December 17, 2008

Five Customer Types: Migration

Obviously, I cannot share actual customer data with you.

But I can give you a few hints about how to look at these relationships.

Organic Customers: One sure way to ruin the organic customer relationship is to run free shipping promotions. The customer was going to buy anyway, and then we willingly throw away gross margin dollars. I'm not saying free shipping is bad --- it is the putting it on / pulling it off deal that is bad. Also, organic customers are willing to use algorithms --- this is why calculation of the Net Google Score is so important.

Algorithm Customers: Pay careful attention to these customers. If the customer does not use a key code on a future order, don't assume that any catalog drove the order. This is one of the places where matchback programs can be wrong, costing you profit.

Social Customers: In the limited amount of data I've been able to play with here, these customers are fundamentally different than all other customers we manage.

Advertising Customers: These customers may not migrate to organic or algorithm status ... and that, my friends, is a bad thing. Catalogers say this all the time --- they say they don't get business if they don't mail catalogs. For these brands, the advertising-based customer won't become an organic or algorithmic customer. Hint --- for these brands, developing algorithmic and organic customers needs to be a top priority in 2009.

Begging Customers: Migration analysis is critical here. Does the incentive/promotion customer respond to advertising, or to incentives/promotions? We make so many mistakes here --- sending expensive advertising to these customers, when the customer doesn't care about the advertising --- the customer cares about the incentive attached to the advertising. Find a way to dramatically reduce advertising expense if these customers will not migrate to advertising response.

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