Through the Eyes of the Customer: Customer Segmentation

Customer Segmentation

06/15/2012

Data, Trust and Building your Brand: Connecting the Dots

The question was recently asked on the Focus forum:

"What roles does a database play in building a Brand?"

Before identifying database initiatives, I'll clarify what I mean by "database":

I'm NOT talking about a database in terms of a raw list of customers or prospects.

I AM talking about a database in terms of a Customer Information System, in which we've captured and manage customer information (demographic information and behavioral information).

Now, on to the thing that we want to build - the BRAND.
A big characteristic of a successful Brand is TRUST. People become loyal to a brand, because they trust the Brand (actually, they're trusting the company behind the brand).

So, we want the people in the market (aka the Contacts in our Database) to Trust us.

We can build Trust by engaging with customers and prospects in a way that THEY find RELEVENT, PERSONALIZED and TIMELY for them, based on who they are as individuals.

So, how can a database help us do that?

We define our customers and prospects through data comprised of purchase patterns, expressed preferences, responses to campaigns and prior engagements. And then we deliver different messages, engagements and offers to different Contacts, based on their unique data-defined characteristics. If done well, you’re messaging/engagements will resonate with the Contacts; they'll feel like you know them, you understand them, and they'll begin to trust you.

So, if you keep a fresh, current, well-managed database with the right data defining each customer, and if you use that data to communicate, engage and transact in very personalized, relevant ways for each customer, they'll trust you more and more. And in the process, you'll be building a Trustworthy Brand.

Posted at 01:22 PM in Branding, CRM, Customer Segmentation, Marketing Best Practices | Permalink | Comments (1) | TrackBack (0)

01/17/2012

Does context matter in email marketing? (Hint: It does, and here's why...)

Email marketing is all about segmentation and relevant messaging, right? If you separate your prospects into different segments, and communicate with each segment according to their differences, more prospects will respond, right?

Well sort of….

There is one other element to consider. And that other element is context. But I’ll get to that in minute. First, I want to tell you about an email that I received last week while I was in the office at work; an email that caught me completely off guard; an email that was actually awkward to read at work.

You see, I work in the technology industry – software, to be precise. So when I receive unsolicited email, they’re usually about technologies and practices around technologies. But last week, I received an email that caught me completely off-guard, because it had absolutely nothing to do with my business. The email was an offer for me to buy pre-paid cremation services.

That’s right – cremation services. Not your typical backup-in-the-cloud or information security solicitation that technology professional receive. This particular solicitation came from a company that wanted to tell me how they’ll take care of my remains on some distant day.

So far as I could tell, the marketer of the cremation sevices used the following two criteria to form a segment: Locality and Mortality.

Locality: A company that I work for is based in San Francisco. The provider of these cremation services is in San Francisco, and saw me as a “local” prospect.
Mortality: All humans are mortal. All mortals eventually die. Anyone who dies is a good prospect for cremation. Somehow, they knew I’m a human, and therefore, I’ll eventually be a good prospect for cremation services.

So, while the segmentation was properly defined (people in the San Francisco area who will someday die) and the message was on target (an offer that fit the segment), the context was way wrong. They delivered the message in a place that didn’t fit. People don’t think about cremation while they’re at work. Cremation is a more personal thing. Email me away from work, when my mind is ready to consider personal matters.

So I clicked “unsubscribe.” Then I clicked “delete.”

So here’s the point:

You may have good data. And you may sort that data into good segments. But if you deliver your message in a way that will be received out of context, you risk becoming worse than irrelevant; you risk alienating your prospects.

To really maximize your response rate, and to establish trust and credibility through your email marketing, follow these three steps:

Segment your market using multiple data elements.
Deliver relevant messages alligned to each segement.
Deliver the messages in the right context; in a time and place where they’ll be best received.

Don’t be caught dead delivering an email out of context. I can leave your prospect feeling very awkward.

Posted at 07:00 AM in Customer Segmentation, Marketing Best Practices | Permalink | Comments (1) | TrackBack (0)

07/04/2011

Keep sales aligned with marketing, and keep both aligned with the customer.

