Use People-Oriented Marketing: Because Products Change, But People Rarely Do

In 1:1 marketing, product-level targeting is “almost” taken for granted. I say almost, because most so-called personalized messages are product-based, rarely people-oriented marketing. Even from mighty Amazon, we see rudimentary product recommendations as soon as we buy something. As in: “Oh, you just bought a yoga mat! We will send you absolutely everything that is related to yoga on a weekly basis until you opt out of email promotions completely. Because we won’t quit first.”

In 1:1 marketing, product-level targeting is “almost” taken for granted. I say almost, because most so-called personalized messages are product-based, rarely people-oriented marketing. Even from mighty Amazon, we see rudimentary product recommendations as soon as we buy something. As in: “Oh, you just bought a yoga mat! We will send you absolutely everything that is related to yoga on a weekly basis until you opt out of email promotions completely. Because we won’t quit first.”

How nice of them. Taking care of my needs so thoroughly.

Annoying as they may be, both marketers and consumers tolerate such practices. For marketers, the money talks. Even rudimentary product recommendations — all in the name of personalization — work much better than no targeting at all. Ain’t the bar really low here, in the age of abundant data and technologies? Yes, such a product recommendation is a hit-or-miss, but who cares? Those “hits” will still generate revenue.

For consumers, aren’t we all well-trained to ignore annoying commercials when we want to? And who knows? I may end up buying a decent set of yoga mat cleaners with a touch of lavender scent because of such emails. Though we all know purchase of that item will start a whole new series of product offerings.

Now, marketers may want to call this type of collaborative filtering an active form of personalization, but it isn’t. It is still a very reactive form of marketing, at the tail end of another purchase. It may not be as passive as waiting for someone to type in keywords, but product recommendations are mixture of reactive and active (because you may send out a series of emails) forms of marketing.

And I’m not devaluing such endeavors, either. After all, it works, and it generates revenue. All I am saying is that marketers should recognize that a reactive product recommendation is only a part of personalization efforts.

As I have been writing for five years now, 1:1 marketing is about effectively deciding:

  1. whom to contact, and
  2. what to offer.

Part One is good old targeting for outbound efforts, and there are a wide variety of techniques for it, starting with rules that marketers made up, basic segmentation, and all of the way to sophisticated modeling.

The second part is a little tricky; not because we don’t know how to list relevant products based on past purchases, but because it is not easy to support multiple versions of creatives when there is no immediate shopping basket to copy (like cases for recent purchases or abandoned carts).

In between unlimited product choices and relevant offers, we must walk the fine lines among:

  1. dynamic display technology,
  2. content and creative library,
  3. data (hopefully clean and refined), and
  4. analytics in forms of segments, models or personas (refer to “Key Elements of Complete Personalization”).

If specific product categories are not available (i.e., a real indicator that a buyer is interested in certain items), we must get the category correct at the minimum, using modeling techniques. I call it personas, and some may call it architypes. (But they are NOT segments. Refer to “Segments vs. Personas”).

Using the personas, it is not too difficult to map proper products to potential buyers. In fact, marketers are free to use their imaginations when they do such mapping. Plus, while inferred, these model scores are never missing, unlike those hard-to-get “real” data. No need to worry about targeting only a small part of potential buyers.

What should a marketer offer to fashionistas? To trendsetters? To bargain seekers? To active, on-the-go types? To seasonal buyers? To big spenders? Even for a niche brand, we can create 10 to 20 personas that represent key product categories and behavioral types, and the deployment of personalized messages become much simpler.

And it gets better. Imagine a situation where you have to launch a new product or a product line. It gets tricky for the fashion industry, and even trickier for tech companies that are bold enough to launch something that didn’t exist before, such as a new line of really expensive smartphones. Who among the fans of cutting-edge technologies would actually shell out over a grand for a “phone”? This kind of question applies not just to manufacturers, but every merchant who sells peripherals for such phones.

