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You can find “milestones” or goals in the Customer LifeCycle by simply examining what customers do on the average. Then segment by source, offer, product of first purchase, service, etc.

By using these milestones to set up a “funnel”, you can track the progress of customers and figure out where they usually fall out of this retention funnel

If you know where they are likely to fall out, you can take action to Pull them back in

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  1. 1. PushMePullYu Jim Novo Customer Behavior Analysis Consultant April 19, 2006
  2. 2. Introduction: Jim Novo <ul><li>Customer behavior analysis consultant since 1997 </li></ul><ul><li>Former VP Programming and Marketing Home Shopping Network </li></ul><ul><li>Author of “ Drilling Down: Turning Customer Data into Profits with a Spreadsheet” </li></ul><ul><li>Co-author of “ The Marketer’s Common Sense Guide to E-Metrics, 22 Benchmarks ” </li></ul><ul><li>Average 60-day ROI of customer retention programs designed for his clients = 70% </li></ul>
  3. 3. Say again? <ul><li>“Intrusive versus Passive” </li></ul><ul><li>“Customer in Control” </li></ul><ul><li>“Participation Age” </li></ul><ul><li>“Experience Economy” </li></ul><ul><li>“Social Media” </li></ul>
  4. 4. And Pull Marketing Is What, Exactly? <ul><li>Q: Are online advertising banners considered push or pull marketing tools? </li></ul><ul><li>A1: Like all advertising directly to end customers, they are considered pull marketing. Push marketing is where you focus on the intermediaries and essentially ask them to push the product down the pipeline. </li></ul><ul><li>-------------------------- </li></ul><ul><li>A2: The content of the ad will determine whether it is pull or push. The online advertisement is the medium. It is the message that reveals whether it is push or pull. </li></ul><ul><li>-------------------------- </li></ul><ul><li>A3: I have to disagree in some regard to both of the previous postings. First of all, &quot;all advertising&quot; is not pull fact, traditional advertising is usually considered &quot;push&quot; marketing… </li></ul>
  5. 5. Jim’s Definition (FWIW) <ul><li>Pull Marketing – </li></ul><ul><li>A marketing approach that re-orients the Sales Funnel to focus on the customer Buying Process rather than the company Selling Process </li></ul>
  6. 6. Buying Process versus Selling Process? <ul><li>The more you reduce friction in your sales process, the more you accommodate your customer’s buying process, the more confidence the customer gains, the better the customer experience. The increased intimacy of that experience is what allows customers to ascribe a deeper connection and more value to products and services. </li></ul><ul><li> – Bryan Eisenberg </li></ul><ul><li>Waiting for the Cat to Bark </li></ul><ul><li>Jim’s take: Pull customers have higher LifeTime Value and are less likely to defect to the competition </li></ul>
  7. 7. Example of Reducing Friction…
  8. 8. Pull versus Push (Marketing) <ul><li>Customer Centric versus Company Centric </li></ul><ul><li>Buying Oriented versus Selling Oriented </li></ul><ul><li>Facilitates versus Intimidates </li></ul><ul><ul><li>These ideas are much bigger than “Marketing”, they are cross-silo “Business Culture” issues </li></ul></ul>
  9. 9. “Control” is in the Eye of the Beholder <ul><li>Empowerment and control are very different things </li></ul><ul><li>Empowerment is a purely voluntary, participatory experience that is aligned with customer’s own goals </li></ul><ul><li>This intimacy of the experience creates a deeper connection with the customer – “the relationship” </li></ul><ul><li>It’s Buying rather than Selling oriented </li></ul>
  10. 10. Customer in Control? <ul><li>Did they “take control”, or did you “give control” to them? There is a big difference </li></ul><ul><li>By understanding customers, empowering them, having e mpathy for them, you can prevent control from being taken, and give control instead </li></ul><ul><li>If you are giving control, guess what – you’re still in control. It’s only when control is taken from you that the customer is truly “in control” </li></ul>
  11. 11. Pull Customers ARE different <ul><li>And it is because of the way the relationship started - from customer company: </li></ul><ul><ul><li>They have self-selected themselves </li></ul></ul><ul><ul><li>They have initiated the relationship themselves </li></ul></ul><ul><ul><li>They have active need </li></ul></ul><ul><ul><li>They have momentum </li></ul></ul>
  12. 12. Things we know about Pull customers <ul><li>Pull customers tend to: </li></ul><ul><ul><li>Be very responsive </li></ul></ul><ul><ul><li>Be less price sensitive </li></ul></ul><ul><ul><li>View interaction with business as a “relationship”- largely because they initiated it </li></ul></ul>
