Loyalty - Is That What We All Are Striving For? Customer Loyalty is Equivalent To Successful Marriage

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What is Customer Loyalty? It is a state of marketing nirvana that all of us are trying to get into, equivalent to a successful marriage where both parties are satisfied with their relations. Our customers develop an emotional bond with our product through a series of repeat purchases that are all positive experiences. All that is due to the fact that we marketers pay attention to every detail and preferences they state each time they come back. And we - evolve and change while catering towards those preferences.

Customer loyalty also implies some sort of solid comfort and knowledge (from the both parties) that at times of conflict or misunderstanding - their interests will get worked out, talked over and resolved. There is trust from both sides - the merchant will not disappear or refuse service and the customer will not run off like crazy to another provider without engaging into the conversation. Now, we are arriving at the true connection between loyalty and database marketing = two-way consistent communication.

Developing the bond between you and your customers is all what the database marketing is about. Loyal customers are more valuable for your business than average because they:
- Have higher retention rates
- Have higher spending rates
- Have higher referral rates
- Higher lifetime value
- Are less expensive to serve
- Buy higher priced options

So which rate listed is more important that others? Of course, the retention rate – once your customers are gone, they are gone and it does not matter how frequently they purchased or how much they have spent.

So what can you do as a database marketer to keep them? – Use the information and data you have and personalize your services accordingly in real time. The industry has a myriad of success stories that illustrate the best known principles of database marketing. One example would be an article by the Chief Marketer’s writer, Bryan Pearson where he views and describes a successful customer loyalty strategy as a dynamic ecosystem. Which makes sense, as the idea is to surround your customers with as many touch points for service/product consumption and positive interaction. We, humans are “hungry for more resources” social beings and respond well to such environments where all our needs are constantly catered in one place at the right time by the same provider as long as the quality and variety aspects are in line with our expectations. And if you add the consistency of touch point interactions - you lock us pretty in a dreamworld of instant gratification that is prolonged!

The top three strategies that are shared in the article include:
1. Understanding your segments, where “extensive market tests definitively prove that customizing content and messages to focus on relevant products and solutions drives dramatically higher response rates and increases the profitability of direct communications to this segment. This model of testing and analysis has demonstrated real-world success in using customer transactions to predict purchase behavior.” Thus, you are able to collect those preferences, track the changes in consumer behavior and predict future purchases for similar customers.
2. Segmenting ahead of the curve, implies taking this analysis a notch up and predicting the future behavior for your customers before they realize that they have new preferences based on marginal deviations from the norm. You can track the info back to some specific event and tailor your communications to test the probability.
3. Enhancing the customer environment, goes without saying into the equation as it manifests your response to the transactional data you receive/the feedback in other words. You make their repeat purchases even more pleasant, more relevant – thus polishing the emotional connection.

All in all, it appears that paying attention pays off in the business world and the laws of evolution are attributable to a successful marketplace. Add an agile human intellect and action in between, and you are likely to follow the lifecycle of a civilization – growing your business. Isn’t it what we - marketers are here for?

Top Ten Interactive Marketing Trends Observed Throughout 2007

Filed Under Creative Marketing, Social Media Fruits, Web Technology, Effective Communications, CRM, Online Marketing, Marketing Channels, Interactive Marketing | 2 Comments

I have been thinking about the top ten interactive marketing trends that I can name on the top of my head that are still pursued by the fellow marketers. I came up with a list of those that was not as surprising as I wanted it to be. At the same time, it reminded me how long marketing as a profession has been around. Reading and tracking various industry publications (Brandweek, AdAge and NYT) as well as googling the term “Interactive marketing trends 2007” for value-add opinions in the top marketing blogs, brought me to the following top ten list:

1. Advergaming
2. Online video
3. Consumer generated media
4. Social networking
5. Mobile social networking
6. Interactive TV
7. Relationship marketing
8. Evangelism marketing, or word-of-mouth marketing
9. Paid search marketing
10. Community-powered search

Regardless of the research executed on the topic, this list does represent somewhat subjective professional judgment. Simultaneously, the top ten list is not necessarily prioritized by significance of the item.

