Web Genius Blog

Last time, in the first of our find 'em...keep 'm strategies we talked about the importance of attracting, motivating and retaining employees and customers, and we identified that it was the interactions between these two gropus of 'human assets' that is what really can give us a true competitive advantage.

This time, in the second of our series on keeping customers, our find 'em...keep 'em strategy #2 is all about analysing customer behaviour.

Our customer database gives us vital information on our customers' buying behaviours over a period of time, this can tell us what they buy, how often the buy, how much money they spend etc.

By ranking our customers based on the recency, frequency and monetray value of their purchases we can rank them into what we call A, B and C customers. You can segment your customer base very much like you would the market; based on the size of the business, type of business, demographics etc. But it is important to start with the buyer behaviour first, and then overlay any demographic information over the top of that.

This way you will identify any unique characteristics that the A, B and C segments may have, for instance the size of the company in terms of staffing numbers and/or the type of industry the company is in may dictate the kinds of companies within each segment.

Once you have chosen your bases for segmentation you can then develop and deploy strategies for stepping up your C customers to become B's, your B's to become A's and so on...some customer segments may be costing you too much to service, in relation to how much they cost to service and/or how long they tend to stay with you before churning.

Life Time Value is a very useful indicator and analysis tool to drive your retention stratgies. If for instance your were andeducation provider, and the qualification you offered was 8 papers and your students generally enrolled in 2 papers each year, then the LTV of that customer would be the duration of the custom (4years in this case) multiplied by the annual Gross Profit made each year. It is importnat to consider the LTV for several reasons, it is a very useful analysis and strategy development tool in relation to customer retention. But also in terms of calcultating how much of your marketing budget you are prepared to spend in attracting a new customer. If that customer is likely to stay for several years and purchase several products (this can be predictided by profiling and segmenting the customer database as outlined above).

Start doing this kind of thing now and just see what types of behaviours you can pick up on, the point at which customers tend to 'churn' or drop off. Is often a tell-tale areas that needs to be explored. Again, if you were the education provider and you found that most poeple who where going to drop out did so within the first 2 courses, once would conclude that 'getting statrted was the hardest part, but once they had passed afew papers their confidence increased and away they want! In this situation you retation strategy may include proactive support by the tutor, profiding astudy buddy scheme, a top new student award and so on...

So come. on...get creative and start tapping into the goldmine of information that is waiting for you in your customer database (it will need to have transactional information in there though which means that accounting and customer recording must be done on a seemless application)

Talk to you again next time with Find 'em...Keep 'em Strategy #3