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



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

    • Developing and Retaining Customers
    • 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
    • Defining your customer
    • 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
    • Customer Acquisition vs Customer Development
    • 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
    • Defining ‘a customer’
      • ‘ Customer’ is a very broad concept
      • Many ways to define a customer
        • buyer
        • multibuyer
        • active
        • best
        • lapsed
        • new
        • profitable
        • ………… ..
    • 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
    • Developing customers
    • Developing customers
      • You’ve just spent money on acquiring a customer
      • What do you do next?
    • 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?
    • 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
    • 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.
    • Segmentation
    • Segmenting your customers
    • Segmenting your customers
      • Which groups contribute most - and least
    • Segmenting your customers
      • And how many customers in each?
      95% of profitable customers?
    • Segmenting your customers
      • And how many customers in each?
      95% of profitable customers?
    • Understanding costs
    • Understand your costs Customer Mailing Affiliates PPC
    • Particularly in the ‘grey’ areas
    • Contact frequency
    • Contact Frequency
    • Contact frequency
    • Optimising performance
    • 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
    • Optimising Customer Performance
      • Monitor the structure of your database
      • If the numbers in the top left are rising you’re winning
    • 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
    • Customer strategies
    • 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
    • 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)
    • 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)
    • 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
    • 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.
    • 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
    • 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
    • Data & Testing