Lifecycle Marketing and Touchpoints: The Customer Map

In this simple example, we have just six channels.

And, clearly, there are three channels that form a "triangle" of customer behavior.

• Customers who order via the Telephone.
• Customers who order via the Website.
• Customers who order via E-Mail Marketing.

Because the "newbies" label is near "website", we can surmise that the website is generally most responsible for the acquisition of new customers. 

Because the "loyalists" label is near "search", "mobile", and "social", we can safely surmise that the best customers are focused on hip, new marketing channels.

Telephone shoppers are off on their own island, aren't they? 

And while email customers are reasonably close to loyalists, there is a bit of distance between email and hip, new marketing channels.  This happens, especially when email marketing is viewed as a discount/promotion channel ... you end up customers who adore discounts/promos, and as a result, you have customers who don't participate in the entire ecosystem. 

It is interesting that search is near mobile/social, and is generally near the loyalist customer.  For this business, search is a tool used by experienced customers.  It's quite likely that loyal customers are doing a lot of comparison shopping.  Strategically, this is important, because loyal customers clearly aren't as loyal as one might hope ... the customer is obviously looking for the best deals.

Mobile/Social, in this case, are aligned with loyal customers.  This is important from an attribution standpoint.  It likely means that these channels are cannibalizing existing channels, and are not causing incremental orders.  You want to look at your customer metrics, to understand if customers are placing incremental orders or not.  If customer order frequency is not increasing, it is quite likely that Mobile/Social are being given too much credit.  More important, these channels matter, because best customers are using them.  Management should not expect a boatload of new customers from either channel. 

In general, the customer is acquired via the website, then migrates toward search/mobile/social, and to some extent, to email marketing.

Obviously, this is a simple example, with just six generic channels.  Your business has considerable complexity, with many channels.  Use this methodology to understand how your customers migrate through the lifecycle. 

Contact me for your own customized Lifecycle Marketing and Touchpoints analysis!

Lifecycle Marketing and Touchpoints: Geeky Math

If you don't like geeky math, please skip this post, because I am about to show you how the sausage is made!

I have eight variables in this model ... weighted percentage of historical dollars spent in email, search, mobile, social, over the phone, and on your website.  You get to choose the attribution model you want to use to assign weighted dollars to channels.  There are two additional variables ... 1/0 variables for newbies and for loyalists.

With these variables, I use SPSS to run a factor analysis, after calculating means and standard deviations.

variable labels
    ch01 'Phone'
    ch02 'Web'
    ch03 'Email'
    ch04 'Search'
    ch05 'Social'
    ch06 'Mobile'
    buy1 'Loyal'
    buy2 'Newbie'.
execute.
DESCRIPTIVES
  VARIABLES = ch01 ch02 ch03 ch04 ch05 ch06 buy1 buy2
  /STATISTICS=MEAN STDDEV.
execute.
FACTOR
  /VARIABLES
       ch01 ch02 ch03 ch04 ch05 ch06 buy1 buy2
  /MISSING LISTWISE
  /ANALYSIS
       ch01 ch02 ch03 ch04 ch05 ch06 buy1 buy2
  /PRINT INITIAL ROTATION FSCORE
  /CRITERIA FACTORS(02) ITERATE(200)
  /EXTRACTION PC
  /CRITERIA ITERATE(200)
  /ROTATION VARIMAX
  /METHOD=CORRELATION.
execute.

We run the code against the dataset, yielding the following output:

The component score coefficient matrix is important, because we multiply the coefficients in that table against standardized values for each variable, yielding the two factor scores that, when plotted, yield the Lifecycle Marketing and Touchpoints map at the start of this post.


I use the following SPSS code to score each factor.

compute st01 = (ch01 - 0.2308) / 0.3969.
compute st02 = (ch02 - 0.4576) / 0.4428.
compute st03 = (ch03 - 0.1622) / 0.3205.
compute st04 = (ch04 - 0.1057) / 0.2765.
compute st05 = (ch05 - 0.0220) / 0.1240.
compute st06 = (ch06 - 0.0217) / 0.1238.
compute by1  = (buy1 - 0.0759) / 0.2648.
compute by2  = (buy2 - 0.2219) / 0.4156.
compute f1 =  0.537*st01 - 0.577*st02 + 0.045*st03 + 0.095*st04 + 0.008*st05 + 0.003*st06 + 0.020*by1 - 0.097*by2.
compute f2 = -0.421*st01 - 0.251*st02 + 0.659*st03 + 0.172*st04 + 0.070*st05 + 0.090*st06 + 0.247*by1 - 0.047*by2.

execute.


At this point, each customer has a score for each factor.


The map shows where customers fall on the two axes represented by each factor.

In the next post, we'll talk about the meaning of this plot.

Lifecycle Marketing and Touchpoints: Variables

In our example, there are six channels (your mileage will vary ... some folks use a hundred different channels/touchpoints in their analysis).

Each variable is expressed as a percentage of weighted historical spend.  For instance, a customer that only ever purchases via the telephone will have 0% values for email, search, mobile, social, and your website, and 100% for phone.

A customer that purchased via search last year and via mobile this year might have 66% values for mobile, 34% for search, and 0% values for all other channel-based variables.


Finally, I add two 1/0 variables into the mix ... a variable that indicates whether the customer is a new customer in the past year (1 = new, 0 = otherwise), and a variable that indicates whether the customer is a loyal customer (1 = loyal, 0 = otherwise).


Up next ... the math that helps us map the customer life cycle.

Lifecycle Marketing and Touchpoints

Social and mobile changed things, didn't they?

At minimum, each channel added a level of complexity.  Back in the day, we used to manage catalogs.  Then we added e-commerce, and after that, a ton of e-commerce micro-channels.

So it was bad enough in 2007 ... and then we tossed social and mobile into the mix.

This causes complexity ... we want to optimize our marketing investment, and that's hard to do when you don't know how a chain of events truly contributed to a purchase.  Worse, we don't have a good understanding of how customer activities, managed over the lifecycle of the customer, yield loyalty.

So, our next series will focus on a methodology for plotting, on a map, customer touchpoints.  The map will illustrate the lifecycle the customer follows.  On a simple, two-dimensional plot, you'll get to see how channels fit together.

A few caveats.

1. There really isn't a true customer lifecycle.  We're doing this because the vendor community pushes us in this direction.  The reality is that the customer orbits areas on the plot, each purchase pushes the customer in a different direction.  The reality is that we need facts to tell us what is actually happening.
2. I'm using a small number of channels here.  You can do this with hundreds of micro-channels, if you wish.  I'm using a small number of channels so that you can accurately see what is happening.
3. The methodology isn't easy.  If you don't like statistics, you'll want to hire me to do this for you.

With that in mind, we'll spend a few days showing you how the methodology maps touchpoints, yielding the customer lifecycle.