Let’s imagine that a marketer would go with an old marketing plan for “similar” products that were introduced in the past. They could be similar in terms of “newness” and some basic features, but what if they differ in terms of specific functionality, look-and-feel, price point and even the way users would use them? Trying to copy some old targeting methods may lead to big misses, as even consumers hear about them from time to time.

Such mishaps happen because marketers see consumers as simple extensions of products. Pulling out old tricks may work in some cases, but even if just a small bit of product attributes are different, it won’t work.

Luckily for geeks like us, an individual’s behavior does not change so fast. Sure, we all age a bit every year; but in comparison to products in the market, humans do not transform so suddenly. Simply, early adapters will remain early adapters, and bargain seekers will continue to be bargain seekers. Spending level on certain product categories won’t change drastically, either.

Our interests and hobbies do change; but again, not so fast. It took me about two to three years to turn from an avid golfer to a non-golfer. And all golf retailers caught up with my inactivity and stopped sending golf offers.

So, if marketers set up personas that “they” need to push their products, and update them periodically (say once a year), they can gain tremendous momentum in reaching out to customers and prospects more proactively. If they just rely on specific product purchases to trigger a series of product recommendations, outreach programs will remain at the level of general promotions.

Further, even inbound visits can be personalized better (granted that you identified the visitor) using the personas and set of rules in terms of what product goes well with what persona.

The reason why models work well — man-made or machine-built — is because human behavior is predictable with reasonable consistency. We are all extensions of our past behaviors to a greater degree than the evolution rate of products and technologies.

Years ago, we’ve had a heated internal discussion about whether we should create a new series of product categories from VHS to DVD. I argued that such new formats would not change human behavior that much. In fact, genres matter more than video format for the prediction of future purchases. “Godfather” fans will buy the movie again on DVD, and then again in Blu-ray. Now some type of ultra-high-definition download from some cloud somewhere. Through all of this, movie collectors remain movie collectors for their favorite types of movies. In other words, products changed, but not human attributes.

That was what I argued then, and I still stand by it. So, all the analytical efforts must be geared toward humans, not products. In coming days, that may be the shortest path to fake human friendliness using AI and machine-made models.

 

5 Ways Direct Mail Can Give You a Marketing Advantage

Direct mail has consistently performed well for many years, providing the results marketers need. However, not all direct mail is the same. There are things you can do to gain an advantage over your competitors. Are your results as good as they could be? Let’s check out the segments you can focus on to use direct mail to its full advantage.

Direct mail has consistently performed well for many years, providing the results marketers need. However, not all direct mail is the same. There are things you can do to gain an advantage over your competitors. Are your results as good as they could be? Let’s check out the segments you can focus on to use direct mail to its full advantage.

  1. Pursue The first way to take full advantage of direct mail is to go after the right people. This will depend on what your offer is, as well as if you are going after prospects or customers. There is a difference in the way you target these two groups. Use your data to segment people into like categories. Sending to the right people makes all the difference and can save you money by not sending pieces to people who are not interested.
  2. Clarity — Next, you need to make sure that your messaging and offer are very clear. If not, you are going to miss out on the people who misunderstood what you were trying to say. Keep your wording simple and stay away from acronyms; in the texting age, your acronym could mean something very different.
  3. Succinct — Your copy needs to get right to the point. Make it easy and fast to read. You can use bullets, bolding and other text highlights to get your most important information to stand out. The less reading required, the more people will scan your piece.
  4. Interest — Does your mail piece generate interest? Your images and messaging need to call people to your piece to look closer at what you have to offer. The more interest people have in your mail piece, the more likely they are to buy.
  5. Cohesion — Do your marketing channels work together? Can customers and prospects flow easily from your direct mail piece to your website or other online platform? When they can, you will get better response rates.

When you have all five segments done correctly, you will see an increase in response. Don’t let your competitors win. Use direct mail to your advantage and get ahead of them. You will need to block out time to get your best mail pieces conceptualized and created. Do not rush the process, or you risk your results. As they say, Rome was not built in a day — and neither are your direct mail pieces.