Advergaming has been on the market for two years and according to Zodiac Interactive’s EVP-Sales & Marketing Rick Howe noted, “Advergames are compelling, sponsored interactive content that enables leading brands to attract large, targeted audiences and effectively promote their brands across multiple platforms. Custom branded Advergames and contextual in-game advertising are considered to be one of the most effective and stickiest vehicles to engage consumers in deeply engaging online experiences. Similar to product placements or ad placements in movies, in-game advertising is subtly placed throughout the gaming experience in a form of banner ads or fictional placements to make a game more real. It is almost surreal to live without advertising! Internet games are filled with products like Cheetos, Mountain Dew and Laffy Taffy. Advertisers know that tomorrow’s consumers are today’s children and they utilize this knowledge in shaping brand loyalties like gardeners growing an orchard.

Online video is very popular these days thanks to its captivating effect as a medium and a number of easy-to-use online applications that fully support its production, sharing and editing. YouTube, Jib Jab and the rest became so common that everyone knows how to use those and does it on regular basis. Online accessibility provides for wide consumer coverage and the interactive video effect allows for better envisioning for potential customers how the product can be used and what the actual benefits are. One of the best examples would be the animation effect in email marketing that a chocolate provider used. According to Amy Johannes from Chief Marketer, the marketer was able to boost its sales by 49% by utilizing animated images in the promotional emails. They also ran a Valentine’s Day promo. “Clickthroughs on an animated e-mail were 203% higher than those showing just a static picture, the study found.” Consumers are used to rich media applications and they expect messages directed at them to be animated, interactive or some sort of participatory.
Finally, it is almost a fact that every strong marketing team is able to produce or to induce the production by customers of humorous online ads and distribute them virally through social media channels, where YouTube is one of the players. According to the eMarketer article on Online Video: Seeing the Whole Picture, “it projects that the number of online video viewers in the US alone will rise from 114 million in 2006 to 183 million in 2011. “
As B2B April article states the point of view of Matt Ross, president of McCann Worldgroup San Francisco,” Entertainment engages, and entertainment sells. People will grant you a tremendous amount of time if you make it rewarding and worthwhile.”

Consumer generated media, or in other terms user-generated content was a very loud marketing term in 2006. Everyone in the marketing community was thrilled at the opportunities and effects it provided. According to Jeffe Juice, one of the marketing bloggers, “Everyone from Doritos to Mentos, MasterCard to Panasonic, Chevy to Oreos, offered user generated content programmes. And not without good reason. Consumers really responded. The UGC programme that Renegade created for Panasonic was great for engaging the action sports community. Mentos’s effort to ride the wave of consumer interest in watching Coke bottle geysers has created a corresponding explosion in sales (up 17% over the previous year). Looking ahead, however, marketers will need to raise the stakes if they hope to get consumers involved in such campaigns. One way will be to offer cash (or other incentives), not just for the winners as Doritos is doing, but for all UGC that other consumers end up watching. This “pay for play” approach is certainly gaining traction with the emergence of Current TV (which is paying for ads) and Revver.com (which is paying for content). Creative consumers will undoubtedly follow the money.” These days every third American has a blog, or knows how to produce a video and get paid for it. A lot of small businesses and specialty agents started using YouTube channels and blogs for self-promotion and business development due to the interactive intimate touch this medium provides.

Social networking showed its popularity especially with the techies (early adopters) and the young teenage audience that grasps every new online tool at the speed of light. At present one can see the movement goes mobile, when social networking sites get support through mobile applications. “I do not use email any longer; just use Twitter that is incorporated on my Facebook page.” says Jeremiah Owyang, one of the online top web strategy bloggers. eMarketer digested the research on attention measure in social network sites done by Complete and suggested that “the top six social networks all saw increased attention, and the top 20 social networks received over 15% of all attention in June. MySpace consumes an outsized share of Internet user time overall.” There is a potential for marketers to engage the audience and utilize this attention on those sites.
The UK is similar enough in Web usage that it can serve as a directional guide to Internet behavior in the US. In the study, 68% of UK social networkers said they had visited another Web site after seeing something on a friend’s social network page. Just under half used a search engine to learn more and 35% had forwarded the space, ad or link to a friend. Behavior targeted advertising is believed to be a solution for richer engagement of this audience towards products and services that their friends are using or referring to.

