March 01, 2008

Simplifying The Direct Marketing Customer Continuum

Let's simplify this message a bit.

You are a direct marketer.

Whether direct marketers understand this or not, direct marketers simultaneously manage three distinct segments of customers.

One segment requires advertising in order to purchase merchandise. This customer wants to be led, wants to be inspired. In our hearts, we believe that all of our customers fall into this category.

A second segment of customers combines advertising, paid/natural search, social media, and word of mouth. This segment of customers might reflect the average customer we market to in 2008.

A third segment of customers buy out of brand loyalty. Think of the customer who wants to buy a book, visits Amazon.com, and buys the book. No advertising, no e-mail campaigns, no marketing was required. Think of the customer who wants to buy a pair of shoes, visits Zappos, and makes the purchase. Again, no catalogs, no e-mail marketing, just an inspiration followed by a website visit.

Direct marketers want customers to feel our passion. We believe customers love our marketing. You wouldn't see catalog CEOs handing catalogs to you if this weren't the case. You wouldn't see a hundred different e-mail marketing blogs if this weren't the case.

But during the past decade, the internet caused customer behavior to change ... dramatically change.

Retailers have always dealt with this. By simply opening a store in a popular shopping center, customers showed up, and sales poured in. Retailers know that marketing plays, at best, a small role in the success or failure of retailing.

Direct marketers never had to deal with this.

Now we have no choice but to start dealing with this.

If you are a business intelligence expert, SAS programmer, web analytics expert, statistician, or a query manager, start splitting your customer base into these three groups. Use your tools and techniques to identify which segment your customers fall into.

If you are a catalog executive, online marketing executive, or e-mail marketing executive, challenge your analytical folks to define these three groups for you. And then market to each group appropriately, the way the customer wants you to speak to her, not the way you want to speak to your customer.

Customers on the left side of the slide need/enjoy advertising. So send your catalogs or e-mail campaigns to these customers. Revel in the fact that these customers love interacting with you.

Customers in the middle of the continuum are fascinating. Let go of the old rules that suggest our marketing strategies are solely responsible for their purchases. Observe these customers, research their activities, ask them why they behave the way they behave.

Customers on the right side of the slide no longer need marketing. Identify these customers, and stop mailing your catalogs and postcards. Stop offering 20% off your next order. Scale back your e-mail marketing to this audience. Bathe yourself in profit instead of bathing yourself in marketing ego.

This self-sufficient audience is hard for us to let go of. We want to attribute their voluntary orders to all of our marketing activities, thinking that without us, these loyal customers would not buy from us anymore. Let go of these customers!

How do you see these principals impacting your business, your customers? Do you have the analytical tools necessary to identify these distinct audiences?