Acquisition Marketing: What's So Bad About New Customers?
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Acquisition Marketing: What's So Bad About New Customers?

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New customers are either loyal advocates in training or a hole that will drain company resources from the moment they land in your database. Taking the long-term view of customer acquisition programs ...

New customers are either loyal advocates in training or a hole that will drain company resources from the moment they land in your database. Taking the long-term view of customer acquisition programs will give you tools to identify both types.

Naturally, not all one-time buyers are the same. The trick is to recognize who will become your customer advocates, buying across channels and promoting your brand to friends and colleagues. But with only one or two days’ worth of history, how can you separate out promising first-time customers from the run of the mill, coupon-toting switchers, who’ll jump ship the moment a sweet offer comes from your competitor?

Learn the answers and actionable tips for improving your acquisition strategy, including our top 10 tips for predicting which customers will buy again. Home Depot case study is included.

This 40-page webinar PPT is presented by Roy Wollen, president of Hansa Marketing Services. It covers how to identify your best customers, cut costs without reducing effectiveness, and more.

Don't miss our next free online webinar. Register here: http://hub.am/XwTIKo

www.HansaMarketing.com
@Hansa_Tweets

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Acquisition Marketing: What's So Bad About New Customers? Presentation Transcript

  • 1. HansaWhat’s so bad about new customers?
  • 2. Who am I? Roy Wollen is President, Hansa Marketing Services Roy was Director of Consulting at Experian, the largestdatabase company in the world Roy has also been on the client side, working for FederatedDepartment Stores and Hewlett-Packard Roy worked at Ogilvy & Mather, the global advertising agency Roy has a Master of Science degree from Northwestern’sMedill IMC program Roy has authored a book on database marketing Roy is an adjunct professor of marketing at DePaul University2
  • 3. HANSABrand ConsultingHANSAAnalyticsHANSAMarketResearchHANSAMarketingCommunicationWho’s Hansa?3
  • 4. Hansa is a global organization4
  • 5. Who are we working with?5
  • 6. Today’s Agenda What’s so bad about new customers? Customer segmentation– Customers see brands, not channels– Measuring the bond– Personalizing the message How to cut costs without reducing effectiveness Case study: The Home Depot 10 things that predict which customers will buy again6
  • 7. What’s so bad about new customers? A few will blossom, but most buy once and never again7
  • 8. Old model “The sale is the start of the relationship” (Levitt) Continuum of your relationship with a customer– Ignorance– Awareness– Interest– Trial (acquisition)– Repeat purchasing (retention)– Loyalty– Advocacy8
  • 9.  Notice– Combination of acquisition media both mass and direct– Customers zigzag in and out of media– There is a lot of research and decision making prior to the sale Attributing response is not only difficult but politicalDisplay ad?E-Mail?TV Ad??PriceComparisonSearchCommunitywww.Brand.comStore visitMobileNew model9
  • 10.  From a customer’s perspective– Customers are in control – more “pull” than “push”– Customers see brands not channels– Customers don’t care who gets credit for the saleDisplay ad?E-Mail?TV Ad??PriceComparisonSearchCommunitywww.Brand.comStore visitMobileNew model10
