Jim answers questions from fellow Drillers
Hi again folks, Jim Novo here.
So Jim, this customer behavior profiling / prediction is great for consumer businesses, but what happens if you’re running a long sales cycle B2B biz where buying decisions take months if not years, and may involve a dozen decision makers? Well fellow Drillers, the answer is not as complicated as you might think – it’s about where to look for the predictive behavior outside of the sale transaction. Interested? Let’s get to the Drillin’ …
Q: I read your section about how “R” and “F” are better indicators than “M” which I agree. But for the problem I face, do you have any ideas on how I can redefine “F” for my purpose? If not, I can always use RM, but will face the drawbacks you mentioned in the book which I think are legitimate concerns for predicting potential value.
(Jim’s note: this Driller is referring to the modified RFM model used in the Drilling Down book. For an overview of what he is talking about see this description of what is in the book and this outline of RFM.)
A: Just to ground this discussion, I assume you are talking about Company XXX …
(a major enterprise software company with many products. He said Yes)
You should look for R and F in other places, if “short term” prediction is what you are after (I’ll discuss long term in a minute). Long cycle businesses like enterprise software can be more difficult to model because the variables you are looking to do an RF scoring on are not as obvious. The sales activity may not be particularly predictive of customer behavior because the nature of the business precludes frequency of purchase.
For example, think customer service. Where in your organization would you see RF show up relative to customer satisfaction? Perhaps at the call center, help desk, or “outstanding issue” logs of the implementation team? There could certainly be other areas, depending on how customer care is set up. The question is: how does the Recency and Frequency of customer care predict the likelihood of customer defection?Continue reading Behavior Profiling for Long Sales Cycle B2B Customers