One of the best features about direct mail is that it arrives in the mailbox and is a physical piece. No other marketing channel is physical in this way. In order to draw interest to your mail piece, you can add features to enhance the sensory experience for your customers and prospects. There are many features you can add, such as textures, foil, embossing, debossing, die cuts, special folds and more. Most of these features are not very expensive but can boost your direct mail advantage. You can also add scent for a multi-sensory experience. Get creative and allow your prospects and customers to have fun.

Boring direct mail will not get you the results you want. You need to find ways to enhance your mail pieces to increase prospect and customer engagement. The better you are able to do this using the five segments above, the bigger your direct mail advantage will be. Are you ready to get started?

Don’t Ignore Baby Boomers

Quick quiz: Which generation is huge in size, interested in experiences, loves to travel, owns digital devices and is active in social media? Millennials? No, it’s actually Baby Boomers. Surprised? The Baby Boomer generation tends to be overlooked, but they are an important consumer segment.

Baby BoomersQuick quiz: Which generation is huge in size, interested in experiences, loves to travel, owns digital devices and is active in social media?

Millennials?

No, it’s actually Baby Boomers. Surprised? The Baby Boomer generation tends to be overlooked, but they are an important consumer segment.

This population — born between 1946 and 1964 — are 74 million strong and have more disposable income than any other generation. They are more likely to be in the upper-income group. According to Pew Research, 27 percent of boomers are in the upper income group, which is the highest figure of all generations. Principal economist at Kantar Retail, Doug Hermanson, notes:

“Upper-income Boomers can sustain their pre-recession spending and be a strong driver of the consumer economy over the next five to 10 years. They have the money to spend. It’s a different mindset of saving before and now saying, ‘I’ve got to spend it while I’m here.’”

Let’s dig into these mass affluent Baby Boomers. These are defined as those who have $100,000-$250,000 in household income and over $250,000 in savings. They are an optimistic bunch, with 77 percent saying their goal is to have an interesting life.

Over 80 percent say they live a healthy lifestyle, and they are much more likely to give to charities. Pew Research reports that Boomers are living longer, with an average life expectancy of 80 years old, up from 68 in 1950. Many are now entering their retirement years. While about half of all adults say they feel younger than their actual age, 61 percent of Boomers are feeling more spry than their age would imply.

So what drives spending for this important segment? Quality is important to the mass affluent Boomer, with nine out of 10 saying they are more likely to value quality over brand name. They also like to shop within brands they feel an emotional connection with. And over 70 percent of Boomers across all income levels say the fact that they “like” a retailer is a driver of retail selection.

So, now that we have seen how they like to spend money, let’s take a look at what this generation plans to spend money on. About a quarter of Baby Boomers in the mass affluent category say they will spend more money in general in the coming year. Baby Boomers at the higher income level are more likely to prefer experiences over things: 73 percent of them say they prefer to spend money on experiences, vs. 69 percent of Millennials. Their spend categories emphasize travel, home improvement and charities.

Additionally, Synchrony Financial consumer surveys reveal the following:

  • The highest category of future spend will be travel. About 40 percent of mass affluent Boomers plan to spend more on travel next year. AARP estimates Baby Boomers spend more than $120 billion annually on leisure travel.
  • The second highest spend category is home improvement, with 32 percent of Boomers spending more on home improvement in the coming year, and 22 percent spending more on home furnishings.
  • Boomers are much more likely to say that they give to charitable causes, with 79 percent saying they plan in increase their charitable giving.

The Digital Divide: Boomers and Technology

Let’s take a look at the most talked-about difference between Baby Boomers and younger generations — digital technology. The reality is that the Baby Boomer population is on-par with younger generations when it comes to smartphone ownership, online shopping and social media access. Three out of four Baby Boomers own a smartphone, up 19 percent from a year ago. The generational divide exists in the usage of digital devices. Synchrony Financial’s research studies show that Boomers are much less likely than Millennials to use their smartphone for a multitude of tasks — from shopping to texting to social media postings.