This past Saturday, I needed to have some tires installed on my daughter’s car. I called a place I’ve been to before; their prices are competitive, their service has been very good, and they’re conveniently located, and I’ve always been able to get an appointment immediately. In other words, I go there because they’re convenient.

But when I called there Saturday morning to get a price on the tires, and schedule an appointment, the woman took me by surprise:

“We don’t give any pricing over the phone. But if you come in with a quote from a competitor, we guarantee that we’ll beat their price.”

“That’s great, but I just want an idea of what I’ll be paying before I come in.”

“You’ll be paying less than you would at any other competitor. We guarantee that. But we don’t give prices over the phone.”

I was a customer who was ready to buy. I didn’t care if they would save me $2 per tire over the competitor’s price. I just wanted to know what that price was, before I left my house. But she wouldn’t tell me.

The woman blew the sale, because she was focused on selling her way, regardless of how I wanted to buy.

There are a few dynamics at play here, which can apply to any size business:

1. Know your customer types, and engage different customers differently.
Every customer wants to know they’re getting a good price. But some customers are willing to forego a little savings for convenience. So before launching into a “nobody can beat our prices sales pitch,” make an effort to know what kind of customer you’re talking to, and what their buying criteria are. Then sell accordingly.

2. Don’t sell – help your customers buy.
Nobody likes to be sold to. But everybody likes to buy stuff. If you’re a discount tire store, and you insist on not quoting your prices over the phone, but guarantee you’ll beat the competitors’ prices, then quote those competitors’ prices over the phone. Don’t say which competitor it is, but just give the price, and promise you’ll be less. In other words, find a way to make buying easy for the customer, without compromising your ideas.

3. Align sales efforts with marketing efforts.
This tire retailer was running a “We’ll beat anybody’s price” campaign on tires. And their sales team was clearly executing on the campaign, to gain full mileage from it. That was good. In too many organizations, marketing will invest time and resources to create a great campaign. But without proper alignment, salespeople sell the way they always sell, without fully incorporating the message from marketing. Any campaign is less effective when the feet on the street march to a different beat than the minds in marketing.

Keep sales aligned with marketing, and sell in sync with your customers' preferences.

Posted at 06:00 AM in Customer Segmentation, Selling Skills | Permalink | Comments (2) | TrackBack (0)

06/15/2011

How Amazon Uses the Wish List to Drive a Better Customer Experience.

In a recent blog post, I described how Amazon uses “Transparency” to their advantage, in building customer loyalty. There’s something else they do well, that makes me and millions of others more loyal customers: They’re really good at capturing data about the things that I like, and using that data to engage with me in ways that I consider relevant.

Now, I’m not talking about my purchase history, or the static information in my customer profile. Sure, like most companies, Amazon uses my purchase history to know what kinds of books I've bought in the past, and suggests similar books for me to purchase in the future. This is a practice that nearly all businesses are familiar with, many put to use, and some actually do well.

But purchase history is only the tip of customer preferences. There's a far greater depth of customer preference data that exists beneath the surface of the purchase.

There’s a second source of customer data that far fewer companies capture, but that is extremely powerful for those that do. Amazon happens to capture and use this data exceptionally well.

I’m talking about the “Wish List.”
Amazon gives me an easy and convenient way to keep track of books that interest me, but that I don’t necessarily purchase.

This Wish List data is like customer profiling gold to a company.
Wish Lists capture customer desires and preferences, and can be used to more precisely segment customers. And more precise segmentation enables more relevant communication with customers. And more relevant communication means more engagement. And more engagement leads to greater loyalty, and greater value for both customer and seller alike.

So, if you’re a data-driven marketing organization (you are, aren’t you?!), you’re utilizing customer data in smart ways to engage with your customers. And you’re always looking for ways to acquire better customer data. The “Wish List” method is a great way to capture data for two big reasons:

It provides value to the customer.
Think of how companies typically acquire segmentation data beyond what’s captured through the purchase history. They augment their internal customer data with data gleaned from external sources. They conduct customer surveys, or solicit information from the customer, in ways that don’t directly benefit the customer. But a Wish List is different – customers perceive the wish list to be entirely about them, and therefore perceive great value.

