Jim’s Intro: These are patterns of behavior seen repeatedly in customer marketing, and can be used to increase profits.
1. Always advertise where the behavior you want to create is. If you want clicks, advertise where people are clicking. If you want buyers, advertise where people buy.
2. The media and method used to acquire a customer has a very large effect on the potential value of the customer. Customers from search engines will have different buying patterns and potential values than customers from banner ads. Measure these differences.
3. 50 percent to 60 percent of your customer base will be one-time buyers or visitors. Accept it. You’ll waste a ton of money trying to change it, and it’s not going to change. One-time buyers who bought multiple items on the first purchase are a possible exception. Try them first. Then try one-time buyers with the highest order value. If these don’t bite, none of the one-time buyers will.
4. The only chance you have at getting a first-time buyer to purchase again is to contact them quickly after the first purchase.
5. One-time buyers who return their only purchase CAN be better marketing targets than those who don’t return their purchase – IF the customer service experience they have in dealing with the return is outstanding.
6. Customers on average will buy down in price over their LifeCycle; unless you take specific action to influence this behavior, the average order price falls over time. For this reason, buyers who “go cheap” on the first purchase usually have lousy future value.
7. One $50 1st purchase customer is worth more than two $25 1st purchase customers. See #6 above for the reason.
8. Resend a promotion to the same people. You can often get 50% of the first response rate if the original promotion was a targeted one. It’s OK to send exactly the same promotion, can be better to send slightly different copy, like “2nd chance!”
This ends the tutorial, which is based on some of the concepts outlined in my book:
Drilling Down – Turning Customer Data into Profits with A Spreadsheet.
Congratulations! You know the techniques used to predict the potential value of customer groups based on their Recency. I encourage you to do a simple Recency study on any customer group you have the data for. You will be amazed at what you see, I guarantee it. You will find out at least 30% of your “best customers” are no longer customers, because it has been a long time since they have interacted at all with you. You have to catch these people with some kind of “early warning system” before they defect, because once it happens, they’re gone.
If you don’t know you have a problem, you can’t begin to fix it, and that’s exactly what these Recency studies are intended to do – identify customer potential value problems and allow you to track them.
If you want to learn how to profitably address these problems, identify best customers who are about to leave you, maximize promotion response while minimizing discounts, and design profitable best customer promotions, my book tells you how to do it, step by step, just like this tutorial.
Look, I can’t just give the information in the book away. I make my living teaching companies and service agencies these methods, and I have responsibilities to take care of. But there’s a lot of smaller businesses out there who need this information to get profitable, and that is why I wrote the book.
I think I’ve been pretty fair here on the site – I’ve given away a ton of valuable information on one aspect of the Drilling Down approach – comparing the potential value of customer groups so you can make the right choices in marketing and site design. You have seen how I write, the teaching style, and the kinds of examples you will find in the book. You can go ahead and test this information with your own data – I’ve explained to you how to do it.
How many other authors are confident enough to give you this kind of information and methods you can use to “try before you buy”? How many marketing books have you bought that promise “how to” information, but give you only theory? Have you read the customer testimonials on my book?
If you want to learn the rest of the story – how to create likelihood to respond and potential value scores for individual customers, and how to use these scores to make more money marketing to customers, you’ll have to get the book.
Hey, do me a favor, will you? If you thought the tutorial was valuable, please send a link to somebody who needs this info to start making more money with customer marketing. The Title / URL for the start of the tutorial is:
Thanks for stopping by. Good luck out there, I mean it, and look to customer behavior to guide decision making. Behavior shows you the path, as actions speak louder than words.
Download the first 9 chapters of the Drilling Down book: PDF