But contrary to what some may think, Boomers have a great deal of access and interaction with social media. Ninety-two percent of Boomers say they have access to a social media channel — mainly Facebook (82 percent of Boomers have access to Facebook, up from 76 percent only a year ago). But they not influenced by social media for purchases. Only one third say they purchased a product after seeing it on social media, which is a significantly lower figure than that of younger generations: For Millennials, that number tops 70 percent.

How well does your business cater to this large and important segment of the population? Generalizations are difficult for any population of this size, but in general, Boomers are optimistic, secure and not done spending. Brands who provide a great shopping experience, high quality and seamless digital technology will go far in attracting this important segment.

Sources: All data is sourced from the following three studies, unless otherwise noted: Synchrony Financial 2016 Loyalty Study, Synchrony Financial 2016 Affluent Survey and Synchrony Financial 2016 Digital Study. All references to consumers and population refer to the survey respondents.

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial.

WAM! 3 Consumer Segments That Drive Growth

With consumer spend hitting sporadic highs and lows, marketers are looking for segments of the population that show promise. And, who can blame them? There is news of consumer confidence that paints a choppy picture of consumer sentiment. But the U.S. is full of segments and sub-segments that can be drivers of success for any given brand. The entire population is made up of consumers, after all.

With consumer spend hitting sporadic highs and lows, marketers are looking for segments of the population that show promise. And, who can blame them? There is news of consumer confidence that paints a choppy picture of consumer sentiment. But the U.S. is full of segments and sub-segments that can be drivers of success for any given brand. The entire population is made up of consumers, after all.

There are three segments that all brands should take a close look at. These segments may not immediately come to mind, and companies may respond that their segmentation strategy is different from others. Even though this is true, there are three segments that all consumer brands should consider specific strategies for: women, the affluent and millennials. Or WAM, for those who like catchy acronyms.

Let’s look at the numbers. The important ones are: 85 percent, 47 percent and 34 percent.

black-women-shoppingSegment No. 1: Women

Women are the purchasing officers of the household and the chief investment officer when it comes to the majority of purchases. Many brands already have this information, but how many of them truly delve into the experiences of women in order to adjust products and the buying experiences to them?

According to Pew Research’s “The American Family Today,“ 40 percent of women with children under 18 at home say they are the main income earner in the family. Along with this comes a busy lifestyle. If they have kids and a full-time job, how much time can they really spend on shopping? At a recent conference, I heard that consumers are now saying that convenience is as important as price in deciding where to shop.

As a result, brands who cater to this can expect a loyal following. What are the priorities of a busy mom? Reasonable prices, healthy items/safety, a quick shopping experience and some understanding. How many times have you had a sleeping child in the car and needed to buy milk, detergent or anything without getting out of the car? The ones who are nodding at their screens right now are busy moms. And, there are a lot of them out there. Brands who cater to the female customer and really know her needs and challenges can expect a loyal following.

AffluentSegment No. 2: The Affluent

According to a study by Pew Research, the affluent have seven times the income than the middle income segment, and their income has grown by 47 percent in the last 30 years. This reflects upward mobility, as middle class households attain greater incomes and rise to the affluent segment. As a result, affluents have a significant amount of purchase power.

What do they buy? They are not very likely to buy only luxury brands, and just as likely as non-affluents to shop at stores like Gap and Macy’s, per the February 2016 Synchrony Financial Affluent Study. In terms of future spend, they say they intend to spend more money on experiences, rather than things, and they intend to increase their spend on travel. As a result, brands who reflect these needs may tap into this growth trend.

Millennial vacationers

Segment No. 3: Millennials

There has been a great deal of focus on millennials — they have been analyzed, debated, probed, viewed and quoted a great deal. A very great deal. A Google search on “millennial” yields about 18 million hits. That’s a lot of analysis. Well, they are a huge generation, and they are going to be coming into a good deal of discretionary income.

