Drilling Down: Turning Customer Data into Profits with a Spreadsheet is a book detailing step-by-step instructions for creating customer LifeCycle scores and using the scores to make more money marketing to your customers.
Companies that have experience selling through catalogs or TV shopping have had the most success selling on the Internet. Why? Because for years they have practiced the art of selling to customers they cannot see, and have developed special techniques for managing these remote customer relationships for maximum profitability. They use customer data to predict customer behavior, and are able to maximize sales while minimizing expenses. By looking at customer transaction data, remote sellers can assess these 3 critical issues regarding their customers:
- How likely a customer is to respond to an offer, and what that offer should be to maximize response while minimizing discounts or incentives
- When best customers are about to stop buying, and what to do about it
- What the future value of a customer will be relative to other customers
Experienced remote sellers use customer scoring models to track and manage these issues, and you can too. One of the most powerful models, known as RFM, can work with interactive customers. You will learn how to apply RFM to your customers in the book. The problem is, interactive customers behave differently. They don’t follow the “rules” nearly as well as the catalog customers RFM was originally created to address. So RFM is just a starting point for understanding behavior.
In the book, you will learn the modifications to the “classic” RFM approach I have made as a result of rigorously testing RFM techniques with interactive customers for years. These modifications improve the performance of classic RFM substantially with interactive customers and have paved the way for me to create very high ROI interactive customer marketing programs. These customer LifeCycle-driven programs have very high payback rates, up to 400% in a 60 day period. The only place you can get this information is in my book. If anybody else has discovered these methods, they certainly have not written an instructional manual telling you exactly how to take advantage of them.
You can create the modified RFM scores for tens of thousands of customers in only 30 minutes using a plain Excel spreadsheet. No programming skills are required. These modified scores are used to set up the simple LifeCycle metrics and customer tracking “flags” (all in an Excel spreadsheet) used to identify the trigger points for high ROI customer marketing. They can also be used to monitor the appeal to best customers of different areas of your site and to predict visits, sales, and profits in the future. Larger companies can use the business rules provided to set this all up with a data query system.
If this all sounds the analytical side of CRM – it is, but as practiced before CRM became a software suite costing millions of dollars.
Most sources of information on using customer behavior profiling to create high ROI marketing promotions and site designs deliver broad descriptions and provide little specific guidance for implementation. My contribution to the topic here on the Drilling Down site, and in the book, is the following:
- Simplifying these methods so anyone can understand and implement them without special tools or advanced knowledge. You get step by step “how to” instructions and demonstrations
- Customizing and expanding these methods for interactive environments
- Creating a visual approach to working with your customer data. By using “visual customer maps,” users can easily identify marketing and design opportunities and challenges, take action on this information, and measure the benefits of the action on future customer valuation and Return on Investment.
Managing customer retention and working with customer data are not hard to do. You just need someone to provide a simple but powerful method, explain it to you in terms you will understand, and unlike many sources on the subject, show you exactly how to do it, step by step. That’s what the Drilling Down site and book are all about.
You will learn how to optimize your site for best customers, evaluate the future revenue potential of individual customers based on their scores, and most importantly, detect when best customers are getting ready to leave you so you can react with an e-mail or other promotion. If you know your way around the world of using scripts and a database to drive website presentation, you can even mimic some of the advanced functionality available with enterprise class CRM analytics. You can also measure the ROI of CRM Implementations with the Drilling Down method.
What will you learn
in the Drilling Down book?
- The difference between a customer profile and a customer model and the strengths and weaknesses of each
- How to decide which data is most important to collect on your customers, and which data is not so important
- How to develop and use simple customer group retention models
- How to use these retention models to track increasing or decreasing LifeTime Value in your customer base
- How to evaluate, monitor, and track the future health of your business based on customer retention metrics
- How to predict whether your customers will respond profitably to the marketing side (analytics) of a CRM implementation
- How to create action-oriented individual customer retention profiles with an Excel spreadsheet (or your own app, business rules supplied) and display them visually for marketing decision making.
- How to use these profiles to:
- Design high-ROI relationship marketing, customer loyalty, and customer retention e-mail programs
- Predict and optimize the financial outcome (profit / loss) of customer marketing promotions
- Define and predict the future value of your customers
- Optimize your web site structure and content to attract and retain the highest value customers
- Predict when customers are about to defect and leave your business
- Determine the future health of your business, and take customer specific action when trends appear to be negative
- Increase customer purchases and visits while decreasing your overall marketing costs
- How to blow away investors (and yourself) with accurate predictions of the future profitability of your business
If you want to make more money marketing to your customers, and figure out where your highest future value customers are coming from, you need the techniques in this book, which are being revealed for the first time and are based on the work I have done with real interactive customers. This is not theory; these methods work, and work very well.
For years TV Shopping and catalog companies have organized their marketing activities around the LifeCycle of a customer, then paved the way on the Internet with very high success rates and profitability. Find out how they are doing it (and start doing it yourself) with this book.
Download the first 9 chapters of the Drilling Down book: PDF