Segmentation by LTD & LifeCycle

Customer Experience, DataBase Marketing, Driller Q & A, Measuring Engagement, Newsletters

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Q: One of the first things I am doing in my new job is to identify the Customer Lifecycle pattern – how many periods (month, year) will it be before a customer is likely buy again.  In enterprise software industry, where software cost easily 6 figures, # of years is a reasonable time frame.

A: Yes, one would assume this.  But these notions would most likely be based on a feeling of the “average” behavior, and on average, it probably does take a long time.

What is not known is this:  if the “average” is composed of short-cycle and long-cycle buyers, who are the short cycle buyers, and what are they like?  What industry SIC code, for example?  And can we get more of them, or at least focus more resources on them, if they are the most profitable?  So the challenge is not only to look for the “average”, but then understand how this average is composed.  If you can break down the average by industry, or by salesperson, for example, this might be highly directional information.

Q: From my internal analysis, however, I discerned from the sales figures something quite counterintuitive – the period between first and next sale is much shorter than I would have thought for the SW industry in general.

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LTV, RFM, LifeCycles – the Framework

Analytical Culture, Customer Experience, DataBase Marketing, Driller Q & A, Measuring Engagement, Newsletters,

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Q: I visited your website because I am trying to understand how to develop a customer LifeTime Value model for the company that I work at.  The reason is we are looking at LTV as a way to standardize the ROI measurement of different customer programs.

Not all of these programs are Marketing, some are Service, and some could be considered “Operations”.  But they all touch the customer, so we were thinking changes in customer value might be a common way to measure and compare the success of these programs.

A: Absolutely!  I just answered a question very much like this the other day, it’s great that people are becoming interested in customer value as the cross-enterprise common denominator for understanding success in any customer program!

If I am the CEO, I control dollars I can invest. How do I decide where budget is best invested if every silo uses different metrics to prove success?  And even worse, different metrics for success within the same silo?

By establishing changes in customer value as the platform for all customer-related programs to be measured against, everyone is on an equal footing and can “fight” fairly for their share of the budget (or testing?) pie.  By using controlled testing, customers can be exposed to different treatments and lift in value can be compared on an apples to apples basis – even if you are comparing the effect of a Marketing Campaign to changes in the Service Center.

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Inside WAA Certification: Any Questions?

Analytical Culture, Web Analytics

The WAA has published a lot of info about the new WAA Certification Exam; you might want to first read the FAQ and take a look at the application information and Exam Handbook for the organizational details, and you can see sample questions from the Test at the bottom of the page here.  But something I can just about guarantee about the Certification – no matter how much info the WAA publishes about it, many people will still have questions!

So here, I will attempt to answer other kinds of questions I think people might have based on my discussions with WAA members.

Update: The WAA has answered many Certification questions here.

However, I’m going to approach this topic a bit differently than most of the published documentation – from a Product / Marketing perspective, rather than an Educational / WAA POV.  I can do this because (if you don’t know) I have worn all the hats on this project – developer, marketer, WAA project owner – and I think it might be helpful to tell the business story of the WAA Certification, from the bottom up.

And if you have other questions, feel free to leave them in Comments and I will do my best to answer them!

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