Tag Archives: Relationship Marketing

Loyalty Program Structure & Tracking

DataBase Marketing, Driller Q & A, Newsletters

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

Q: I’m involved in a loyalty program analytics project.  This client is a local pharmacy. All sales are done directly in store, the web site is just for communication purposes. The general problem we are trying to solve is the manager doesn’t have any detailed ideas about shoppers behavior apart from human observation.

The idea is to launch a card-based loyalty program which will track sales activity and give insight into customer behavior. The program will be points-based calculated on amount spent.  Points can be redeemed as rebates, coupons, gift certificates, or use points to buy items in loyalty program catalog.

The task is to segment customers according to their recent purchase behavior and determine the customer lifecycle. I’ve been able to do some basic analysis using the R package and MySQL database, but am unable to detect customer lifecycle.

Can you please give me guidance on this?

A: What is the Objective of detecting the LifeCycle, to create a more “active” customer retention program? Loyalty programs can be quite “passive” and often benefit from a more active overlay. But there can be many reasons to want to understand the LifeCycle…

Q: My 2nd task is to use the behavioral data with demographics to build a direct marketing strategy and provide management with insight into the customer base, for example: percent new customers, % of Gold customers who passed to Silver in last quarter.

A: Again, it would be helpful to understand how management would take action on this data. But I suppose you are in the common position of not knowing the tactical approach, and nobody will lay it out for you (a.k.a. they are clueless)…and you don’t know the right questions to ask or how to ask them.

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Post-Action Dissonance

Customer Experience, Marketing thru Operations

You may have heard of this concept as Post-Purchase Dissonance, an area where more research has been done, but the fact is that many actions other than purchase create dissonance.

This area of  Psychology is more generally referred to as Cognitive Dissonance.  Along with Norms of Reciprocity, Dissonance is one of the most important pieces of Psychology for today’s Marketing folks to understand.   This is doubly true if you are serious about using a two-way Social model in Marketing.

Here’s why:  The Social sword has two edges.  If you are going to use a two-way Relationship Marketing approach, you will create higher expectations with those who Engage.  If you fail to perform, or just act like an Advertiser would, then you will end up creating more damage than if you had simply ignored the two-way idea.

For Marketing, the important idea to understand is the human brain always questions actions taken, however briefly, and tries to resolve conflict.  Any unresolved conflicts tend to taint the action, they create Friction, and drive down the Potential Value of the experience.

The important action item for Marketers is to know this will happen beforehand, and take steps to counteract the Dissonance.  The result will be customers who have generally better experiences, and you know what that means, right?

In other words, by planning for Post-Action Dissonance you are using a Prediction that increases Profits or cuts Costs down the road.

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Norms of Reciprocity

Analytical Culture, Customer Experience, DataBase Marketing, Measuring Engagement, Web Analytics,

Social Marketing Doesn’t Rely on Social Media

Do you believe human beings share certain fundamental traits that define “being human”?

If so, do you believe that human beings tend to behave in certain ways under certain circumstances?

If so, do you then believe since human behavior has these tendencies, it can often be predicted?

If so, then do you think perhaps the study of Psychology and Sociology might provide you some clues to creating successful businesses, campaigns, products, and services?  While your friends and competitors are all iterating their way into oblivion?

On the web, time and time again, we see the same themes repeating.  Yet with each introduction of a new technology, these themes tend to be treated like a new discovery, even though the theme has been well established in the past.

Norms of Reciprocity is a constant human theme.  You may know the expression of these norms as “Sharing”.  Web old timers will probably recognize this idea as “Give, then Take” from the I-Sales discussion list as early as 1995.  In various forms, this theme goes back to the beginning of human history, all the way back to the handshake and other greeting gestures.  This same theme is embedded in countless Religions all over the world: “Do onto others as you would wish them do onto you”.  At least a couple centuries old, this idea.

Norms of Reciprocity simply means this: When you do something nice for a human being, help them in some way, this human tends to feel Gratitude towards “the doer” and tends to do something nice back.  Gratitude drives the desire to Reciprocate, because it’s just what humans do, it’s normal, a “norm”.

Norms of Reciprocity.

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