  • 11. Measuring the bond How do you measure the bond between your brand,your product/services, and your customer? Strategic customer segments Some marketers name their segments11 Advocates Repeat buyers Gift givers Too good to be true Trial buyers Dormant Defectors– About to defect– Baby come backCustomersSegments
  • 12.  Sandra is a real customer Sandra has information in a database– Contact information and “preferences” (opt ins, opt outs)– Transactional summaries at the customer level– Order detail12Meet “Sandra”
  • 13. Sandra’s purchase history tells a story Sandra has a broad range of information in a database– Purchase and non-purchase details (clicks, store visit)– Merchandise detail associated with her purchases
  • 14. Sandra’s purchase history tells a story When you include long term behaviors, it completes the story
  • 15. Personalizing the message for the individualThank you for your purchase(Sales incentive disguised as a product review)Attend a store event – clienteling exampleWhatSandrabought The store closestto Sandra? Samestore as before?
  • 16. Potential Customer 1 55 year old male Located in Texas Price conscious Shopping for Golf BallsDynamicCategory/SubcategoryTextDynamicGender/AgeRange ImageDynamic CountdownDynamic Product ImageTexas store locationsDynamic store locatorDynamic ContentSource: Dotomi, 2012
  • 17. Potential Customer 2 35 year old female Located in Washington state Brand conscious Shopping for Golf ClubsDynamicCategory/SubcategoryTextDynamic Image Rotatesbetween Product and BrandDynamic CountdownDynamicGender/AgeRange ImageWA locationsSource: Dotomi, 2012
  • 18. Personalizing the message18Source: Dotomi, 201220s 40s 60s Professionals 50sExample ofmessaging atthe segmentlevel
  • 19. Today’s Agenda What’s so bad about new customers? Customer segmentation– Customers see brands, not channels– Measuring the bond– Personalizing the message How to cut costs without reducing effectiveness Case study: The Home Depot 10 things that predict which customers will buy again19
  • 20. 123...CustomerCentricBatch & BlastMail1 Email1 Email2 Email3 Mail2Y N Y NYTwo approaches to marketing outreachHow “deep”should Icirculate?What doesSandra want?
  • 21. Comparing the two approaches Batch & Blast is an old model of marketing outreach– Selecting audiences based on our marketing calendar– “Batch and blast” – each campaign seen as a distinct event– Response rates of 1% are acceptable (99% failure rate) What’s wrong?– Presumes customers are in market on our timetable– Not aware of other media – particularly customer initiated– Slave to “what have you done for me lately” mentality• Audiences are selected based on Recency – Frequency model forexpensive media such as telemarketing and mail– For less expensive media, one size fits all• Anyone with an email address gets all email campaigns, no targeting21
  • 22. 22Campaigns within a promo periodCampaign 1 Campaing 2 Campaign 3 Campaign 4 Campaign 5What it looks like to a customer (mail edition)
