IDM Business Performance Award 2000: silver winner
Client: Thomson Travel Group
Agency: Evans Hunt Scott
Campaign: Thomson Founders Club
At its flotation in 1998, the Thomson Travel Group made 15 per cent of its shares available to private investors. This created a database of more than 600,000 people who were clearly responsive to the Thomson offering. Qualitative and quantitative research revealed that while half of these shareholders were interested only in the investment potential, the other half represented a potential affluent audience.
An 18-month programme of direct marketing was carried out, targeting the private shareholders to test the viability of direct marketing in the mass tourism sector. A challenge was set to demonstrate that using direct marketing techniques could drive incremental sales profitably.
Initial database analysis was carried out using questionnaire data and Acorn. It revealed that Founders Club members were significantly older and more upmarket than the core Thomson customer base. Seven out of ten are aged over 46, while nearly two-thirds take two or more overseas holidays a year. They have household incomes of £40,000-plus, high share ownership, substantial homes which they own, and take long-haul and multiple holidays.
The first year of direct marketing activity involved 'piggy backing' communications with shareholder information mailed quarterly. The result was a 22 per cent rise in bookings compared with a control group, producing a return on investment of 2:1.
A database merge-purge, deduplication and enhancement was carried out that allowed some transactional data from Lunn Poly, the wholly owned travel agency, to be added to the Thomson Travel Group customer data for the first time. A total of 6.2 million records were processed from 17 different sources to create a single customer view.
Founders Club members were profiled and two distinct segments identified. Top Bananas, the high-value segment, comprises those members who take top-quality holidays and who are willing to pay a premium price. Sunny Melons, the low- to mid-value sector, comprises those who take sun holidays and are willing to pay more to ensure they travel at the hottest time of the year. Offers and creative executions relevant to these segments were developed and achieved a 23 per cent sales increase over the same period in 1999.
A database analysis showed that 20 per cent of Thomson Travel Group customers account for 58 per cent of revenue. These customers were divided into different segments: those who booked both before and after the scheme were classed as Loyal Founders Club holidaymakers, and those who travelled for the first time after the launch of the programme were New Founders Club customers. A third segment was created for non-Founders Club customers.
This segmentation proved that membership of the Club drives incremental holiday purchases: more than 75 per cent of members had taken three or more holidays, compared with 5 per cent of non-members.
Loyal and new club members were also identified as spending more, with 40 per cent of these spending about £500 per person, compared with 25 per cent of non-member customers. The scheme increased bookings by 21 per cent and spend by 45 per cent per household.
Creating a customer database and segmenting the Founders Club achieved key benefits. By targeting club members, 46 per cent of bookings were generated from members who had not previously travelled with Thomson. A group of well-travelled and well-off customers was identified, which has a distinct profile to the company's overall customer base.
The programme helped to ring-fence loyal Thomson customers and increase the frequency and value of their spend. Overall, the scheme proved to be a major success. Specific revenue of £150 million can be attributed to the programme, accounting for £7.5 million in incremental profits, with a return on investment of 3.75:1. Further work is being carried out to extend and enhance the relationship with Founders Club members.
| All coverage of the IDM Business Performance Award 2000 has been reproduced with kind permission from Marketing Week. |  |
