Analytics software is useful, but some concept of what should be analysed is also of value. Retailers will often create a RFV model, combining Recency (of last purchase), Frequency (regularity of purchase) and Value (either total spend or average order value, for example) to create a score for each customer.
We have found that adding additional elements expands the score from the 3-letter acronym to a multi-letter acronym such as RFVRCA where you add on the instances of Returns, Complaints and Abandoned on-line baskets committed by the customer.
This score then becomes a comparitor between customers, a selection criterion for campaign or proposition and changes in the individual’s score over time become a valid measure of success of the relationship.
Applying demographic, lifestyle and psychographic profiling provides an even more granular segmentation and the ability to apply the concept to prospects, with the benefit of making relevant offers to convert them to customers.
Such models can be created without investment in analytical software and can be applied in rules-based workflow and business process, with the dynamics regularly reviewed and the model(s) enhanced.
How long have you been using the same communication model? You need to challenge its validity. Models will outlive their validity within 12-18 months.
Can you improve the return on your campaigns?
Do you need to increase protection against churn?
Is the profile of your customer base changing?
Do you think you can increase your marketing efficiency?
Does your current model encompass all your marketing channels?
Do you need to identify new opportunities for cross sell and up sell
Marketing analytics enables rapid discovery of valuable insights into how and why a business performs in the way it does so that you can apply this knowledge to shape future success. You need to define your customers not simply in terms of revenue, but:
Duration of custom
Number of enquiries, returns, support requests or complaints
Frequency of business
Propensity to refer or recommend
Types of product or services purchased
Preferred channels of communication
Response to marketing propositions
From this newfound understanding, you are able to tune services to meet customer needs and develop propositions, with the result being customers that feel valued and who are likely to spend more and be increasingly loyal.
Your business will be provided with specific details of opportunities e.g. who to contact and what proposition to present, so you can act upon the results and benefit immediately from ensuring you are employing the right strategy.
These techniques can address some of the key business imperatives uppermost in the minds of marketers:
The need to know more about their customers
How to identify and protect against churn
Direction for growth
Areas where service needs improvement
Pinpointing the opportunities for cross sell and up sell
How to get more out of the marketing budget (or the same for less)
and ensure more of the right people get the right message at the right time.