In his book Drilling Down, Jim Novo begins with a safe assumption.
If you are a data-driven marketer, you likely have two objectives:
- Keep your most valuable customers.
- Try to increase the value of your less valuable customers.
And further, Novo says, you want your customers to take action. In the case of B2B marketing, you want your buyers to visit your website, read your education material, subscribe to your newsletter, download a calculator, or make a purchase.
Then you want them to do it again. And whatever you spent to persuade them to do something the first time, you want to spend less getting them to do it the second time.
To influence your buyers to take action, you need to build a model of their behavior. Your model will be action-oriented. It will help you to see buyer action over time. And it will let you predict your buyers’ behavior.
You could spend a lot and build a heavy-duty model. You would need people with amazing talent and experience to help you. A room full of PhDs.
Or, Novo says, you can create your own model. It doesn’t have to be heavy-duty. No PhDs required.
It might not be as good as one that a group of experienced analysts would create, but it will be good enough.
So what are the ideas behind the model that you build? Jim Novo describes four:
1. Past and Current customer behavior are the best predictors of Future customer behavior.
Any buyer group you can identify – external, internal, vendors, resellers – they all follow their own particular routines. Since they are likely to behave in the future similarly to how they behaved in the past, you can use that information to improve your marketing programs.
If you have a group on your website who have shown an interest in articles on “changes management,” it’s likely they will show similar interest in a new article on change management.
If those routines change, you can expect an opportunity or a challenge to arise in how you relate to them.
2. Customers want to win at the customer game.
Buyers want the feeling that they control the choices they make, that they are making smart decisions. Take advantage of this desire by making offers that ask buyers to do something you want and that make them feel good about their decision.
It could be a series of articles you’d like them to read or a trial version you’d like them to try. If you ask them to do something and they feel they are winning the customer game by doing it, it’s more likely they’ll make a decision in your favor.
3. Data-Driven programs are about allocating resources.
Every business has limited resources. If you spend $1.00 on a program, you expect to get more than $1.00 back in profit (not revenue, profit). If you have two alternatives each of which cost $1.00 and one of them returns $.50 and the other $2.00, then of course you’ll choose the one that returns $2.00.
This is the purpose of data-driven marketing, to help you discover which choices to make, to know which alternative will give you $.50 back on your investment and which will give you $2.00.
With data-driven marketing, you’ll be in a position to increase your returns and lower your investment cost. (Of course, as Jim points out, we’re not really talking about ROI here. It would be more accurate to call it ROME, return on marketing expense.)
4. Action — Reaction — Feedback — Repeat.
“Data-Driven marketing and service programs are driven by creating continuous communications and interactions between the business and the customer, and analyzing these interactions for challenges or opportunities.”
Your marketing programs are conversations. They only work if you listen to the messages your customers send you, through their behavior and the data their behavior create.
That’s why I will sometimes talk about the data “speaking to you.” The data is, in effect, speaking for the customer, telling you by its very existence (or non-existence) that there has been an action (or not) that is waiting for a reaction. An action or inaction is a raising of the hand by the customer, and the Data-Driven marketer or service provider not only sees the raised hand, but also reacts to it, then looks for the hand to be raised again by the customer.
This level of customer communication and interaction would be expensive and time-consuming in the offline world. But online it costs less and and can move quickly.
These last paragraphs summarize the introductory chapter to Jim Novo’s classic Drilling Down. The next idea of Jim’s to explore is how to develop a strategy for your data-driven marketing.