Mobile social networking provides a great opportunity for location-based marketing. According to eMarketer and Juniper Research’s “Mobile User-Generated Content: Social Networking, Dating and Personal Content Delivery” report, “Mobile end-user generated revenues worldwide from social networking, dating and personal content delivery services will increase to more than $5.7 billion in 2012 from $572 million in 2007.” Mobile phones become the main means of online access and communication. There is a great potential for integration of location-based marketing and mobile social networking to make it for a rich customer experience. Imagine with what ease decisions could be made by consumers when they socialize and get instant notifications from the social networks sites and simultaneously they are presented with the service/product offerings that can continue the social experience. The best example would be someone who just arrived to a new city and gets a notification from a friend to meet in an hour for a dinner in a certain area. Simultaneously, a listing of context-driven places is displayed to allow the parties agree fast on where to meet. The whole interaction can take 5 minutes, which usually might have taken 20 provided that one of the parties was familiar with the location or was thinking about it in advance.

Interactive TV proves to be much more effective than ads, as the level of audience engagement brings significant results. The audience interacts with the content displayed and gets engaged into purchasing decision-making process. According to the May article in Television Week “DirecTV Hawkeyes Interactive Spots”, “viewers are responding to interactive ads about 11 percent of the time, exponentially higher than the response rate for Internet ads.”

Its effectiveness might be due to the multitasking behavior that expands in all levels of an average user. The most recent example is Nike’s interactive campaign, “Quick Is Deadly” for its Zoom training-shoe line. “It would include more than 20 minutes of interactive content accessible to Dish Network subscribers with DVRs.” This is about 30% of the network’s 13 million subscribers — will be able to click into 30- and 60-second TV spots starring San Diego Chargers running back LaDanian Tomlinson and other fleet-footed Nike athletes. Nike gives them the option to view interview footage of the football star discussing his exhaustive training regimen. The footage of Mr. Tomlinson’s signature spin move in different speeds. The Nike-branded game designed to test viewers’ remote-control reflexes and a three-dimensional demo of the Zoom shoe. Using ZIP-code information in each Dish unit, users will also be able to find stores carrying the shoe at the click of a button. The campaign does not give users the option of buying the shoe from their set, although the technology does enable that function.”

Relationship marketing has it origin from direct marketing and is evidenced to be relevant in the current environment where consumers became sophisticated enough to demand personalized service tailed to the individual needs. Customers today are demanding more in their expectations of how they are serviced and the levels of service they receive. More often than not, a level playing field between many businesses today means the only real differentiation and competitive advantage we can develop and sustain will be the relationships we forge with our customers. Obviously, the more personalized the catering, the more engagement marketers would receive from their customers. Amazon, as one of the leaders in the transparent customization process, illustrates the benefits that relationship marketing can bring in order to retain its existing customers and acquire the new ones. As an online retailer, its audience and markets is very broad and diverse. It is segmented by geo regions, however its demographics is not clearly defined due to the scope of retail industry. However, the total online shopping market comprises over 26 billion people. Clearly, Amazon utilizes behavioristic approach to segmentation, using database marketing. Its acquisition strategy starts with Level 1 (mass marketing), it is not discriminated but slightly targeted based on searching, browsing space and search words, which is an appropriate acquisition strategy for an online retailer. Amazon’s marketing programs follow the pattern of customer differentiation process matrix in its communications and benefits to the users. It comprises of 4 levels:

Level 1: Beginner (Free Super Saver)
Level 2: Purchase patterns captured (Buy 4, Get 1 Free)
Level 3: Heavy user, hooked (Amazon Prime)
Level 4: Heavy user is rewarded by savings (Amazon Visa Card)
Obviously, Amazon’s strategy is reflected through its marketing programs where it moves along the entire quadrant in the full new user transfer into customer circle, while utilizing its mass customization capability that is transparent to the end user. From the standpoint of current customers, most of its programs imply the development of 1:1 marketing, while upgrading services and offering for the loyal customers.