  • 23. What it looks like to a customer (email edition) Customers being pummeled by email Everyone gets the same level of attention Clear differences in responsiveness Not everyone has an active email addressRFM and Email analysisRecencyActiveEmail %TotalEmailsEmails/Buyer Openers% whoOpened OpensOpens/Buyer Clickers% whoClicked ClicksClicks/Buyer CTR0 - 3 Mos 70,960 74.6% 2,124,751 29.9 43,580 61.4% 339,099 4.8 33,304 46.9% 115,778 1.6 5.4%4 - 6 Mos 79,305 83.4% 2,212,122 27.9 42,724 53.9% 342,965 4.3 30,743 38.8% 102,063 1.3 4.6%7 - 12 Mos 131,193 80.2% 4,161,901 31.7 57,161 43.6% 407,003 3.1 36,133 27.5% 95,216 0.7 2.3%0-12M buyer 281,458 79.5% 8,498,774 30.2 143,465 51.0% 1,089,067 3.9 100,180 35.6% 313,057 1.1 3.7%13 - 18 Mos 110,122 75.2% 3,550,586 32.2 44,609 40.5% 310,592 2.8 27,159 24.7% 65,970 0.6 1.9%19 - 24 Mos 94,968 71.7% 2,813,285 29.6 33,669 35.5% 221,741 2.3 19,487 20.5% 43,939 0.5 1.6%25 - 36 Mos 160,279 67.4% 4,036,381 25.2 49,156 30.7% 308,036 1.9 27,007 16.8% 57,400 0.4 1.4%37 - 48 Mos 73,727 44.8% 2,173,384 29.5 21,294 28.9% 135,273 1.8 11,350 15.4% 23,129 0.3 1.1%49+ Months 60,842 24.9% 2,035,069 33.4 16,946 27.9% 111,304 1.8 8,953 14.7% 17,889 0.3 0.9%Grand Total 781,396 61.1% 23,107,479 29.6 309,139 39.6% 2,176,013 2.8 194,136 24.8% 521,384 0.7 2.3%23
  • 24. Contact strategy based on customers Planning done based on a customer’s potential (value)– How much should we invest in retention marketing?– Where do we draw the line (lower bound)?– Which channels does the customer prefer? But implementation is reactive to customer actions– Welcome streams– Triggered by activities– Triggered by non-activities (time going by)– In b2b, triggers might come from site level activities24
  • 25. Contact strategy experiments Longitudinal planning = planning campaigns for aperiod of time (e.g., 6 month season)– Experiment with # of touches– Experiment with cadence and rest periods– Experiment with media (phone call followup)– Experiment with offers– Experiment with cycle time (e.g., how long it takes to get awelcome kit) Keep in mind:– Control groups at campaign level– Control groups at universal level (6 month hold out group)25
  • 26. 26 Marketing ROI SeminarResponse Summary by Recency - Frequency6-Month Season % Sales/Recency Frequency Customers Campaigns Visits Revenue Resp. Piece0 - 3 Months 3x+ 90,802 713,249 37,508 $17,147,029 5.3% $24.040 - 3 Months 2x 29,595 188,862 5,360 $2,115,413 2.8% $11.200 - 3 Months 1x 50,465 313,203 6,533 $2,535,099 2.1% $8.09Subtotal 0 - 3 Months 170,862 1,215,314 49,401 $21,797,541 4.1% $17.944 - 6 Months 3x+ 58,251 513,520 14,231 $5,835,189 2.8% $11.364 - 6 Months 2x 23,920 188,644 3,139 $1,137,168 1.7% $6.034 - 6 Months 1x 46,067 332,731 4,345 $1,580,571 1.3% $4.75Subtotal 4 - 6 Months 128,238 1,034,895 21,715 $8,552,928 2.1% $8.267 - 12 Months 3x+ 81,972 666,277 12,293 $4,944,773 1.8% $7.427 - 12 Months 2x 40,365 280,555 3,764 $1,371,733 1.3% $4.897 - 12 Months 1x 80,106 490,082 4,947 $1,785,701 1.0% $3.64Subtotal 7 - 12 Months 202,443 1,436,914 21,004 $8,102,208 1.5% $5.6413 - 18 Months 3x+ 60,541 375,304 3,695 $1,406,123 1.0% $3.7513 - 18 Months 2x 37,628 192,206 1,465 $531,979 0.8% $2.7713 - 18 Months 1x 80,242 344,511 2,057 $698,731 0.6% $2.03Subtotal 13 - 18 Months 178,411 912,021 7,217 $2,636,832 0.8% $2.8919+ Months 3x+ 129,024 398,968 2,687 $949,888 0.7% $2.3819+ Months 2x 127,003 313,473 1,816 $598,560 0.6% $1.9119+ Months 1x 380,147 820,132 3,487 $1,096,891 0.4% $1.34Subtotal 19+ Months 636,174 1,532,573 7,989 $2,645,339 0.5% $1.73Total 1,316,128 6,131,717 107,327 $43,734,864 1.8% $1.78BestLongitudinalanalysis ofcampaigns
  • 27. Contact strategy can be extended to touchpoints Clienteling at point of sale (POS)– Data driven POS experiences– Contacts then continue from store associates Intelligent call center routing based on value andcustomer segments Dynamic creative on the web– Landing page optimization– Personalized display ads Dynamic creative on outbound email– Early morning test then change creative to everyone basedon results– Keep track (a history of what interested customers) 27