Wish-list data goes deeper.
A wish-list is a door to the inner mind of the customer. The typical customer only buys a small percentage of the things that they would like to buy. Think of a customer’s purchase history as the tip of the customer-preference iceberg. In contrast, the wish list is the entire ice berg, and can give you a lot more valuable information to more successfully navigate the customer relationship.

What “Wish List” opportunities exist in your business?

How and where can you capture deeper data about your customers’ needs, desires and preferences?

And how can you use that data, to build a better customer relationship?

Posted at 06:00 AM in Customer Segmentation | Permalink | Comments (0) | TrackBack (0)

04/19/2011

What really determines the level of Customer Service that a company delivers?

I asked that question on LinkedIn, to get some more feedback to a blog post from last week.

Some insightful answers were posted, and in the spirit of sharing the insight, here they are:

Service quality is a really a function of Leadership – not size.
Smaller businesses display better service more often because the leadership is longer lasting, better connected and more passionate - especially in businesses that are directly managed by the owner.
(Thanks, Derek Wiliams.)

Capable managers are required to relay the Leader’s vision to the front lines.
“But, in the layers of staff below the Leader, which needs to communicate to frontline, you could have a weak link that is not capable of sharing that vision and providing that consistency.” Without capable middle management, the Leadership can be lost in the translation.
(Thanks, )

Not all organizations need or want to deliver great service.
Boy, it took some real guts to type that! But it’s true -
“What we have to remember is that not all organizations want to focus on giving great service. The beauty of our world is that each business owner can make their own decision about strategy and how they want to run their business. “ If your value proposition is based on price, availability and distribution (Hello, Walmart!), your customers may expect low prices, but care a lot less about service, as long as they get that low price.
(Thanks again, Derek!)

Serve different customers differently.
“Larger companies have the luxury to personalize service for larger accounts which offer greater financial returns, and offer generic process-driven service to smaller clients, according to the financial impact of losing an account” In other words, treat different customers with different service, based on the financial return.
(Thanks, !)

So there you have it -

While smaller companies have a tendency to deliver better service than larger companies, the quality of service is really a function of factors other than company size; it’s about Leadership, management, and ultimately the role of service relative to the company’s overall strategy in delivering its value proposition to the marketplace.

What do you think?

Posted at 07:00 AM in Customer Segmentation, Customer Service | Permalink | Comments (0) | TrackBack (0)

02/03/2011

Is your email marketing this rude?

I received an email today from a guy named Mike.

I don’t know Mike, and I don’t know his company.

But Mike still sent me an email. It began like this:

“Dear Jim:

I'd like to get on your calendar to speak with you about how my company DayBreak can assist your business development efforts.”

I can’t say that Mike had me at hello, because he never said hello. Mike didn’t bother introducing himself – he just told me what he wanted from me. (Like I care - I don’t even know this guy!)

Mike’s email went on for three paragraphs – not short, concise, bullet points that I could easily scan and digest, but three self-centered paragraphs that were painful to read.

The first paragraph was all about what he wanted from me, and the great and powerful stuff that his company does.

The second paragraph told me about the great achievements of his CEO.

And in the third paragraph, Mike told me that that he asked his assistant, Beth, to call me to schedule a conference call and presentation. If Mike really cared about me, and wanted to have me for a customer, he’d call me himself, wouldn't he?

Business development is about developing positive, trusting relationships between two people. The best way to begin any relationship with another person is to show a genuine interest in that person. It means being relevant to that person. And it means delivering value. Mike’s message didn’t do any of those.

So, what three things can you do, to make a good impression, and convert more prospects into customer, starting with your email campaigns?

1. Be Relevant by Segmenting.
Don’t send the same email to everyone on your list. Segment the list by industry, geography, role, or some other criterion. Then send a segment-specific message to each group. For example, send a technology-oriented message to the technology companies.
Send a retail-oriented message to retail sector companies. There was nothing in the email that mike sent to me, that reflected anything unique or relevant to my business. Segmenting makes your messages more relevant.

