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4   Developing & Retaining Customers   Profitable Multi Channel Marketing   March 2010
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4 Developing & Retaining Customers Profitable Multi Channel Marketing March 2010

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Developing & Retaining Customers …

Developing & Retaining Customers
So, you’ve acquired a customer (or at least someone who’s bought once). How do you go about converting them into a truly valuable ‘long term’ customer and how do you evaluate how much to spend on them and when to stop?

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  • 1. Developing and Retaining Customers
  • 2. What we’re covering
    • Defining the customer
    • Developing customers
    • Segmenting your customers
    • Understanding your costs
    • Contact frequency
    • Optimising performance
    • Contact strategies
    • Data and Testing
    • Summary
  • 3. Defining your customer
  • 4. Who are we talking about? … . you know about and have bought from you … .. you know about and have never bought from you … .. you know nothing about and have bought from you You know nothing about and have never bought from you
  • 5. Customer Acquisition vs Customer Development
  • 6. How does a customer define you?
    • Customers buy from you because
      • You provide a product or service they want at a point in time
      • At a price they consider realistic
      • With a service that they find acceptable
      • And because they trust you (or at least don’t distrust you)
    • Generally they won’t buy from you any more if any one of these elements is no longer true
  • 7. Defining ‘a customer’
    • ‘ Customer’ is a very broad concept
    • Many ways to define a customer
      • buyer
      • multibuyer
      • active
      • best
      • lapsed
      • new
      • profitable
      • ………… ..
  • 8. Defining ‘a customer’
    • ‘ How you define ‘customer’ in your business depends on a variety of factors
    • Such as:
      • Cost of recruitment
      • AOV
      • Purchase frequency
      • Lifetime value
      • Contact cost
    • Final analysis - its all down to profitability
  • 9. Developing customers
  • 10. Developing customers
    • You’ve just spent money on acquiring a customer
    • What do you do next?
  • 11. Developing customers
    • How do you ‘tempt’ customers to buy more?
    • How do you decide which customers are most likely to buy?
    • How do you decide on the most appropriate temptation(s)?
    • How do you decide how much to spend and when?
  • 12. Developing customers
    • The big advantages of marketing to customers are:
      • You know who they are
      • You know what they bought
      • You know may know what triggered the purchase
      • You certainly know how they bought it
    • Developing customers is about using, and building on, this information to drive sales through a planned contact strategy
  • 13. Developing customers
    • Who’s going to give the best return?
    • Most common modelling is RFM
      • Recency
      • Frequency
      • Monetary
    • More complex modelling can refine this but get the basics right first.
  • 14. Segmentation
  • 15. Segmenting your customers
  • 16. Segmenting your customers
    • Which groups contribute most - and least
  • 17. Segmenting your customers
    • And how many customers in each?
    95% of profitable customers?
  • 18. Segmenting your customers
    • And how many customers in each?
    95% of profitable customers?
  • 19. Understanding costs
  • 20. Understand your costs Customer Mailing Affiliates PPC
  • 21. Particularly in the ‘grey’ areas
  • 22. Contact frequency
  • 23. Contact Frequency
  • 24. Contact frequency
  • 25. Optimising performance
  • 26. Optimising Customer Performance
    • For the vast majority of your customer base basic analysis tools will work fine.
      • RFM analysis
      • Source of initial order
      • Possibly initial product category
    • This will identify both
      • Your existing ‘best’ customers
      • Those customer types which provide the best ROI and thus the ones you want to target and encourage
    • Once you’ve got this data and acted on it you could look at more sophisticated modelling – it will fine tune the boundaries but is unlikely to change the general approach
  • 27. Optimising Customer Performance
    • Monitor the structure of your database
    • If the numbers in the top left are rising you’re winning
  • 28. Optimising customer performance
    • RFM would lead you to focus on the top left hand
    • More sophisticated modelling, such as regression analysis, might find subgroups to rule in or out linked to other variables
    • But this is more likely to impact the yellow areas than any other
  • 29. Customer strategies
  • 30. Customer strategies Contact methods
    • Contact drives sales
      • Variety of Contact Mechanisms
        • Mailed catalogues
        • Other mailings (leaflets / postcards)
        • Bounceback catalogues
        • E-mail
        • Outbound telephone
        • Text
      • And these can be enhanced with
        • Offers
        • Promotions
        • Personalisation
  • 31. Customer strategies
    • Different types of customer will be best served by differing strategies. For example:
      • New customers (recent single buyers)
      • Existing customers (multibuyers)
      • Best customers (recent 2+ multibuyers)
      • Fading customers (6 - 9 month buyers)
      • Lapsed customers (9 month + buyers)
  • 32. Customer strategies New customers (recent single buyers)
    • Objective: Convert to Multi Buyer
      • Welcome e-mail as soon as order likely to be delivered featuring:
        • Greeting to the business
        • Feedback form asking to comment on experience
        • Product ‘offer’ related to add on to first purchase
      • Catalogue mailing within 4 weeks
      • High frequency contact strategy (most frequent mailing and e-mail strategy)
  • 33. Customer strategies Existing customers (multibuyers)
    • Objective: Convert to higher level multibuyer and maintain recency value
      • High frequency contact strategy by mail and e-mail
      • Introduce graduated promotions to contacts after first 1/3 of season
  • 34. Customer strategies Best customers (recent 2+ multibuyers)
    • Objective: Convert to yet higher level multibuyer and maintain recency value
    • These are the most valuable customers AND the ones that like your product and service the most
    • The aim should be frequent contact but there should be less need to promote
      • High frequency contact strategy by mail and e-mail
      • Tailor e-mail / personalised print communication to reflect ‘special’ status
      • Exclusive product offers
      • Delay promotion to last 1/3 of season and focus on exclusivity / first chance to get offers.
  • 35. Customer strategies Fading customers (6 - 9 month buyers)
    • Objective: Catch before they fade away
      • Lower frequency contact strategy
      • More use of e-mail
      • Stronger ‘come back’ promotions
      • Mail at start of season and with Sale catalogues
  • 36. Customer strategies Lapsed customers (9 month + buyers)
    • Objective: last chance to get back as buyers before abandoning
      • Low frequency contact strategy
      • Heavy use of promotions / offers
      • ‘ Last chance’ call to action
    • Assess seasonality (e.g. gift buyers at Christmas) and tailor contacts accordingly
  • 37. Data & Testing