Evangelism marketing or word-of-mouth marketing keeps its relevance in the marketers’ tool kit. Word-of-mouth marketing often targets influencers — people who are passionate about a product category, and who are perceived as credible sources. The theory is that reaching more influencers increases the odds that they will spread the message. The interactivity piece comes into play in the ability of those individuals to build credibility and relationship easily due to expertise or their own investment into the service/product they promote. There is also some sort of role-modeling that those individuals exercise that allows for effective promotion. According to the Bridge Ratings/University of Massachusetts study published in August 2007, getting just about anybody else besides advertisers to convey the message would seem to be more effective. The study also revealed that 93% of respondents said they were moved to take some sort of action by WOM influence. eMarketer estimates that 20% of US adults will be WOM influencers in 2011, up from 17.5% in 2007. Web sites, blogs and other technology are making it easier to spread the word on a favorite topic.


Paid search marketing is continuously growing according to David Wigder from the FutureLab, Marketing Strategy and Innovation Blog, as a core tool for online marketers. There are several reasons for search’s continued dominance as an interactive online activity. Search allows marketers to:

1) Engage consumers as they actively seek information in market, thus providing them with relevant content during the selection process of the buying behavior when they need it.

2) Connect consumers with relevant content based on self-identified interests.

3) Pay only when consumers click on a sponsored link, no waste in marketing expenditures.

4) Scale spend in the channel (to a point).

5) Enhance the productivity of other channels, while integrating other communication channels.

It is almost a fact of life that prospective buyers receive information from a variety of channels and do engage into online search before they purchase. Paid search provides for easy-access, relevant information based on the messages communicated through TV, radio, print and word of mouth.

Community-powered search finds its relevance in interactive marketing when “consumers are hungry for relevant content, but prefer to trust their peers, friends or expert community. More relevant consumer experience is of value that community-powered search engines provide. Customized search engines such as Eurekster Swicki, Rollyo and Yahoo Search Builder are likely to become more popular as search results are informed by the collective experience of the community.”

In retrospective, there has to be something else, something new in the marketing tool box that is not there yet publicly known. My gut feeling and overall assessment says that all the top ten “trendy” things already reached the masses or to be precise the mature crowd. The early adopters are up to something new and hopefully I am about to run into that in the near future.

My Lifetime Value (LTV) as a Customer for Amazon

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Last three weeks of the MBA…cannot wait till I am done and ready to pursue my next adventures! However, I promised to share my recent learning on calculation of lifetime value in the database marketing class. My individual project required the calculation of my LTV to a service I have an extended relationship with. Amazon was my choice.

Relationship and Frequency Data:
- Length of active relationship = 9 months
- Average purchase over 6 months is $ 36.57
- Average frequency: 1.5 per month
- Average order: 3 books
- 99% of orders are books

Assumptions:
- Acquisition costs = $ 25
- Variable costs = 18 %
- Retention rates: 95.9% for first 6 months, 97% for the next 6 months, 98% for the next 24

There are 4 levels of customer engagement:

Level 1: Beginner (Free Super Saver)
Level 2: Purchase Patterns Captured (Buy 4, Get 1 Free)
Level 3: Heavy User, Hooked (Amazon Prime)
Level 4: Heavy User is Rewarded by Savings (Amazon Visa Card)

Each level of marketing programs reinforces continuous purchasing behavior, increases frequency and average purchase value that are paramount for increasing overall LTV.

Presently, I am a consumer on Level 3, as Amazon Prime Buyer. With the assumption of 3 years as my projected life experience with Amazon, the LTV amounts to $634. My switching costs are quite significant at this point and comprise of $79 of annual fee, ease of use, loss of automated purchase process, brand equity, security and trust that the service of the competitor might or might not be delivered.

