Marketing Frontier

Strategies for a data-driven marketing world


Archive for the ‘Uncategorized’ Category

Healthcare communications — a work in progress

Posted by marketingfrontier on November 17, 2006

Over the past several weeks, we have received in our family two different phone calls from our health insurance provider.  Both of those calls illustrate the challenges involved in leveraging customer information to provide personalized communications and to reinforce relationships in data-driven marketing. Read the rest of this entry »


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Getting started with segmentation

Posted by marketingfrontier on November 17, 2006

Share of Wallet is a critical metric, but like most single metrics, it has limited value.  True, Share of Wallet will prioritize targets for marketing activities based on size of opportunities.  However, the fallacy comes from assuming that all the customers with the same size wallet opportunity are the same. 

The differences between customer groups, usually referred to as segments, provide critical insight for marketing programs, product assortment, business processes, etc. that can change the fundamental nature of the business’s relationship with customers.  In addition, segmentation can provide the foundation for  metrics that actually measure changes in the dynamics of the customer base.

Segmentation can be a daunting task, however.  How do you get started? Read the rest of this entry »

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Making results, and measuring them too!

Posted by marketingfrontier on November 17, 2006

Last week, I wrote about how Janet determined her target segments, and then identified the product gap or frequency gap for each segment.  Then I wrote, “she marketing to them,” and left it at that.  For any experienced marketer, it is never just “she marketed to them.”  Rather, the next critical step in growing a customer base is determining the right mix of communications and incentive, and a motivating creative delivery to convey that information.  Add in the need for multi-channel communications, and we have a heavy load for any marketing team to deal with.

But dealing with that load, and then measuring the results, is vital to successful data-driven marketing. Read the rest of this entry »

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Share of Wallet – The Next Level

Posted by marketingfrontier on November 17, 2006

In the previous blog, I discussed how Janet, the fictitious Marketing Director of ABC Autoparts, developed purchase frequencies for her Best Customers for windshield wipers and oil and air filters and was able to use that information to target specific offers for those products to customers who resembled Best Customers but did not purchase like them.

The question I posed at the end of the blog was “how can we use this learning to develop a broader strategy?”   The goal is to have a broader impact on total company revenue, while still maintaining a highly targeted (and therefore efficient) customer contact strategy. Read the rest of this entry »

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Finding Lifecycles

Posted by marketingfrontier on November 17, 2006

Once you have realized that understanding customer lifecycles is a critical part of targeting customers at the right time in their purchase cycle, the next question becomes how to do so.  Often this consideration becomes a daunting one, since the process can become so complex as to be almost impossible.

The key to success here relies on one of my core beliefs — it is better to be “about right” fast, than to delay to achieve perfection.  While targeting customers based on their personal lifecycles may be difficult, segment lifecycles can be understood and leveraged in a fraction of the time with a fraction of the work.

Let’s review an example of how this can work, so that you can see the potential. Read the rest of this entry »

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Right product, right time…

Posted by marketingfrontier on November 17, 2006

Ever receive an email from a supplier that could be the right product, but just reaches you at the wrong time?  We did recently, when we received a solicitation for a new commercial printer/copier for our office.  The solicitation was well done, the offer (financing) compelling, but the timing was all wrong — we moved into new office space three months ago, and bought our new equipment in the following several weeks.  The best offers don’t result in sales when the timing is off.

Adding the component of time to customer targeting can provide a substantial increase in response, revenue and profit.  But how can you add time without adding excessive complexity to your marketing analytics and profit?

Many companies would say that they do incorporate time into their marketing programs.  After all, don’t they create seasonal offers all the time? Read the rest of this entry »

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Share of Wallet — the Upside to Customer-centricity

Posted by marketingfrontier on November 17, 2006

As companies seek to identify customers that should be prioritized for data-driven marketing, one criteria that is often not considered is “Share of Wallet.”  Share of Wallet can be a difficult calculation to make precisely, but using an approximation of the upside potential at the individual customer level can dramatically change your marketing strategy and target.

