Jim answers more questions from fellow Drillers
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Q: I’m involved in a loyalty program analytics project.Â This client is a local pharmacy. All sales are done directly in store, the web site is just for communication purposes. The general problem we are trying to solve is the manager doesn’t have any detailed ideas about shoppers behavior apart from human observation.
The idea is to launch a card-based loyalty program which will track sales activity and give insight into customer behavior. The program will be points-based calculated on amount spent.Â Points can be redeemed as rebates, coupons, gift certificates, or use points to buy items in loyalty program catalog.
The task is to segment customers according to their recent purchase behavior and determine the customer lifecycle. I’ve been able to do some basic analysis using the R package and MySQL database, but am unable to detect customer lifecycle.
Can you please give me guidance on this?
A: What is the Objective of detecting the LifeCycle, to create a more “active” customer retention program? Loyalty programs can be quite “passive” and often benefit from a more active overlay. But there can be many reasons to want to understand the LifeCycle…
Q: My 2nd task is to use the behavioral data with demographics to build a direct marketing strategy and provide management with insight into the customer base, for example: percent new customers, % of Gold customers who passed to Silver in last quarter.
A: Again, it would be helpful to understand how management would take action on this data. But I suppose you are in the common position of not knowing the tactical approach, and nobody will lay it out for you (a.k.a. they are clueless)…and you don’t know the right questions to ask orÂ how to askÂ them.
Continue reading Loyalty Program Structure & Tracking
It’s interestingÂ most folks that consider themselves Marketers,Â especially of the online variety,Â seem to only discuss and have ideasÂ about Advertising.Â But of the 4 P’s that make up Marketing -Â Product (which includesÂ People), Price, Place (channel), and Promotion – Promotion (Advertising) is the weakest element of the four.
I sayÂ weakest because Advertising cannot fix a poorly thought out Product, Pricing Strategy, or Distribution system.Â It just can’t.Â Yet huge amounts of money are wasted trying to do exactly that.
Perhaps this why someone feels they need to publish a book that tells people Product is important in Marketing.Â To me, that’s the most circular or redundant idea for a Marketing book I’ve ever heard.
Marketing starts with Product, which should include all the audience or market segmentation studies (People) that drive the creation of the Product -Â defining the need.Â If you do this first and develop a Product which truly fills the need,Â AND you get the Pricing and Distribution right,Â the Product will literally sell itself to the core audience.
If you can make it that far,Â THEN the ProductÂ can perhaps be sold to the next segment out from the core through Advertising.Â All “Marketers” should know this.
Continue reading The Other 3 P’s
You may have heard of this conceptÂ as Post-Purchase Dissonance, an area where more research has been done, but the fact is that many actions other than purchase create dissonance.
This area of Â Psychology is more generally referred to as Cognitive Dissonance.Â Â Along with Norms of Reciprocity, Dissonance is one of the most important pieces of Psychology for today’s MarketingÂ folks to understand.Â Â Â This isÂ doublyÂ trueÂ if you are serious about using a two-way Social model in Marketing.
Here’s why:Â The Social sword has two edges.Â If you are going to use a two-way Relationship MarketingÂ approach, you will create higher expectations with those who Engage.Â If you fail to perform, or just act like an Advertiser would, then you will end up creating more damage than if you had simply ignored theÂ two-way idea.
For Marketing, the important idea to understand is the human brainÂ always questions actions taken, however briefly, and tries to resolveÂ conflict.Â Â Any unresolved conflicts tend to taint the action, they create Friction, and drive down the Potential Value of the experience.
The important action item for Marketers is to know this will happen beforehand, and take steps to counteract the Dissonance.Â The result will be customers who have generally better experiences, and you know what that means, right?
In other words, by planning for Post-Action Dissonance you are using a Prediction thatÂ increases Profits or cuts Costs down the road.
Continue reading Post-Action Dissonance