How can you market without understanding your customers?
Posted by
Mark Price on Wed, Mar 10, 2010 @ 01:13 PM
Sitting here this evening waiting for my younger daughter to be judged in a
History Day competition, I found myself thinking about the value of history.
Have we learned nothing?
In front of me are tables filled with historical vignettes, with students standing poised to answer questions from the judges. After the judging is completed, the students mill around anxiously, waiting to find out if they qualified to go to the next level. For each level, the students are challenged to delve deeper into their topics to answer the question "what is the legacy" of your subject.
The question I have is not what they have found, but what they have learned.Everyone knows that "
Those who cannot remember the past are condemned to repeat it" (
George Santayana), but the lessons are far deeper, especially for data-driven marketers.
Surrounded by all this data, I wonder how many of the students will actually be able to convert that data into real knowledge, the kind that helps them make better decisions in the future. In the same way, many (if not most) marketers are surrounded by customer data, yet are unable to take that data and convert it to knowledge that they can use in the future.
"Yeah, yeah," I am sure you are saying, "I have heard all of this before."
Let's not belabor the obvious, then. Let's take a lesson from History Day and develop a very specific plan of attack to create knowledge for you in terms of actionable customer metrics.
Here are lessons we can take from how History Day students tackle their tasks:
1. Identify the problem you are trying to answer. If you do not know what you are trying to learn, the odds are, you won't learn anything. Just "teach me about my customers" sounds broad and interesting but usually turns bland and unexciting. Pick a specific business problem to solve first, and then learn more once you have success. For example, you can focus on
retaining best customers, as the problem.
2. Mindmap all the aspects of the problem. Brainstorm the different components and make a list of them all. For example, for retention of Best Customers, I would lay out: best customer definition, best customer counts, percent purchasing in both of the last two years, stores with more best customers, etc.
3. Let the mindmap be your guide. Given the mindmap, I would first ask for all transactions by customer ID for the past two years for a random group of customers. I would then also want store # attached. Then I would use Excel to solve the problem for a small group of customers. I would subtotal sales by customer. The I would do a count of the number of transactions by customer. And so on.
4. Take small pieces of information and put them in context. Do not ask for averages, ask for distributions of the data, which will help you build the picture. What I mean is that, if your Best Customers visit you 3 times per year on average, how many of them visit you 10 times, 9 times, 8 times and so on. Then you can find subgroups of highly-frequent, low transaction $ customers as well as low-frequency, high value transaction customers -- more detail on the picture.
5. Assemble the puzzle and begin to look at the picture before it is fully formed. Do not wait to finish the analysis until you find some trends. Look at customers who have lots of transactions and a gap since their last purchase, and figure out your risk of attrition (that they will not come back at all, or for a long time).
6. Remember to put together an inviting presentation, or the judges will judge you before even you start. We used to present our client with pages and pages of analysis and got a glassy-eyed response almost every time. Now we work very hard to create one key visual that becomes the focus point for the presentation. We will still have the reams of data in appendix for the analytic-minded, but the one visual seems to transcend the presentation and exist as a stand-alone for some time to come. That key visual is a good way to focus the conversation, both during and after your presentations.
Fortunately, the students at History Day this year appear to have learned something. The question is...have you?
BTW -- hats off to the many teacherswho spent so much time mentoring students for their History Day presentations. This investment in our students will benefit us in the long run.