How do you turn the four driving forces behind data-driven marketing into actionable campaigns and programs?
The simple answer is that you look for changes in customer behavior — either change that the buyer wants to do more with you – or change that the buyer wants to do less.
To find these changes, first build a model that defines “normal” customer behavior. Then you can look for behavior that varies from the norm.
Jim Novo says don’t worry about absolute numbers with your measurement in customer marketing, look for change.
It’s not nearly as important to know the absolute or exact value of a customer as it is to know whether this value is rising or falling over time. Customer behavior also changes over time, and these changes in behavior typically precede a change in customer value. That means if you track these changes in behavior, you can forecast a change in value, and if you can forecast a change in value, you can get your campaign or program out there and do something about it. This is the core idea behind Relationship Marketing, and these changes in customer behavior and value over time are called the Customer LifeCycle.
Buyers tend to do what they’ve done before
Specific segments among your buyers tend to stick to their routines, so when they change their routine this can be a sign of trouble ahead (or a sign of an opportunity).
For example, let’s say you create a series of articles on how to program your FPGA chips and send them as a email marketing sequence. And then one day you notice that new subscriptions from Japan have tailed off.
Why is that? Have you saturated the market? Are potential subscribers going to your competitor to get the information? Is there a problem on your signup page?
You don’t know yet. But since you’ve been watching the pattern, you see the change as soon as it happens and can do something about it.
Changes in buyer behavior act as a tripwire
A change in the rate of signups acts as a tripwire. It warns you of a change in buyer behavior that requires your attention.
When customers raise their hands by changing their behavior and when marketers respond, you have the basic feedback loop at the center of Relationship Marketing. Your buyer acts, you react, you see how they respond. Your buyers raise their hands, the marketer responds.
Segment your buyers to make spending decisions
How do you know how much to spend on your response? This is a key question because the ROI for most marketing programs is lower than it could be. To know how much to spend, you’ll need to segment your buyers. For every $1.00 you spend, some segments will return $.50 and others $5.00. Of course you want to spend your resources on those $5.00 segments.
Segment your buyers based on their behavior. Look for the segments that are changing their behavior, that are raising their hand for your attention.
Why are these segments so important? Novo answers the question this way:
Customers who are in the process of changing their behavior — either accelerating their relationship with you, or terminating their relationship with you — are the highest potential ROI customers from a marketing perspective.
These are the buyers where you have some leverage, where your marketing investment will have a bigger impact. The buyers who are just cruising along, reading your blog, your RSS feed, your email newsletter, they aren’t likely to respond to a message from you.
But the ones who are changing their behavior, it’s a different story. Their interest may be increasing in which case they may be ready to move to the next stage in their journey. Are you presenting them with new opportunities to engage with you?
Or their interest may be declining. Quick, before they disappear altogether, can you find out what’s changed? Are they stuck in their buying journey or have they encountered another problem before they can move on?
Once again, from Novo:
High ROI Data-Driven marketing techniques are best used (and create the highest returns) when they are used to surgically strike at a trend in behavior, not when customers are comfortably plodding along.
Novo’s tools — latency, recency, and other customer behavior metrics — are simply the tools of measurement in customer marketing that you use to recognize when buyers are raising their hand. These tools give you the chance to react to new actions on the part of your buyers.