As they grow older, their incomes will outpace their student loan burden, and that means they will have money to spend. But their shopping habits are very different than past generations. They are all digital all the time. They are completely comfortable with digital shopping and becoming more interested in mobile payments. Social media drives a great deal of their spend, particularly for the younger millennial. According to a June 2016 Synchrony Financial Digital Study, about 75 percent of millennials say they have purchased something as a result of social media. As a result, marketers must look at this growing population and put strategies in place to attract them with digital technology and social media content.

This country is a beautiful combination of many segments and sub-segments. It is impossible to identify any one segment that will lead to success for any retailer. However, keep in mind WAM — women, affluents and millennials — as segments to watch, for future successful strategies.

Note: The views expressed in this blog are those of the blogger and not necessarily Synchrony Financial.

The Most Important CRM Metric You Might Be Missing

Virtually every organization we have worked with in the past year is working on managing, improving or optimizing their relationships with customers. This work falls under the umbrella term “Customer Relationship Management” or “CRM.” It is, of course, the oldest “new thing” that marketers have focused on, en masse, for a long while.

CRM keyVirtually every organization we have worked with in the past year is working on managing, improving or optimizing their relationships with customers. This work falls under the umbrella term “Customer Relationship Management” or “CRM.” It is, of course, the oldest “new thing” that marketers have focused on, en masse, for a long while.

“CRM,” as it is, is a term that means many things to many different organizations and to different individuals in those organizations. This has created some confusion and leads to missed expectations in organizations.

Through meetings and executive interviews with brands, we have found that the majority of marketers will eventually describe the primary purpose of “CRM” initiatives as growing the value of customers who do business with them. We say “eventually,” because the initial responses to the question “what is the objective of your CRM initiative” gets quite a few answers including:

  • Know our customer better
  • Improve communications with our customer
  • Grow customer relationships (the most common response, and also the least actionable)
  • Decrease the usage of promotion
  • Reduce the volume of emails sent

These are just a few of the ways the organizations we work with begin to define their CRM initiatives; but to really make a difference in the business, CRM needs a clearly defined vision:

Intelligently managed customer relationships grow customer value. It drives incremental profit by either reducing the cost of promotion or driving incremental profitable revenue. CRM requires ongoing testing and learning, which can strategically inform customer acquisition and, in turn, increases the quality of the business.

“Intelligently managed customer relationships grow customer value. It drives incremental profit by either reducing the cost of promotion, or driving incremental profitable revenue.”

Can You Really Grow the Value of Your Customers?
Given the continuing trend of technology and data-driven CRM, it often comes as a surprise that few organizations have a heavy concentration of high-value customers. In fact, it’s the norm.

In a study Kaplan and Anderson published in the Harvard Business Review, the following was found across all industries:

  • 10 to 25 percent of customers drive 100 percent of profits
  • 50 to 60 percent deliver no profit at all
  • 10 to 25 percent deliver negative profitability

Some may find the magnitude of these facts surprising, perhaps even alarming. Not surprisingly, these profitability metrics correlate entirely to our experience across many dozens of organizations in working with their customer databases. What is sometimes an “uncomfortably large” percentage of revenue and profit is driven by a small group of the most valuable customers. In the luxury segment, where some brands have created an “accessible luxury” segment, the results grow even more staggering.

One example where we’ve seen this is among premium luxury brands that have grown “more inclusive” in their customer base. The concentration of customer value in the organizations is often almost exclusively in the top 10 to 15 percent of customers. When we have revealed this insight and evidence, the very business model may need to be rethought. To be sure, across all segments, customer value is a very big deal to all organizations — and, therefore, CRM.

Do Brands Have ‘Bad’ Customers?
This is a topic that is also hard to engage on. Often, marketers dedicate many hours and PowerPoint slides to focusing on the successes, and how good our customers are for our business. That’s an entirely intuitive point. These great customers also have an inverse; that is, customers whose value isn’t quite so great.

