Context Parameters for Best Use of Recency Metric

Jim answers questions from fellow Drillers

Topic Overview

Hi again folks, Jim Novo here.

Time to take a look at some basic strategy framework ideas in a customer retention program. You have to know where you are first before you can decide what actions to take, and this initial analysis will prompt ideas for action. Trust me, finding out specifically what is happening in an actionable way is the most critical step to the design and execution of a customer retention program. Not doing this is why so many of the programs fail. Ready, Driller? Let’s do it.

Q:  I’m reading some of your information you have on your web site, regarding Recency / Frequency.  I’m curious about the statement that Recency is the number one most powerful predictor of future behavior – if you did some thing recently you’re more likely to do it again.  

A:  Yes.  Funny thing about web sites, it’s hard to control what sequence people read things in.  From the questions below, I believe I have failed to introduce you to the Recency metric in the right context.  Shame on me!

Q:  With regards to purchases, how is this so?  I can think of numerous instances where this might not be true.  In fact, I would guess that price of purchase would be a more likely indicator of whether or not someone would purchase again.  If I’m running Best Buy, and someone comes and buys a washer / dryer, I would not expect they’d be buying another one anytime soon.  Ditto furniture, cars, travel bookings, etc.

A:  Two important “context” issues surrounding Recency.  First, Recency is a “relative” metric, it doesn’t exist by itself, but “relative” to other data points.  In the case of customers, Recency and the “likelihood” is a relative comparison of two customers, two customer segments, or a customer versus the average customer, for example.  So for a washer / dryer purchase, looking at the customer in question, Recency answers the question, “how likely is this person to purchase relative to another customer”.  It’s a scoring system, a ranking of likelihoods to (in this case) buy, or visit, or download, or whatever.

Continue reading Context Parameters for Best Use of Recency Metric

Customer Marketing for a Carpet Store

Jim answers questions from fellow Drillers

Topic Overview

Hi again folks, Jim Novo here.

OK Jim, so what if the small business is “old school”, you know, not a lot of computer stuff other than billing / scheduling and so forth, and knowledge of spreadsheets is limited. Can the business till take advantage of the ideas you are putting forth without a lot of Excel going on?

You betcha fellow Driller – as long as you don’t mind a little paper and pencil madness …

Q:  Like most of your readers and visitors, I am absolutely bowled over at the prospect of what can be achieved by studying customer behaviour on a simple database/spreadsheet and using the resultant insight to drive unique High ROI customer marketing programmes to increase profits and reduce marketing costs.

A:  That’s a mouthful!  Welcome to the club.

Q:  I have to say that prior to meeting you, on your website and in your book, I had been intrigued by Arthur M. Hughes’ Strategic Database Marketing, but regretfully had reached the conclusion that its inspirational techniques were just not capable of being actioned by me, an Access/Excel illiterate and not so good on the figures either.

A:  Arthur Hughes is a hero of mine though I have never met him.  Some very nice folks have told me my material reminds them of Hughes, sort of a “next generation” Hughes.  That’s very good company for me to be in…

Q:  But your Drilling Down methods and the possibility of your consultancy help, has revived my enthusiasm to learn all I can about these wonderful techniques and to make use of as many of them as I am able.

Here is my challenge:  Father and son business.  Together about 12 years, but moved to present premises four years ago when they extended their product range and re-launched with new branding- under our stewardship!  They are a typical, small company turning over just under the £1m mark and spend around £30,000 – £40,000 pa on their marketing, mostly direct mail (works for them) and email.  Their product range has consisted of fitted carpets, flooring and Oriental rugs.  They have now doubled the size of their store by taking the first floor too.

Continue reading Customer Marketing for a Carpet Store

Customer Marketing for a Pedicure Spa

Jim answers questions from fellow Drillers

Topic Overview

Hi again folks, Jim Novo here.

I hear from lots of “really small” business owners who are interested in doing “loyalty programs” or similar types of marketing – particularly in service businesses – but think these ideas are too complex or too expensive for a typical owner to handle. I’d say this is not so, the trick is to think through the program features and match them to business needs and resources available. You don’t need a points program to create customer loyalty, my fellow Drillers …

Q:  I came across your website while researching customer loyalty programs and I  am hoping that you may be able to give me some feedback on an idea that I have.

I run a small home-based spa that specializes in pedicures, and have had great feedback from my clients.  So far I have relied on word of mouth and am now ready to do some advertising as I need to be busier.  I have come up with an idea for a program to help with my pedicure loyalty and referrals.  This is a rough idea of it, customers will earn Points in the following ways:

For each friend or family member you send to me, earn 8 points.  You will receive 7 points if you pre-book your next pedicure within a before leaving.  For each pedicure you receive, earn 5 points (except those paid by Gift Certificate).  When you have earned a total of 50 points, you will receive a $25 Gift Certificate!!  (my pedicures are priced at $35).  Your Point total is maintained on your individual file.  The total is updated whenever you earn or redeem points.

I am new to the marketing aspect of all this and I would love to hear your opinions on such a program and also if it seems fair from a customer point of view.  I am also looking for suggestions on a name for it or any other suggestions towards it and presenting it.

Continue reading Customer Marketing for a Pedicure Spa