  • 28. Cost cutter ideas Plan campaigns longitudinally Envision media holistically, experiment– Example: Email prior to direct mail Direct mail reserved for best customers– Use statistical models to select audiences based on probabilityof sales or attrition Make online communications relevant– First class postcards with a special offer to drive recipients toyour website– Specific search terms lead to relevant landing pages– Data driven display ads, not generic “banners” people ignore– Display ads on email 28
  • 29. Today’s Agenda What’s so bad about new customers? Customer segmentation– Customers see brands, not channels– Measuring the bond– Personalizing the message How to cut costs without reducing effectiveness Case study: The Home Depot 10 things that predict which customers will buy again29
  • 30. Case study for customer centricity Analytical challenge– Home Depot wanted to know which online affiliates attractedNew- versus Repeat customers?• When customers buy again, do they buy directly from The HomeDepot, or via the same affiliate channel (who’s the customer loyal to?)• Which categories of publishers are best (not just biggest) for drivingloyal customers? Solution– Analyzing customer transactions and determined LifetimeValue (LTV) to establish the base for measuring success– Home Depot gained more control of its affiliate program at thesame time it increased repeat purchasing and LTV30
  • 31. Today’s Agenda What’s so bad about new customers? Customer segmentation– Customers see brands, not channels– Measuring the bond– Personalizing the message How to cut costs without reducing effectiveness Case study: The Home Depot 10 things that predict which customers will buy again31
  • 32. 10 things to help you predict which customers buy again1. Dollars spent on first purchase2. Breadth of first purchase (# of departments)3. Usage of a sales incentive or coupon4. Payment method, especially house credit program5. Degree to which customers tell you theircommunication preferences6. Sample or ancillary service on first purchase7. Replenishment nature of product8. What happened prior to the first purchase9. (b2b) role and employee size10. (b2b) activity of the site 32
  • 33. How do I know this is true? Repurchase rates by first dollar amount This template can be used for any dimension33First Dollar New Customers Bought in 1st 3 Months Bought in 1st 6 Months Bought in 1st 12 Months$501+ 5,284 1,793 2,345 2,850$401-500 3,942 1,207 1,617 2,041$301-400 12,223 3,557 4,898 6,130$201-300 38,609 10,493 14,698 18,690$101-200 151,955 35,659 52,210 67,978$ 76-100 104,687 21,437 32,243 42,464$ 51-75 105,149 19,925 31,015 41,667$ 26-50 170,551 28,009 44,350 60,112$ 25 or less 54,049 8,922 14,174 19,236646,451 131,001 197,550 261,168
  • 34. How do I know this is true? Repurchase rates by first dollar amount This template can be used for any dimension Go on a treasure hunt for the most important attributes34First Dollar New Customers Bought in 1st 3 Months Bought in 1st 6 Months Bought in 1st 12 Months$501+ 100% 34% 44% 54%$401-500 100% 31% 41% 52%$301-400 100% 29% 40% 50%$201-300 100% 27% 38% 48%$101-200 100% 23% 34% 45%$ 76-100 100% 20% 31% 41%$ 51-75 100% 19% 29% 40%$ 26-50 100% 16% 26% 35%$ 25 or less 100% 17% 26% 36%100% 20% 31% 40%RetentionRate