Some of these organizations have a material number of what might be called “bad customers,” altogether. But given that customers are the key element to realizing value in every business, how then can they be “bad”?

Let’s be clear, “bad” may carry a visceral sense of judgment. That’s not the point here, at all. The point is to meaningfully differentiate between customer groups or segments that naturally exist today in your database. “Good” or “bad” for the data-driven marketer really means how profitable the group is, or if it’s profitable at all. Simply put, a “bad” customer” must exist if a “good” or “great” customer does. Perhaps more “PC” — all customers have value, yet the value they hold for an organization is very, very different.

“All Customers have value, yet the value they hold for an organization is very, very different.”

You may even have a term for a segment of your customer base that you can’t afford to service well as “cost-control” customers. This happens in financial services, for example, where cost control may mean higher fees and online self service only. While that specific model does not necessarily apply to every business, all businesses have various segments of customers by value — both realized, and potential.

An Example: The Luxury and Accessible Luxury Categories
In the luxury category, brands sometimes become “more inclusive” (for example, in 2008 and at the depths of the Great Recession), which often means either markdowns or a product line for the “accessible luxury” category. As a result of this, customer value inevitably declines. In our experience, that decline was driven by decisions years earlier to scale at the cost of customer quality.

In these scenarios, if you were managing a CRM initiative, you’d have what’s known as a “dual-universe” problem — you can’t manage the value of these very different customers the same way. They may require a different P&L to account for them, and understand their value to the business.

A simple starting point in understanding a “dual universe” goes like this: Segment out your customers into the two groups — those who buy your true premium product, and those who have bought everything else. Analytics can then be leveraged independently across those groups.

The key to understanding if you have good and bad customers is, of course, the speed and dexterity you have to analyze customer data and your ability to measure and monitor changes in customer value by cohort. That’s a tall order for a lot of organizations today. Most are still focused on revenue through acquisition, rather than a strategic view where customer value is crafted first through the unique kind of customer acquired.

Good Customers — The Heart of Your Business
Good customers typically have longevity. Good customers purchase frequently, they have higher order sizes, or monetary value to your organization, they tell their friends about you, and while they appreciate a product they like on sale, they can also pay full price to get what they want.

Most importantly, while great customers generally cost more to acquire, and are harder to come by — good customers are quite profitable.

When a customer is considered good in most situations, they sometimes have the potential to become great ones. And therefore the mission of the CRM practitioner becomes, in simple terms, to ID the similarities and differences between them, make communication more relevant, and shape the value of each sale systematically. Growing customer value for your “good customers” can fill several of these columns, and we’ll put a series on migrating the good customers to great ones. (leave me a comment, or email me if you’d like to see those in the next couple of months).

Great Customers, or ‘Gold Customers’ — The Backbone of Your Business
The challenge for these “great customers” is they are often few and far between. If you’re in a business, where you have many great customers, you are either very, very fortunate, or you have not created a meaningful stratification of customers by value! This is one of the reasons that an intelligent segmentation of customers by value is an eye-opening engagement for most marketers and CRM practitioners.

Great customers, in most cases, are not only few in number but — counter to what may be one’s “gut feeling” — they quite literally carry the business. If you were to assume the contribution of customers to your bottom line followed a normal distribution, (think the bell curve, with a big fat middle), you would be quite surprised by what it most likely looks like. That contribution is stacked heavily to the top standard deviation, or way to the right side of the curve.

The insights we glean over time and across industries on organizations’ “Gold Customers” is the genesis and the reason CRM as a practice exists today.

“The Insights we have gleaned over time and across industries on organizations’ ‘Gold Customers’ is the genesis for and the reason that CRM as a practice exists today.”

The Best Way To Influence your CRM and Customer Value — Smarter Acquisition
This comes as a curveball to many CRM practitioners, especially those early in their CRM careers and experience. Nothing but nothing will change the performance of your database more meaningfully than adding more customers with higher potential value.

