Response Analysis – easy to do, so why is it ignored?

Generally, a business will put in a huge amount of work to win a client – pitches and proposals adding up a significant portion of dedicated resource. But once they start to use a businesses service, sometimes the dedication placed in winning the business seems to dwindle. Admittedly, this isn’t all the time, but the potential for it to happen is there.

In terms of data, data purchases / sales and predictive modelling, one of the easiest traps to fall into is to fail to fully “close the loop”. If a data services business wins a client with the aim of providing targeted prospect data or implementing a Customer Insight solution, invariably there would be a scoring process for the client’s existing data. This could be using a client’s own variables / values, an appended set of variables and flags, or a mixture of the two.

With the data scored, the next stage of the project begins. If its prospect generation, then the scores should reflect a prioritisation within the service providers own data source. If it’s an insight service, then the initial aim should be a schema for promoting and prioritising customers based on current & future campaigns and incentives. Either approach will provide a set of data that is intended for marketing purposes. These processes are fundamental and the core of what is proposed by the service provider, and bought into by the client.

But where to go from here? A fire-and-forget approach (as discussed on this blog previously) is easy, and hassle-free. It’ll result in some success and some failure. Because of the thought put into the process from the outset there’s also a chance that a client would come back to the service provider and ask for a repeat of the data file. And because of a shift in the data due to time lapsed, new prospects may appear, and old prospects may disappear.

However, this isn’t using effectual test-and-learn techniques; the process isn’t benefiting from valuable response analysis. If you can begin to understand why some responders agreed with the predictions, and why other responders seemed to appear out of nowhere, then a contact strategy can be finessed. In fact, there’s a strong argument to suggest that because a client has taken positive action in order to source or score their data prior to marketing, that very activity changes the make-up of the data over time – in effect, what you knew before may now be irrelevant, because an insight has driven a fundamental shift in strategy. Admittedly, a dramatic swing in a target market is quite unlikely! But the increased use of insight must be constant and self-training, rather than piecemeal and self-fulfilling.

CRM 2.0?

Well - it's been a while, hasn't it! My 2010 resolutions to post regularly disappeared in smoke. Let's see if I can improve in 2011!

As a result of some discussions online today, I started thinking about the things I'm interested in : the next stage of serving consumers information versus requesting information.

There've been quite a few fads, next big things and new hopes within marketing over the years. Customer contact has been the consistent focus, and we’re into the third decade of the internet now. But so far, nothing has really revolutionised the way that customers and retailers interact. It’s a two way process, sure, but it’s always been call-and-respond.

Indeed, going way back, we started with serving up print advertising and TV advertising, with retailers seeing the opportunity to get into people’s homes through new technologies. Then the customer took control (to a certain extent) by responding; using vouchers or cut-outs to redeem a service or request information. From there we moved into cold calls, and blanket mailings, to more advanced profiling for targeted direct marketing. The customer then had the power to manage contact (preference service registering), use the info as research, or disregard. Driving customers into stores, the advent of the Internet and online shopping gave way to a “library” approach to high street retail – browsing in store and securing deals online. In turn, personalised emails became a norm. This seemed to continue the cycle into the 21st century; service providers exploiting new technologies to gain more and more presence in front of their (increasingly) unwilling targets.

However, we’re now in a situation such that a new technology has developed with the people serving information, the advertisers, marketers and service providers, playing catch-up for the first time. Social media is the buzzword, and will quite possibly go on to define the last five years, and the next five. But because of the nature of its development, it is full of potential but fraught with danger.

I’d like to think that the biggest challenges we have to negotiate are general sensitivities to privacy and the “focus group” nature of the medium. Because of social media, we’ve got a fantastic opportunity to communicate with customers / interested parties directly, and immediately. However, we need to make sure that we don’t cross the spamming line once again, and instead engage in a two way conversation that provides genuine value and engagement. This approach has always been the gold standard of which 99% of businesses have fallen short. Just because it could be easier than ever to speak to customers doesn’t mean that we need to repeat the intrusive, bullish attitude that could often be the end product of dependence on constant outbound comms. Balancing ease of access with the simplicity and appropriateness of the message could come to define success or failure in the next 5 years.

Can ex-customers actually be better than new customers?

Well, no.  Obviously!  Ex-customers no longer provide revenue to your business.  In some cases, if the relationship you had with the customer soured to an irretrievable point, an ex-customer could even be detrimental to your business.  If this is the case, a small research project might help you to address some sticky points in your overall customer experience.

Too often your focus will swiftly move from an ex-customer to your newest acquisition.  But there is so much to learn from your old customers that can ensure your new customers are as fruitful as possible.  Perhaps you might even reactivate some of your old customers; what a bonus that could be, in an age where buying lists of data can often have mixed results.

Fundamentally, old customers can tell you a huge amount about not only what you can expect from your new customers in terms of length of loyalty, overall spend, purchasing patterns and even (if you profile the data) who your new customers are likely to be.

Old customer and transaction data is gold dust.  Nothing can tell you about your business more than how your business has performed in the past (although if your business has had a radical brand overhaul in terms of product ranges and targeting, then perhaps the best you can get out of your old data is who not to target).  Too many businesses ignore what they already own.  If you can harness the knowledge that’s trapped inside your old data, then you can make significant savings on marketing and acquisition, savings that will be reflected in a larger profit margin. 

As part of understanding your old data, it can help to amalgamate the data sources together into one customer system.  This will allow you to see which customers flip from active to inactive over a certain period of time.  It will also ensure that when your new data becomes old data, you’re in a stronger position to apply what you have learned and ensure your business is always moving forward.