  • 35. How do I know this is true? Repurchase rates by presence of sales incentive Conclusion: Bribery has a short term benefit butdownstream drawback35RetentionRatePremium New Customers Bought in 1st 3 Months Bought in 1st 6 Months Bought in 1st 12 MonthsYes 13,848 1,819 2,928 4,205No 631,516 131,582 197,776 260,459Premium New Customers Bought in 1st 3 Months Bought in 1st 6 Months Bought in 1st 12 MonthsYes 100% 13% 21% 30%No 100% 21% 31% 41%
  • 36. What customers did prior to their first purchase36Source: Joe Stanhope, Forrester 2010
  • 37. Key takeaways Not all first-time customers are created equal Most won’t buy a second time37
  • 38. Other takeaways Take a long term view of customers, which will providefeedback on acquisition marketing decisions Envision communication as streams, conversations Plan contacts based on customer value andlongitudinally, not batch and blast Then embed triggers to react to customer activities Make your messages relevant Set aside control groups Measure what’s working38
  • 39. Above all: measure what’s working From campaign analytics …– Basic response analysis with ROI– Responses across channels (response attribution)– Experiments in market for offers, audiences, selections39Channel Buyers Trans Sales Sales/Piece Margin GM% AOVRespRateRespRate 2Retail 200,000 250,000 10,000,000$ $2.50 5,000,000$ 50.0% 45.00$ 4.0% 4.5%Direct 100,000 130,000 5,000,000$ $1.50 2,500,000$ 50.0% 35.00$ 3.0% 3.2%Total 300,000 380,000 15,000,000$ $3.00 7,500,000$ 50.0% 40.00$ 3.8% 4.0%List Priority Circ AOV Resp Rate Sales/Piece1. List x 1,000,000 $55.00 3.2% $2.002. List y 2,000,000 $45.00 4.9% $3.003. List z 2,000,000 $35.00 4.6% $4.005,000,000 $40.00 3.8% $3.00Market Circ AOV Resp Rate Sales/PieceKey market 1 1,000,000 $50.00 6.0% $4.00Key market 2 4,000,000 $35.00 2.0% $2.00Grand Total 5,000,000 $40.00 3.8% $3.00Discount Circ AOV Resp Rate Sales/Piece$25 off 1,000,000 $55.00 5.0% $4.00$35 off 2,000,000 $65.00 6.0% $1.75Gift w Purchase 1,900,000 $25.00 2.0% $2.00Control group 100,000 $40.00 3.0% $2.00Grand Total 5,000,000 $40.00 3.8% $3.00Distance to Store Circ Buyers Trans Sales Sales/Piece Margin AOVRespRateRespRate 2Within 1 mile 300,000 90,000 110,000 4,000,000$ $13.33 2,000,000$ 55.00$ 7.0% 7.2%2 miles 200,000 50,000 75,000 3,000,000$ $15.00 1,500,000$ 45.00$ 6.0% 6.5%3 miles 500,000 40,000 55,000 3,000,000$ $6.00 1,500,000$ 50.00$ 6.0% 6.4%4 miles 500,000 40,000 50,000 2,000,000$ $4.00 1,000,000$ 45.00$ 5.0% 5.5%5 miles 500,000 35,000 40,000 1,000,000$ $2.00 500,000$ 25.00$ 4.0% 4.0%6 to 10 miles 1,000,000 20,000 22,000 900,000$ $0.90 450,000$ 40.00$ 2.0% 2.2%11 to 15 miles 1,000,000 15,000 16,500 650,000$ $0.65 325,000$ 35.00$ 1.5% 1.7%16 to 20 miles 1,000,000 10,000 11,500 450,000$ $0.45 225,000$ 35.00$ 1.0% 1.2%TOTALS 5,000,000 300,000 380,000 15,000,000$ $3.00 7,500,000$ 40.00$ 3.8% 4.0%01,0002,0003,0004,0005,0006,0007,0008,0009,00010,0001/2/20101/4/20101/6/20101/8/20101/10/20101/12/20101/14/20101/16/20101/18/20101/20/20101/22/20101/24/20101/26/20101/28/20101/30/20102/1/20102/3/20102/5/20102/7/20102/9/20102/11/20102/13/20102/15/20102/17/20102/19/20102/21/20102/23/20102/25/20102/27/20103/1/20103/3/20103/5/20103/7/2010Customers
  • 40. Above all, measure what’s working …to customer analytics– Value of a lead, then optimizes investment in bothacquisition and retention programs– Hidden influencers, specifiers and site level and buying cycledynamics (by role, industry, employee size)– Finally dashboards drive action not just recite KPIs40
  • 41. Roy WollenPresident, Hansa Marketing Services Inc.(847) 491-6682roy.wollen@Hansa-Marketing.comwww.Hansa-Marketing.comBlog.Hansa-Marketing.comhttp://www.linkedin.com/company/404316?trk=tyah