Certainly you’ve heard the statement, “S/He is like a squirrel hunting for nuts”. This is usually meant as a derogatory comment about someone. However, I propose and have seen that a marketer who isn’t really trained or knowledgeable about analytics and /or database marketing, may start their search for a nugget of information that will improve their marketing ROI in the same way a squirrel hunts for nuts.
Unfortunately a lot of companies, even large ones, do not have the data collection or resources devoted to analysis of the available marketing data that could help a marketer analyze data to easily find the nuggets (and sometimes gems) that will enlighten them to alter their marketing strategy and dramatically improve results.
What do you do if you are in this position? Think like a squirrel! Look, hunt, ask everyone questions (especially the seasoned sales people as well as the operations folks).
Here’s a short list of what basic questions to answer/define:
1. Who is my customer?
a. Define as many characteristics as you can: What is the demographic information? What are the best customers and how often do they buy? Why do they buy? What method do they use to buy? What is the return rate of these customers? What anecdotal information (psychographic, personality, etc.) can you get from the people closest to the customer? (This is where the info from sales and ops can really help.) If you have support and budget, get your best customer list appended with psychographic data. This will most definitely provide you with invaluable insight into your best customer.
2. Who are my other customers?
a. Do a quadrant analysis on your customer list and divide them into four groups: Best, Next Best, Third Best and Fourth Best. (I suggest that there is a fifth group and that is people who routinely interact with your marketing tactics but don’t buy from you. Then, test to see if you can convert these folks into customers or make them evangelists – but that is your last step in this process.) Repeat the process above for each quadrant.
b. Compare your results and percentages, with each quadrant’s characteristics, against your potential market (geographic, market size/share of market, demographic indicators in your market, etc.) Determine how you are doing in comparison to what is there for the taking. Define your saturation level and look for the opportunities and develop a strategy to capture as much as you can.
3. What are your customers buying?
a. Look at the quadrants separately. Are there any significant trends of what is purchased and how it is purchased across the board or do your quadrants respond differently? Some of my clients have found that they are spending a lot of their time and money marketing to people that really just routinely buy the same thing/s, at the same time and by doing this exercise, they realize that a lot of the marketing could be redirected to increasing share of wallet or bumping the 2nd quadrant up into the 1st and the best customer could be communicated to with a loyalty strategy.
4. What does this data tell you?
a. Now that you have the data (even if it is raw) look for the patterns and look for the opportunities. Look for how these groups like to buy from you and look at how they have responded to your current marketing. As an example, it might be fascinating for you to see that your strategy is heavy on digital marketing but your customer tends to buy via telephone orders. (*Hint: this may tell you it is the personal touch that your customer likes and your customer may or may not be responding to your digital efforts.)
What do you do next?
1. Develop a strategy to gain customers where there is room for growth. Develop it based upon how your customer interacts with you not based on what you have always done.
2. Test your strategy (A/B is standard) and define your winner.
3. Once you have your winner, develop a campaign and implement it.
4. Use this strategy for all of the quadrants where you see potential. Change your strategy to loyalty where you have saturation.
Is this the end of marketing analytics or database marketing? Absolutely not! This is a very good starting point though. I have used this approach with many, many clients with unbelievable results. Try it in your organization and with success, perhaps you will be able to justify the investment of tools that will help you to continuously perform such analysis and even develop a strategy to acquire a full- blown database marketing strategic environment. I strongly believe that once you realize what amazing results you attain by implementing a “smart” approach to marketing strategy, you will never go back to a think tank or top down marketing approach ever again.