As far as the effectiveness of this program, it did increase my frequency by eliminating time and quantity restrictions. I purchase twice as much on demand, increasing my total spending by 50 %. Simultaneously, it ensures committed 11-12 orders per year based on the annual fee that is a pre-paid shipping expense, thus increasing overall probability of purchase.

Retrospectively, I made a smooth transition from the prior 2 levels:

- Level 1 (Free Super Savor) made me buy in triplets manner which drove consistent purchase order to be roughly $28. At this stage, my LTV amounted to $348 over 3 year period.
- Level 2 (Buy 3 Get 1 Free) made me buy more books, increasing the level of frequency and ensuring that average order always amounts to $ 49. At that stage, my LTV was $ 507.
- Level 3 (Amazon Prime) increased my LTV to $ 634.
- Level 4 implies getting Amazon credit card. This could be a significant step transferring a heavy user, like me into a lifelong customer, however, the one time savings of $30 and the hassle of having another credit card is not enticing enough.







The 4 level approach works well while acquiring new users and transferring them into heavy users and ultimately into loyal customers.

Frequency of purchase, volume and average purchase value play a major role while affecting LTV, thus the following initiatives are advisable to expand into:

- Cross-selling is optimal to generate higher frequencies of purchase. Bundle packaging and offerings could be considered as alternative offerings based on the search data.
- Branding initiatives could help to seed awareness and repeat the message that online you can find it at Amazon: all the goods, ranked, recommended, traded – already pursuing community engagement
- Utilizing referral campaigns to potentially eliminate acquisition costs and carry the branding message (though the latter are quite low)
- Developing an alternative to the level 4 program (Amazon credit card), perhaps just a points card for customers that are not responsive to getting another credit card. It can still provide the same data, but alleviate the commitment factor implied in the financial decision of signing up for a credit card.
- Not sure how I missed it, but Amazon does a good job utilizing social media and web widgets to generate more interaction and customer involvement. Brian Oberkirsh has a great post on it here. I wish the design and usability of Amazon could be better and user friendly..too busy and too much going on for me when I sign up.

P.S. Just ran into a good chart on Bnet brought by iProspect on the Purchasing Power of Web Sites. Clearly, Amazon tops the score. (Added on May 15, 2007)
Purchasing Power of Web Sites (IProspect)


Why Some Loyalty Programs Work and Others Don’t?

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Three week intensive course of CRM class uncovered the basics of customer loyalty aspect: loyal customers add more lifetime value (LTV) and we marketers should be focused on it and court them as they are less expensive (they are knowledgeable about your service and product and thus take less time and money to service, they might even educate your prospects and refer). Well, it all makes sense and this week we discovered the opposite! According to Werner Reinartz and V. Kumar article on “The Mismanagement of Customer Loyalty“, customer loyalty focus only can be a big mistake.

Studies show that loyal customers could be rather demanding and not willing to upgrade, buy more or pay a premium. How about the obvious resentment in some consumer industries that loyal customers experience when they are hogged or bombarded with upsell messages? I might buy the product more frequently, but why should I pay a premium or extra as I know exactly what the product value is. Why do I want to spend $70 a year just for 2 day free shipping if I can continue buying my books on Amazon in triplets to use a free shipping option of purchase order that exceeds $ 30? It works well, why change? Thus, loyal customers can be quite price-sensitive.

In business-to-business industries, loyal customers can be expensive to serve: as they buy in large volumes and dictate the terms. A closer look should be taken at the relationship between the loyalty and profitability. One of the solutions provided is time-driven activity-based costing. It allows to uncover the costs of business activities and all the time spent on them.

What about endorsement? Supposedly, loyal customers are your product evangelists. But, looking just at the purchase behavior is not enough. It is a combination of attitude and consumption that makes an average heavy user an endorser.

