Have you asked the right questions?
A 10% improvement in customer data insight will generate 90% of the incremental gains available.
Instead of looking for the best combination of actionable data insights and achievable best practice first, we all seem to be doomed to fall for the big system, big investment hype?
Many companies are now finding that the gains they expected from such investments are either very difficult to quantify or illusive.
And as the gains are incremental, there are many factors that could de-rail them.
So, what can be done to make maximum gains from your data with minimal investment? Allowing you to determine whether a large scale infrastructure investment is necessary and will provide the required business gains.
Here’s an interesting sequence of thoughts for you
Have you quantified exactly what “success” means? Where are the incremental gains going to come from?
What do you need to learn – does the business have the know how to enable success? Can you use your existing systems, maybe with some help, to make the gains without major investment?
If it’s possible to quantify the gains – it may be possible to achieve them with some changes to current practices.
Start by defining the end result as exactly as you can and only then talk data and data insights.
It’s worth noting here that most investment spent on creating, analysing and exploiting customer engagement data is lost at this first stage – simply because a lack of clarity means we then try to answer the wrong questions.
Here are some useful suggestions that may help you in determining the most effective way forward.
Find the 20% of effort that delivers 80% of results
The key thing to remember here is that there must be a pay back. This is not an academic exercise. It’s not about data and intelligence. It’s about ROI.
Look for areas where minimum change provides maximum gain. For example what, can you or would like to, learn from existing customer data that can be used to improve customer engagement and increase sales today – now!
De-select your worst customers
Finding the worst customers you have is far easier than finding the best. And it’s far easier to predict what the least likely rather than most likely will respond to – and you need far less data to do so.
It’s well worth investing time in identifying your worst customers because you lose very few sales by dropping the worst but you can make considerable savings by removing them from contact.
Why not do this and reinvest the savings in communicating with your best customers.
The aim here is not just to make savings but to cull the list in an attempt to find the 20% of customers that deliver the 80% gains.
Remember go for speed of action rather than perfection. Data, targeting, analysis will never be perfect. Trying to make them so is very expensive and the returns are dubious.
Contact your best customers more often
Firstly define what you mean by “best”. Unless you do this you won’t be able to define your objectives.
These customers represent your greatest return for the least cost. Nearly always your most recent, most frequent and highest spending customers deliver your ROI.
You know a lot about them so keep in contact with targeted, personalised, relevant messages.
It’s the oldest, simplest DM rule in the book: RFM – Recency, Frequency, Monetary Value – AND IT WORKS EVERY TIME – SO PLEASE USE IT!
Ask your best enquirers and lapsers to come back
Never simply cull your data list. Decide on the definition of a lapsed customer.
Make sure you recognise that some lapsed customers may actually be amongst your best past customers – they’ve simply dropped off for temporary reasons.
You probably already have enough customer data to differentiate the best prospects among enquirers and lapsers from the worst. It is these customers you need to concentrate on in terms of reactivation.
These customers have lapsed for reasons you will probably never learn. Speak to them personally with honesty and genuine offers to maximise your chance of encouraging them to become active customers.
Things to remember
Test, test and test again – if you don’t you’ll never know if you’re plan has worked.
Test against an alternative or nothing at all.
A properly tested result = learning = repeatability = gains.
The beauty of DM and email is that it can be measured.
BUT… poor, or even worse no testing = wrong insight = waste and loss
AND… good analysis is driven by good questions, not data or statistics