Jim answers questions from fellow Drillers

Topic Overview

Hi again folks, Jim Novo here.

How do you measure likelihood of customer defection when purchase behavior is highly orchestrated or executed due to repetitive billings? Yea, it’s a bit more complicated because “orders” really can’t express any kind of behavioral change, can they? So, you have to find indicators other than sales to provide the triggers. The Drillin’ the Drillin’ …

Q:  Jim, first let me say that I am enjoying your book VERY MUCH!!  Nicely done, and a nice job of integrating it with the CRM paradigm, 1-to-1 etc… I’m reading very slowly and finished the Latency Metric Toolkit.

A:  Great!  Thanks for the kind words.

Q:  I had a couple of questions on the Latency toolkit and the Latency tripwire, especially as it applies to environments with built in cycles for repeat purchases.

I am in a business where our resources are quarterly based, i.e. customers purchase our resource use them for a quarter and re-purchase the next quarter’s resource.  That is, we have a built in pattern, where customers would purchase our resources each quarter.  I was wondering how well I can use Latency with this type of built in cycle or if I would have any problems applying your Latency concepts to it, maybe they apply that much more readily?   In our case we try to call most folks who haven’t purchased within 2 weeks of a new quarter beginning.

A:  Right, a subscription-type business.  This is also an issue with utilities and other like businesses who bill about the same amount each month or have contracts for service (like wireless).  The answer is if the revenue generation really doesn’t represent anything to do with the behavior, then you simply look for other parameters to profile.  For example, a friend of mine was responsible for analyzing the likelihood of subscription renewal in a business that provided the content online.   Increasing Latency of visit was a warning flag for pending defection, and they triggered their most profitable campaigns based on last visit Recency.  In wireless, the correlations are found in payment Latency and age of phone.