The bottom line is that the link between loyalty and lower costs = profitability is industry specific. Consistency in purchasing behavior and attitude/emotional connection to the product make the best referral agents from your customers. To choose an appropriate loyalty strategy, segment your customers by longevity and profitability.

Web 2.0 Expo, Day 2 and Day 3, Experience Takeaways

Filed Under Creative Marketing, Web Technology, Effective Communications, CRM, Conference | 2 Comments

It took me 2 days to get into my normal routine after such a whirlpool of knowledge sharing and social networking using traditional and web technology methods. Instead, I am still catching up with all the people I met. However, I thought I would quickly put my notes in this post. So what happened within those 2 days and what and who inspired my curious mind?

I. Behavioral Targeting, a session led by Basem Nayfeh, explored the world of web analytics and database marketing that allows to target your customers based on their behavior. It is not a new technique, but I was happy to see how pronounced the topic becomes. The complexity and at the same time, the solutions it brings are worth exploring by every marketer in any given organization. It allows to make a pause and ask a question where consumer attention is and follow it. Paying attention to customer steps on your page or online allows to be an effective marketer. An interesting fact that 60 % of content is posted by someone “we know”, “you know”, exemplifies well that our social behavior does not change dramatically on the web. Behavioral segmenting is intelligent segmenting and qualifying people based on their actions: (searches made, product interests, articles they read, navigation, geography, keywords, workplace attributes). Behavior is captured and targeted message is delivered, new knowledge about your product is discovered, etc.

II. Web Analytics and Internet Marketing Solutions session by Akin Arikan touched upon similar topic. He also shared a free whitepaper that illustrates well the major points on how to optimize your online marketing campaigns. The Web Analytics Recipe Cards provides an overview on how to maximize the number of qualified leads captured online, maximize online and offline revenue and increase brand awareness. Another document that is worth reading, shared by Unica, summarizes how today’s marketers can anticipate, understand, help their companies profit from the web transformation.

III. Social media discussions were quite popular and interactive. I am “delegating” this topic to Jeremiah and Mario, as lots of coverage can be found at their prominent blogs: Marketing Nirvana and Web Strategist.

IV. The best part of the entire event for me was meeting a number of brilliant people. The social aspect of the conference attendance left the most satisfaction. People who make a difference in this industry being in either big or small companies is the biggest asset of web.2.0 revolution and evolution. I had a lot of fun meeting people at the expo, at the after event parties and during live upstreaming opportunity with Podtech. The combination of knowledge and social capital gained definitely exceeds the projected ROI. Web 2.0 expo 2007 is money and time well spend.

V. (Added on April 29, 2007)
And I also wanted to express my joy and thanks to Marcelo Paiva who volunteered to help me fix my style sheet issue when I discovered it at the event. I still cannot help but smile every time I see my new blog design! People would point me out that due to some coding my blog content would show up crookedly in Firefox. This was rather embarrassing since most of the web 2.0 crowd uses Firefox and while sharing and introducing myself I had to make a disclaimer. Not any more! Social media got another outcome of connecting people that might never be due to geographies and other restrictions. If it were not for Jeremiah’s live blogging and video casting at the event, I would never have a chance to get fast help and collaboration right away. Moreover, we used Skype to do virtual collaboration and remote desktop access tool VNC to fix the problem! This was a very empowering experience, collaboration on the user level where you get the same results as if you work in big corporations with virtual teams, but here you use basic web 2.0 tools that enable individuals!
Marcelo also created my new logo, which I find rather a perfect fit. Talking about branding on one’s feet and Skype!
Finally, we discovered similarities in professional interests (user design, marketing, CRM, segmentation) that allowed both of us developing another value-add professional connection, which we completed via registering it at LinkedIn. :)

Web 2.0 Expo Day 1, Knowledge Nuggets and More Inspiring People

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Day 1 was so good: the energy of people I met and the knowledge I got kept me so invigorated and excited throughout 18 hours of stimulation.  Before the next wave of events hits my “ship”, I wanted to set in stone the nuggets for Day 1 at web 2.0 expo.