2. Deliver Value.
Whenever you call on a prospect, whether through an email, a phone call, or a face-to-face meeting, deliver something of value. It may be a point of research from your prospect’s industry; a recent article of interest; anything that your prospect will consider worthwhile knowing. If you make a habit of delivering value upon every encounter, your prospect will make a habit of reading your emails and taking your calls.

3. Be Polite.
Your mother was right on this one. Manners do count. Even in email blasts. Draft your emails with a courteous and professional tone, and don’t say anything in an email that you wouldn’t say face-to-face, upon meeting a complete stranger for the first time. Baseball great Yogi Berra said, “Swing hard. Just in case you hit the ball.” Similarly, you might say, “Write polite emails. Just in case the recipient reads it.”

If email campaigns are a part of your marketing mix, then don’t be like Mike. Instead, be relevant, bring value, and be polite. Your prospect will respect you, trust you, and maybe even buy from you.

What do you think?

Posted at 11:51 PM in Added Value, Customer Segmentation, Marketing Best Practices, Reputation | Permalink | Comments (3) | TrackBack (0)

10/22/2010

If you don't have permission, don't press "Send."

The Kittery Trading Post in Kittery, Maine sells outdoor and sporting equipment, including hunting and fishing gear. The Maine Department of Inland Fisheries and Wildlife sells hunting and fishing licenses over the Internet. Because of a ruling by Maine’s Attorney General that those names and email addresses were considered public record, they Kittery Trading Post was able to buy the list for a nominal sum.

Smart marketers always look for lists that are highly targeted, and tightly-aligned with what they have to sell. You can’t get much more aligned that that – a list of 100,000 people that hunt and fish in Maine as a business that sells hunting and fishing gear in Maine.

Bill Nemitz told the story well in his column in the Portland Press Herald.

What was most interesting and telling is that the people on the list appeared to more upset at the Kittery Trading Post’s plans to send them unsolicited email, than they were with the Department of IFW, for selling their names in the first place.

This story illustrates the importance of opt-in, and permission-based marketing: a prospect may really like what you have to sell, but if he didn’t tell you that you can talk to him, you might damage your brand by trying.

Ask permission first, and market second.

Posted at 10:29 PM in Customer Segmentation, Reputation | Permalink | Comments (0)

10/05/2010

Treat Different Customers Differently. You Both Deserve It.

All customers are not the same. And some are more valuable than others. Therefore, they should be treated that way.

I recently called the customer service department at a bank, to ask about a charge that appeared on my statement. The Customer Service Representative explained that the charge is something they apply to all accounts.

“But I’ve been a customer for 15 years, and I’ve given you a lot of good business.”

“Yes, you have. In fact, I can see in your account history that you’ve been a very valuable customer to us.”

“Tell me,” I asked, “if I had only been a customer for six months, would that same charge appear?”

“Yes; what we do for some customers, we have to do for all customers.”

That simply isn’t true, and worse, it’s bad business practice.

At the end of the day, a strong business relationship is like a strong personal relationship. The more you do for your best friends, the stronger the bonds of friendship become. It’s the same in business. The more favorable treatment that you curry upon your most valuable customers, the more valuable those customers become to your business.

Airlines successfully pioneered this strategy with their frequent flyer programs. They found ways to give their more valuable customers preferential treatment, and as a result, the value of those customers would increase further. Then, lower-value, or less frequent customers would become aware of the preferential treatment, and subsequently take action (fly more miles) to earn the same preferred status. According to the Peppers & Rogers Group, the success of these programs has been their ability to build profitable, long-term customers relationships.

There’s nothing wrong with giving your best customers preferential treatment. In fact, you’re shortchanging your customers and your bottom line, if you’re not already doing it.

Thanks to whosiandrewwee.com for this montage of customer types!

Posted at 08:01 AM in Customer Loyalty, Customer Segmentation | Permalink | Comments (3)

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