What is “Share of Wallet”?  Simply put, Share of Wallet is the measurement of the amount of spending a customer will do in your category and the share that he/she actually spends with your company.  This measurement is as true for B2C companies, measuring consumer purchases, as for B2B manufacturers, who are measuring their revenue on a customer basis vs. what money is spent by that customer with competitors.  Across both types of industries, Share of Wallet is a critical metric to determine potential upside.  And potential upside is one measure of where you should spend your marketing $$.


So why don’t more companies make Share of Wallet a key metric for success?  Because Share of Wallet is difficult to measure on an individual customer basis.  Customers do not like to tell you what they are spending with competitors, let alone why.  The only way to exactly measure Share is to audit customer books (or checking account), and that is not an option.  A survey is another alternative, but only a selected group will respond, and you will want to market to everybody.  Read the rest of this entry »

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What comes after the loyalty survey?

Posted by marketingfrontier on November 17, 2006

Let’s say for the moment that your company has completed some research on loyal customers, and has discovered (1) benchmark behaviors for that segment and (2) key requirements that loyals feel are important and that your company meets well.  Let’s say that your company has also roughly determined what share of total category spending is spent with you, by customer.

OK — now what?  Remember, up till now, nice research, no ROI…

The best attack is a twofold one — first, examine customers who meet the requirements profile of loyals, but don’t spend that way.  Establish a series of communications to that customer to reinforce customer-described points of difference and consider frequency-based offers to drive consistent brand contact.

Second, examine customers who are spending consistent with loyal customers, but show some significant gaps between that they think is important and how your company is performing. These customers are at risk.  Again, establish a consistent series of communications to this customer segment.  Review their requirements and determine if meeting them is consistent with your mission, positioning and capabilities.  If so, develop specific plans to improve performance in those areas and highlight that information to the appropriate “at-risk” customers. Develop continuity offers to maintain customer traffic velocities.

For customers who require something that you cannot deliver, consider alternatives that are appropriate to the value of those customers, implement and communicate.

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Loyalty — A behavior or an attitude?

Posted by marketingfrontier on November 17, 2006

Often companies get confused about loyalty.  Everyone knows that loyalty is important to their business at some level — they have read The Loyalty Effect (Reichheld) or at least read the dust jacket :), and they understand that loyal customers help a business to grow.

The question is how many loyal customers do you have, and how to you identify them?  In my previous post, I identified loyalty with an expressed preference for the brand/willingness to recommend, and also with “share of wallet” — the percentage of total category dollars that are spent with that company.

Loyalty is therefore both an attitude and a behavior — but let’s examine the attitude for a moment.  Loyal customers are defined with an expressed preference and a willingness to recommend, but what causes that condition to exist? 

Every customer knows at some level what is most important to them in terms of performance in your category or industry.  The list will always include price (how could it not?), but it also usually includes a series of “service-related” benefits such as timely customer service, knowledgeable salespeople or frequent contacts.  Those customers also know how your company is performing on each of those attributes.

When you examine your most loyal customers, pay particular attention to the factors where what those customers value meets what your company delivers.  Those are the factors that drive loyalty.  When you examine less loyal customers, notice the areas where the gap between what is important and what you deliver is the largest — those are areas to improve to gain those customer’s loyalty.

Loyalty is both an attitude and a belief, but the attitudes drive the beliefs — determined by what attributes customers value and how you deliver on them.  Reduce the gap between value and delivery, and increase loyalty and profitability.

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Difference between retention and loyalty

Posted by marketingfrontier on October 12, 2006

I am struck often by the number of clients that confuse customer retention with customer loyalty.  As I often say, what gets measured is what matters, and if retention is the primary measurement, then loyalty is likely to get short shrift. 

Now, I do not want to cast aspersions on companies that do measure retention, since that metric, in and of itself, is often overlooked.  However, if the goal is to increase revenue faster than costs, then loyalty is one metric that must get higher attention.

Retention, of course, is the percentage of customers who make repeat purchases over a period of time.  Not too difficult.  Note, however, that this calculation does not include some key factors that determine both profitability and loyalty:

  • what products they purchased, and at what margin
  • how often they shop in the category
  • how often they shop with you
  • where the bulk of their dollars are spent

Now, if loyalty is defined as an expressed preference and a willingness to personally refer friends and family (Reichheld), then these additional factors will begin to address those issues.  But how do you get this information, when the bulk of it is not included in your database? Read the rest of this entry »

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