope to which detailed demographic and business data has become available alongside postcodes, and how it can be combined with internal customer databases to offer a great deal of depth to help inform marketing decisions.

It’s perhaps surprising to discover that postcodes and their various international equivalents are not quite as ubiquitous as you might imagine. Here in the UK they are part of our daily lives with extremely strong levels of awareness and public support - the UK postcode system has recently celebrated its 50th anniversary, for instance. Other countries, such as Ireland, will not have a fully operational system until 2011, when addresses will start using letters and digits.

But Ireland’s plans indicate just how important postcode systems have become for business, and are being seen there as an important step towards in their plans to create a ‘smart economy’. Expectations are also high that the launch of the system will create a wide range of commercial services.

Among these are likely to be a range of ways in which Direct Marketing professionals will use postcodes. For countries where systems are well established, they are regularly applied at key stages of the marketing process, from customer profiling and territory planning to marketing analysis.

So, how can they be used to improve planning and maximise the effectiveness of a campaign? What is the state-of-the-art in the use of postcodes for direct marketing and how can they improve marketing performance?

It’s important not just to view postcodes and their use in isolation. Marketing professionals can potentially gain a great deal of insight by looking at their own customer data alongside postcode information, so if you have a regional or local demographic drawn from your own sales efforts, overlaying the specific trends and patterns available from postcode data can allow businesses to understand why certain sales patterns are occurring (or even more importantly, why they are not). It’s even possible to take into consideration issues such as consider carbon footprint, ecological and corporate social responsibility.

For customer profiling, the objective is to understand which customers are most attracted to your offer and deliver the highest return. Once this is understood it is possible to calculate market penetration, potential and to quantify, identify and locate the candidate customers available to you in your marketplace. One of the key things that a universally recognised postal code structure delivers is the provision of a common key that allows you to link your own data to market data to location data. Whether this is demographic or business data, it assists in defining tone of voice, positioning and content of a given message or piece of communication. This is extremely powerful allowing you to assess market penetration, identify new opportunities and assess how to deploy resource on the ground to best effect.

All of this information can be readily analysed and overlaid onto current sales, distribution or store networks. This process can help you to understand the dynamics of performance and to establish relevant and targeted approaches at a local level.

The key components of profiling are the use of geodemographics for consumer markets or Standard Industry Classifications (SIC), for business markets, which are used in various regions including the USA and UK (where NAICS numbering system is used).

The basis of geodemographics is that people or households in the same area have broadly the same characteristics. This can be readily challenged and it cannot truly reflect beliefs, values, attitudes and behaviours. However, if applied sensibly these systems can contribute to effective segmentation and can dramatically reduce waste and improve performance. This is also true of SIC codes and their equivalents. The coding system helps to identify business type and can be used with turnover, employee size, length of trading and credit ratings to form a profile of your customer base.

In both cases the first step in the process is to attach the codes to a current database. The codes that perform the best within in the data are then matched against the population or business universe to find more of the same. The application of this type of data can deliver input at both abroad strategic level and can also inform localised sales and marketing activity.

The effective management and deployment of a marketing budget to deliver best return is a difficult process. The age old question and required answer, surrounding which element of the mix is working, remains as elusive as ever. It has become particularly difficult to unravel which element of the campaign has delivered with an increasing drive towards integrated marketing and the contribution of the internet. That being said, there is no substitute for some good planning, accurate targeting and careful coding to enable some degree of analysis.

This is particularly relevant when budget is deployed on a local or regional basis or where there is a pooled contribution from local branches or business units who feel that they never get their share of voice.

For DM applications such as door-to-door marketing, resource deployment is a vital consideration and an area where postcodes come into play. The efficient management of sales-based territories is important, because resource costs are high, so poor planning can have a very real financial impact. Applying postcode data and processes can allow resource to be accurately allocated, and gaps, overlaps and wasted effort can be eradicated. It is also worth considering how it can be applied to labour, fuel and printed matter and postal/fulfillment costs. The overall objective is that new national territories can be formed or existing territories can be fine tuned to improve performance and reduce costs.

Territory planning using postcodes should aim to reduce the overall effort required to cover a given territory, via efficient planning and reduced travel time. It should allow campaign planners to allocate appropriately sized sales teams and give them the option to allocate more time on the ground to be spent with customers, rather than just ensuring a territory has been covered.

Wherever your marketing plans take you on the world stage, it’s important to plan carefully and seek up-to-date local knowledge, as postcode systems are constantly under development and review. Even though there is international consultation and co-operation on postcode system development, countries do not operate a ‘one size fits all’ approach.

When planning an international campaign using postcodes and associated data, look closely at the amount and depth of information available from suppliers. How mature are the datasets? How much demographic and geodynamic information is available? How often is it updated and when did that last happen? Careful planning and research will allow you to apply the available data at to the points of your campaigns where they’ll have the greatest impact.