FAQ

What is Cohorts?
Cohorts is the power to understand and access distinct customer and prospect groups, send the right message to the right household, and improve marketing ROI. Cohorts provides business-to-consumer marketers the ability to better serve customers and improve response by sending targeted, relevant, versioned messages and offers that lead to increased sales and customer loyalty.

Cohorts is household-based, dividing virtually all U.S. households into cohesive groups that share distinct demographic, lifestyle and consumer behavior characteristics. Each group is named to reflect its personality and to help marketers distinguish it from the others. For example, married customer segments range from Alex & Judith (affluent empty-nesters) to Chad & Tammie (young families).

Because it's a household-level (not neighborhood-based) market segmentation system—it helps you target the right households, not just neighborhoods.

How was Cohorts Developed?
Cohorts was developed using an advanced cluster analysis of a rich sample of U.S. households. This nationally representative sample of many millions of households was derived by combining selected data from the two leading consumer data companies - Experian and Equifax. The weighting procedure, developed by the U.S. Census Bureau, adjusted the database to make it a mirror image of U.S. households as determined by the Census. The procedure guarantees that your market profile reflects reality—as opposed to profiles derived from biased databases.

So, Cohorts is built from a wealth of actual, self-reported household level data, rather than the inferred or geographic level data used in other segmentation systems. This key difference greatly improves the precision of any marketing analysis, as well as the resultant marketing strategies.

Does Cohorts really work?
Yes. In numerous controlled tests, Cohorts versioned direct response campaigns have increased response rates, often dramatically. The lowest increase we have seen in a controlled test is 15%, and we have had clients experience actual lifts in excess of 300%. Cohorts-based versioning increases the ROI of marketing campaigns—because increased sales greatly outweigh incremental costs of Cohorts and versioning.

Why is Cohorts better than other segmentation systems?
Cohorts is based on the specific demographic and lifestyle makeup of each individual household. Cohorts understands that consumers will be more responsive to messages and offers that are relevant to their specific lives and lifestyles, rather than the average characteristics of their neighborhood.

On the other hand, the most widely used segmentation systems are based on area-level U.S. Census data. These geo-demographic systems look at a geographic area (ZIP Code, carrier route, block group, etc.) and assess the aggregated characteristics of that area, and then apply what they find to each individual household.

For example, if a block group (with 200 households) has an aggregated median income of $42,000 and median age of 56 based on Census data, every household in that block group is assigned the corresponding cluster code for income $42,000 and age of 56. In reality, few of the households in that block group will fit those exact demographics.

We have our own house-file scoring models, why do we need Cohorts?
Cohorts works hand-in-hand with models—after all, you can't build a relationship with a score. The Cohorts add the "face" to the data to improve messaging, while the models are intended only to identify and rank order "targets" for an offer. The optimal direct response campaign will be one that identifies the best prospects and is versioned to be relevant to each prospect. Cohorts provides the personality data from which to impact marketing creative. Additionally, because a relevant message improves list performance, Cohorts can enable you to mail successfully further into lower ranks in your model. Finally, house-file models only work on the data from which they were constructed, meaning they don't link to prospect names on external databases—Cohorts does.

Our business is so unique. How can Cohorts, an externally developed segmentation system, help us?
Because Cohorts is household-based, each customer record on your database can be tagged. This allows clients to understand each Cohort segment's behavior in the terms important to its own business. For example, we can look at the transactional behavior of each of the Cohorts distinctively, by recency of purchase, frequency of purchase, monetary amounts, seasonality of purchase activity, revolving balance information, etc. It's like taking a survey of your customers where you've sampled thousands rather than hundreds – it is a one-to-one match, based on name and address. Cohorts then adds a face and personality to your transaction data that allows you to create marketing messages with more relevance, and therefore, more impact. The results are specific and actionable.

How does Cohorts tie into my company's Customer Relationship Management (CRM) efforts?
We agree that marketers benefit from knowing as much as possible about their customers. After all, the customer is what drives every business. However, the job of the marketing department is not to develop and implement a CRM program, rather it is to cost effectively deliver and retain customers. Cohorts provides the customer information-based foundation to let the marketer accomplish this. It is not technology dependent, it works with your existing database, will complement any CRM initiative you have put in place, and it is cost-effective to implement.

Why are the Cohort segments all given first names?
One might ask what's in a name? In the case of Cohorts, quite a lot. Because Cohorts was developed through advanced statistical analyses of actual consumer databases it was built using data from real people. After the segmentation was completed and each household assigned to a specific Cohort segment, we found that some first names occurred with much more frequency and in some cases, only in a given segment. So when we talk about Alex & Judith (affluent empty-nesters) households, for example, we are talking not only about a cohesive group of affluent households, but households that are over five times more likely to contain a male named Alex than in any other household type. This first name analysis was performed on all 30 Cohort segments, helping give each a personality and adding rich texture.