Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)
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.
They plan to extend their product range, again, by adding furniture (particularly leather) and beautiful stone tiles. We are currently working on a Marketing Re-launch, using press advertising but including a mailing to attend Preview to all customers.
They reckon they have about 6,500 customers, but as you say in your book, “When is a customer no longer a customer?” I have just got hold of a disc with their “customer database” on it. We are going to try to sort average latency for each of the three basic product categories – and set up the “tripwire” column to end on the last day of acceptable days since last purchase.
Please understand that my two creative colleagues do not understand Access and Excel one bit, and I did only an Introductory Course on them a couple of years ago at the local tech. So none of us is very database or spreadsheet literate, which is why we shall need outside help for spreadsheet querying.
A: It doesn’t sound like we have much of a technology base to work with here, but have no fear! I think there are a couple of simple things you can try. All you really need is a bit of tracking matched up with who responds to your marketing efforts.
First, an angle on cost savings regarding advertising mail using Recency. I would focus on last purchase date, with the objective of reducing the volume of mail in any one drop so you can mail more frequently to the people who respond to the mailings. Perhaps you could print a code on the labels of the mailer indicating how long it has been since last purchase – “1” for 1 month, “2” for 2 months, “3” for 3 months, etc. I assume these mailers have an offer of some kind; ask the customer to bring the card to take advantage of the offer. After the initial promotion, look at the numbers on the cards “redeemed” to find some kind of pattern. No cards redeemed with a number higher than 12? Then you probably are wasting money mailing to people with a last purchase date of over 12 months ago, and should not mail them again.
Do the numbers on the redeemed cards “cluster” anywhere, say around 6 months? If so, you will probably get the highest response mailing when last purchase was 6 months ago. This means every month you should mail an offer to people whose last purchase was 6 months ago. Generally, take the same budget and reallocate the spending away from where you get no response and towards where response is strong; you spend the same amount but get more for it. Very simple idea and low tech as well.
Further, over time, you may see other “clusters”; look to see if perhaps those people bought the same kind of product, it was over / under a certain price, was it their first purchase, etc. Reallocate budgets and target based on these new findings. For example, you may get the highest response for new customers / first time buyers at 3 months since last purchase, but with customers having over a year of buying history, higher response at 6 months since last purchase. Look for these segments and adjust accordingly.
Second, perhaps some of the money saved on these mailings could go into “pipeline” building. If you can capture name and email / address “at the point where they are asked to visit and quote for a carpet fitting or whatever” you can develop a “sequenced mailer” for non-buyers – people who don’t respond to the quote. The idea is this: if they are having you quote, they are probably into a “LifeCycle stage” where they will need similar products / services. Even if you don’t close the original quote, these people are a highly targeted list forother business. Your creative types should have a ball with the copy on this one!
I assume when a quote is given a quote sheet with customer name and contact info is created, and a copy goes back to the office to a “waiting” file or something like that. So, after a certain amount of time goes buy or after a follow-up phone call / e-mail, there are quotes left which did not “close”. Create a simple list with these names and mail / email out a follow up message. Not sure what the message should be, but it could be humorous, for example. You could use the same idea as above: a single mailer that goes out to a cross-section of dead quotes where it has been 1 month since quote, 2 months since quote, 3 months since quote, and so on, tracked as above., to determine response clusters if any.
Or, you could create a “campaign” series of say 3 emails / mailers mailed 1 month, 2 months, and 3 months after the dead quote to the same person, to see if that works.
The point is, when you organize segments by using buying behavior like this, any success you have becomes repeatable, it works again and again. If 3 months after first purchase is the best time to mail new buyers today, it will be next month and next year. You find out what works, then reallocate budget away from what doesn’t work and towards what does work. Simple, low tech, and should be fun for a bunch of creative older gentlemen!
Jim
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