I. Web Technology

Google Analytics and all the magic you can do with this free tool was shared by Brett Crosby. Get your web metrics into the order, get your data and make your site more effective, analyze your marketing campaigns ROI.(Example: Paris Hilton Commercial, was produced normally in a ad agency, but distributed through the web (YouTube). The effect is beyond what a TV ad of the same caliber can do. Due to the viral effect, people actually went online themselves (control of content/infomation consumption) and watched it on average of 6 times. Where else do you get such coverage, reach and ROI? It was cheap to place on the web!) The package is free, delivers on the promise and can make a difference in your web communications. Spend a few minutes and learn more how you can optimize your web site. You do not need to be a statistician to get the maximum benefit. (I am going to deploy it for my blog and once I have enough experience I will share my recommendations).

  1. Google Analytics = track your traffic and ROI on marketing campaigns
  2. Google Webmaster Tools = know your audience and optimize your site
  3. Google News = free way to make images searchable
  4. Google Maps
  5. Google Earth
  6. Google Catalogs = upload your catalogs, get the content out, make it discoverable
  7. Google Website Optimizer = great tool to track PPC, does not hurt organic search (was considered during the development stage), you can even start your free multivariate testing to learn more what your audience is doing on your site and how to make them do what you want them to do!

II. More Web Analytics

Avinesh Kaushik shared his insights on how you can test the effectiveness of your site, optimize your conversion rate based on real feedback from your customers! I must confess, it was the best session so far, as much as, Avinash promised at the start. Using Multivariate Testing, marketers and web strategists can expose their customers to variations of web site design (multiple pages produced automatically by a tool) and get feedback (behavioral feedback!) on what works and what does not to arrive at the site that generates sales or delivers what you want your audience to do on this site. Most companies do not know why their customers come to the site. Avinesh’s golden rule is testing, testing, and more testing. One cannot get the same information on what works through the traditional focus groups, surveys and interviews of the customer base. “Customers yell out problems and do not provide solutions”. At the same time, our bosses think that they represent the customers and know how the site should look like to deliver the best and their decision influences the final product that might not be user-friendly at all. Even if it does, it could be not as optimal in delivering to the bottom line. Even the userbility testing is not as effective. “They way we do userbility is isolating a sample of people in a room, putting a bunch of devices on them and ask them to act normal. People do not act normal in such conditions and they would be extra cautious, biased or wierd.” You can get the basic ballpark, (maybe, maybe not) on your testing. With multivariate analysis you are measuring the entire consumer experience, even when they are shopping on your site in their pijamas. Little Ajax script is all you need to get your testing set up. It creates variations of your site for further testing. You can test all the ideas you have, not just 2-3.

Avinesh is planning to publish a book in the near future, called “Web Analytics, An Hour A Day” (which I will definetely read!). You can even pre-order it at Amazon.com. All the proceeds (100%) will go to local charities.

III. Great ideas from the Keynote

Keynote was very well put together and this video called Digital Ethnography by Michael Wesch launched the discussion. I could not help but share this video, it illustartes so well the evolution of the web and though, I am not a geek, it stimulates my mind and heart. 

There was lots of fun speeches at the keynote and Richard MacManus covers it well on his blog.

My favorites were 3 launch pad ideas:

Spock.com = allows you perform human search! You can now get the full scoop! (My KGB roots make me so excited about this one! :))

Npower.com = finally, a web 2.0 application for intraverts! and people who care a lot about personal growth, allows to measure your actions towards your goals, incorporates training and coaching knowledge with a web 2.0 capabilities of interactivity and user content generation. Unfortunately, I have no URL for it to share.

IV. Social Mingle Afterwards

It was a lot of fun to explore web 2.0 social mingle scene and parties afterwards. The best part is to meet the personalities and simply personable people to close the day. Special thanks to Jeremiah, other Podtech crew and Mario for being hospitable hosts! Anytime, you are in Portland, OR, please let me know and I will show the city at its best and I am very good at it!