  13. 13. Pull Gone Push <ul><li>The customer defines Push and Pull, not you </li></ul><ul><li>If you manage to engage a customer through Pull Marketing, and then serve them up a Push Product, Process, or Service Experience, you’re worse off </li></ul><ul><li>What if different divisions of the same company are all using a Pull strategy but inundating the customer with individual communications? This is viewed as Push by the customer, who knows “company” not “division” </li></ul>
  14. 14. When creating Pull Campaigns, think: <ul><li>What is the action we want someone to take? </li></ul><ul><li>Who are we trying to persuade to take the action? </li></ul><ul><li>What does that person need in order to feel confident taking that action? </li></ul><ul><li> – from the Persuasion Architecture model </li></ul>
  15. 15. Then, how do we set up the “Pull”? <ul><li>You need an “attractant” </li></ul><ul><li>The quality of this attractant and relationship to the primary business goal will determine the value of the relationship created over time </li></ul><ul><ul><li>Attractant must be relevant </li></ul></ul><ul><ul><li>Attractant must create or provide value </li></ul></ul><ul><li>You will “get what you pay for” in this area </li></ul>
  16. 16. It’s not about media… <ul><li>Any media can be used for “Pull Marketing” – all it has to do is create an Attraction or highlight one </li></ul><ul><li>Just because a media is “broadcast” or “untargeted” does not mean it can’t Pull. </li></ul><ul><li>However, a broadcast media will probably need a “Raise you hand here” backup, e.g. TV web site </li></ul><ul><li>If there is no way to interact, you can’t “Pull”, because you can’t give control, and they can’t initiate action </li></ul>
  17. 17. BP: “Carbon Footprint”
  18. 18. Novartis: “Where to Stop & Where to Go”
  19. 19. Bernd gets it <ul><li>The most powerful driver of brand value is customer experience. The experience the customer has when interacting with your company, product, or service can be your most effective marketing tool. </li></ul><ul><li>- Bernd Schmitt Columbia Business School professor and Executive Director of the Center on Global Brand Leadership </li></ul>
  20. 20. And it’s not All about Acquisition <ul><li>Seems to me all this chatter and navel-gazing about Push versus Pull focuses on customer acquisition </li></ul><ul><li>This is bizarre given the main reason to engage in a Pull strategy is all about long-term customer value; the “exchange” nature of Pull creates higher value </li></ul><ul><li>Would be very short-sighted not to be prepared on the Retention front since Pull Customers are likely to also be Best Customers – at least for a while! </li></ul>
  21. 21. Give me a hand, will you? <ul><li>In the 80’s, “Relationship Marketing” was the Pull Marketing buzzphrase, the very front end of the Sales Funnel was “Getting people to raise their hands” </li></ul><ul><li>Simply means this: what can we do to attract the attention of people who might want our product, and get them to tell us they interested? </li></ul><ul><li>These people, who are already seeking a solution to a problem our product solves, will then “raise their hands” by taking some kind of action we facilitate </li></ul>
  22. 22. Push Me, and I’ll Push Back! <ul><li>Once they take action, we react, based on their action </li></ul><ul><li>They react to our action, we react to their action </li></ul><ul><li>And so forth. All this “to and fro” tends to “pull” the customer right into a relationship, and it’s the interactivity that defines the relationship </li></ul><ul><li>This trail of actions and reactions is the Customer Retention Funnel, and can be tracked in much the same way as the “initial conversion” Funnel </li></ul>
  23. 23. Typical Retention Funnel - Retail <ul><li>Sign Up for Newsletter </li></ul><ul><li>1 st Purchase </li></ul><ul><li>2 nd Purchase less than 60 days after 1 st buy </li></ul><ul><li>3 rd Purchase less than 45 days after 2 nd buy </li></ul><ul><li>Joins “Buyer’s Club” less than 30 days after 3 rd buy </li></ul>
  24. 24. Typical Retention Funnel - Service <ul><li>Uses service 2x in 1 st month </li></ul><ul><li>Uses service 4x in 2 nd month </li></ul><ul><li>Uses service 5x in 3 rd month </li></ul><ul><li>Signs up for low volume “bulk” rate billing </li></ul><ul><li>Uses service 10x in 4th month </li></ul>
  25. 25. Typical Retention Funnel - Content <ul><li>Spends 30 minutes on site month 1 </li></ul><ul><li>Spends 60 minutes on site month 2 </li></ul><ul><li>Spends 90 minutes on site month 3 </li></ul><ul><li>Signs up for “premium” content month 4 </li></ul>
