No, we’re not talking about insurance. We’re talking about your customer data. Careful management of your customer data is one of the smartest things you can do for your business. Customer marketing should be at the core of your business development plans.
Whether you are a B2B or B2C business, you know that customer sales typically drive 70% or more of all revenue. When d.trio works with a client, one of our first conversations is about identifying their customer profile: “How many customers do you have? Who are they (demographics, industry, etc…)? What are they buying from you and how much?” If our clients can’t answer these questions, it’s fair to assume that they haven’t been managing their customer data effectively.
Identifying your best customers, and crafting a different marketing message and strategy for them, is key to retaining those relationships and growing their spend. Don’t forget your mid-level group as well – they may need extra attention and a compelling offer to step up to the next level.
A great tool for creating this customer segmentation model is an RFM Analysis and Scoring, which rates your customers based on Recency, Frequency and Monetary (RFM) measurements. The scores help identify core groups of customers to support tactics, messages and promotional strategies for each group. The scoring is organized by:
Recency: Your customers are ranked from the most recent visitors to the least recent. This knowledge is especially valuable because studies show that recent behavior is more likely to be repeated.
Frequency: Customers are ranked from the most frequent visitors to the least frequent. This information can be used to target those customers who need incentives to purchase more often.
Monetary: Customers are ranked from most dollars spent to fewest dollars spent. This knowledge can be used to target those customers who need greater incentives to increase their overall dollars spent.
Once complete, you can identify your most productive and valuable customer segments, and make the most profitable, informed marketing decisions based on actionable intelligence.
In addition to the RFM Analysis, use your customer data to identify their demographics and core traits, creating a profile. Your customer profile will become the benchmark for your prospecting and customer acquisition programs. In direct marketing we call it the “look-alike” model. But that’s another story for another newsletter.