The 24 Essential Techniques of Database Marketing

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While, immersing myself into the knowledge of CRM and Database Marketing, I wanted to share a great checklist Arthur Hughes provides in his Strategic Database Marketing book.  This list will help visualize the breadth and scope of this approach. At the same time, it will allow you to serve as a great keyword framework while you are building your informational library about the subject.

  1. LTV (Customer Lifetime Value) = Net worth of your customers, almost like ABC marketing segmentation
  2. RFM (Recency, Frequency, Monetary Analysis) = allows to predict the success of your promotional efforts
  3. Customer Communications = personalized customer communications based on the data, love this part!
  4. Appended Data = all the demographics, psyschographic data we get from “zip code profiles” providers
  5. Predictive Models = one can build based on item 4 and communications, helps to increase response rate and decrease attrition rate
  6. Relational Databases = form of the database that allows instant useful info to make marketing decisions, something you have to have set up right from the start!
  7. Caller ID = helps CRMs to do their magic = boding experience via instant info and response
  8. Web sites = helps your customers to experience your product/service, bond with it and provide their behavior pattern data for good purposes obviously, allows engage into conversations. Jeremiah has loads of nuggets in this area.
  9. Email = allows effective communication, leads to retention and increased sales. Allows to reach your customers, still does!
  10. Tests and Controls = use test groups to see the effectiveness of your customer loyalty programs
  11. Loyalty Programs = customers are delighted to participate in those! Airlines are a good example
  12. Business Intelligence Software = allows you to have “hands on” your marketing activities before, during and after, well - anytime
  13. Web Access = for your relational database for all functions within your company (management, CRS, sales, marketing, operations, etc.)
  14. Rented Lists = allows to get direct response (mail) data easily than you think
  15. Campaign Management Software = speeds up your execution phase from the planning to doing
  16. Address Correction Services = made modern database marketing possible
  17. Profitability Analysis = allows you to change your pricing and marketing strategies to increase your profits
  18. Customer Segmentation = allows to create useful segments based on demographics and behavior based on the actual data, helps to create targeting communications!
  19. Status Levels = allows to provide special services for special customers (Platinum, Gold, Silver)
  20. Multichannel Marketing = more sales wherever your customers show up
  21. Treating Customers Differently = profits come from retaining the Gold customers and encouraging others to move up the higher status levels
  22. NBP (Next Best Product) = powerful tool to determine why one group of your customers buys and the other does not. Sales people and CRM will appreciate the info
  23. Penetration Analysis = helps to direct sales force and make them more effective
  24. Cluster Coding = helps to identify who is buying and who is not, creative tool that allows to improve both marketing and sales!

 

Behavior-Based Segmentation and Customer Lifetime Value

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Shopping lately at Amazon and getting into Database Marketing class, my last term, made me rethink the whole notion of segmentation analysis. For decades, and just personally for me, for the last 5 years, I categorized target markets/customers by psychographic and demographic data.  While, people watching and further character studying always amused me with identifying their behavior patterns and action tendencies. At the same time, it never occurred to me how the two can be well-connected in the behavior-based segmentation process.

CRM (Customer Relationship Management, Customer Equity Management) concept is not a novelty, but today I started getting excited about the idea and its application. For the last 6 months, I have been buying books on things of interest for myself at Amazon in a “triplets” manner to use free shipping service. Oddly enough (not so oddly), now I get promotional messages to buy 3 with 1 free = total 4. And guess what, I started looking for the next 4 that I want to read. It works on me and everybody else! It changes my behavior and increases my usage. “Books that might interest you” feature is not even mentioned as we all are so used to it! I wish all my online clothing shopping experience got me personalized style advice based on my purchasing behavior!

What I most looking forward to is to actually being able to calculate my lifetime value to Amazon as a customer by the end of this class…and to other services that I might reconsider! Stay tuned…

    Content Disclaimer

      Everything posted on this blog is a product of my own thoughts, ideas, reflections based on the professional interests. It is based on the public information, works of the colleagues and fellow researchers that are cited respectfully and my opinions as an industry professional.