  26. 26. OK, so you didn’t see YOUR funnel, but… <ul><li>The point is, you can find “milestones” or goals in the Customer LifeCycle by simply examining what customers do on the average. Then segment by source, offer, product of first purchase, service, etc. </li></ul><ul><li>By using these milestones to set up a “funnel”, you can track the progress of customers and figure out where they usually fall out of this retention funnel </li></ul><ul><li>If you know where they are likely to fall out, you can take action to Push or Pull them back in </li></ul>
  27. 27. I’m not a Pull-Over…or a Push-Over <ul><li>Push and Pull marketing don’t really exist as separate mutually-exclusive approaches </li></ul><ul><li>Rather, they exist on a continuum: </li></ul><ul><li>The correct ratio or mix of Push and Pull Marketing depends on where the customer is in her LifeCycle with the company. </li></ul>Push Pull
  28. 28. Of Push and Pull <ul><li>You can only Pull when the customer is engaged, wants to be interactive, and will exchange with you </li></ul><ul><li>As customers pass behavioral milestones without action, they are telling you through their behavior they are becoming less engaged, more resistant to Pull </li></ul><ul><li>Pull is almost always cheaper than Push because customer momentum is with you. If you wait until you have to Push, you will be fighting a build up of friction </li></ul>
  29. 29. Retention Funnel Marketing Example <ul><li>Let’s say your average customer makes a 2 nd purchase within 60 days of first purchase </li></ul><ul><li>Up until 60 days, you have the opportunity to “Pull”, build a relationship, interact – soft benefits (cheap) </li></ul><ul><li>After 60 days, you will have to Push – hard offers ($$) </li></ul><ul><li>The “customer” will be less and less likely to respond as time goes by after 60 days </li></ul>Push Pull 60 30 90
  30. 30. Recency + Latency = Push or Pull Push Pull Rest!
  31. 31. Did he say 438 times more likely? 90-Day Revisit Index by Days Since Last Visit Fuhgetaboutit Push Pull
  32. 32. Lab Store – New Customer Kit Test <ul><li>Exotic Pet Supplies Business </li></ul><ul><li>50 / 50 split test – ½ new customers get special Welcome package with letter, gifts, samples </li></ul><ul><li>“Surprise and Delight” message injects new customer with higher level of Momentum and “Pulls” customer into stronger, more profitable relationship </li></ul><ul><li>90-Day ROI: 4,891% </li></ul>
  33. 33. Momentum Injection Device
  34. 34. Customers with Increased Momentum
  35. 35. The Economics of Pull <ul><li>Avg. Cost of Momentum Injection Device $.74 </li></ul><ul><li>Increase in 90-Day second purchase rate 32% </li></ul><ul><li>Increase in consumable purchase rate 24% </li></ul><ul><li>90-Day ROI 4,891% </li></ul><ul><li>Delighted, Engaged Customers Priceless </li></ul>
  36. 36. Oh yea, I told you I would explain this…
  37. 37. Sweeping Away Friction <ul><li>Like the stones on the ice, customers will eventually lose momentum with you, slow down, and defect </li></ul><ul><li>The question is, can you prolong the relationship, extend the length of it, increase the profitability of it by knowing when and how to sweep away friction ? </li></ul><ul><li>You can get the “when” from your Retention Funnel milestones. “How” takes understanding customer behavior, analysis instead of reporting, and testing </li></ul>
  38. 38. Get the Right Broom <ul><li>How can you make their Buying Process (not your Selling Process!!) faster, easier, surprising in a good way, delightful, more experiential, engaging, and fun? </li></ul><ul><li>What kinds of things can you do / offer when milestones are violated? Does the customer have enough Current Value to justify your action? </li></ul><ul><li>Are you prepared / empowered to act and remove or reduce the Friction that has slowed momentum? Even if this friction is a cross-silo problem? </li></ul>
  39. 39. Reducing Friction is about Potential Value Current Value Potential Value Low Potential Value, Low Current Value Should You Spend Money Here? Low Potential Value, High Current Value Grow These Customers High Potential Value, High Current Value Keep These Customers High Potential Value, Low Current Value Grow These Customers
  40. 40. Analytics are more complex for Pull <ul><li>You will need to look at behavior and value over time – “attractant analysis”, for example </li></ul><ul><li>Requires not just “reporting” but some real analysis – understanding of psychology, consumer behavior </li></ul><ul><li>Profitability of Pull is highly sensitive to changes in the “context” of the customer, not always obvious based on site reports - you might have to think / go outside your web analytics tool to get information you need! </li></ul>
  41. 41. Contact Information <ul><li>Jim Novo </li></ul><ul><li>The Drilling Down Project </li></ul><ul><li>1-866-658-1827 </li></ul><ul><li>[email_address] </li></ul><ul><li> </li></ul>