Put another way, great — or “Gold Customers” — are the backbone of a business, in that they are primary drivers of profitability, and they are the reason we’re engaging in CRM. So it’s imperative that we not only treat them differently and market to them wisely — but very simple math suggests we must also be acquiring more of them to increase the value of our database, our customer base and our business.

The Most Important Metric of Your CRM Strategy: Potential Value
There are many ways to measure your customers, their behaviors and their value. Concurrently, the most strategic way to grow your business and the value of your CRM initiatives is to collaborate with and inform your customer acquisition; that is to say, you can sculpt potential value through who you market to in the first place.

Customers who can’t afford you, don’t have the habits, beliefs, credit or lifestyles that your great (most valuable) customers do simply won’t or can’t buy like those who do. Those who do are your MVCs (Most Valuable Customers) and those who are ever further from this ideal are your least valuable.

Therefore, there is nothing we can do as marketers and as CRM practitioners that will improve the value of customers now and over time more so than acquiring more of the right ones. The strategy to how we do that is covered in another important article I’ve published as part of the body of work in this column on, “How to Scale-up Customer Acquisition Smarter.”

When you take a holistic view of your marketing, and place the appropriate value on the role of customer intelligence from CRM into your customer acquisition approaches, you can have an ever greater impact on the No. 1 metric we discuss herein — the potential value.

A high-potential value in the customer database then can be translated into ever-greater revenue and profitability, in a scalable and methodical fashion. While potential value is unlocked through all of the strategies and tactics we engage with through CRM — it all starts the most important “inputs” to your CRM — the customers themselves; moreover, acquiring the right ones.

5 Data-Driven Marketing Catalysts for 2016 Growth

The new year tends to bring renewal, the promise of doing something new, better and smarter. I get a lot of calls looking for ideas and strategies to help improve the focus and performance of marketers’ plans and businesses. What most organizations are looking for is one or more actionable catalysts in their business.

The new year tends to bring renewal and the promise of doing something new, better and smarter. I get a lot of calls looking for ideas and strategies to help improve the focus and performance of marketers’ plans and businesses. What most organizations are looking for is one or more actionable marketing catalysts in their business.

To help you accelerate your thinking, here is a list of those catalysts that have something for everyone, some of which can be great food for thought as you tighten up plans. This year, you will do well if you resolve to do the following five things:

  • Build a Scalable Prospect Database Program. Achieving scale in your business is perhaps the greatest challenge we face as marketers. Those who achieve scale on their watch are the most sought-after marketing pros in their industries — because customer acquisition is far from cheap and competition grows more fiercely as the customer grows more demanding and promiscuous. A scientifically designed “Prospect Database Program” is one of the most effective ways great direct marketers can achieve scale — though not all prospecting databases and solutions are created equally.

A great prospecting database program requires creating a statistical advantage in targeting individuals who don’t already know your brand, or don’t already buy your brand. That advantage is critical if the program is to become cost-effective. Marketers who have engaged in structured prospecting know how challenging it is.

A prospect database program uses data about your very best existing customers: What they bought, when, how much and at what frequency. And it connects that transaction data to oceans of other data about those individuals. That data is then used to test which variables are, in fact, more predictive. They will come back in three categories: Those you might have “guessed” or “known,” those you guessed but proved less predictive than you might have thought, and those that are simply not predictive for your customer.

Repeated culling of that target is done through various statistical methods. What we’re left with is a target where we can begin to predict what the range of response looks like before we start. As the marketer, you can be more aggressive or conservative in the final target definition and have a good sense as to how well it will convert prospects in the target to new customers. This has a powerful effect on your ability to intelligently invest in customer acquisition, and is very effective — when done well — at achieving scale.

  • Methodically ID Your VIPs — and VVIPs to Distinguish Your ‘Gold’ Customers. It doesn’t matter what business you are in. Every business has “Gold” Customers — a surprisingly small percentage of customers that generate up to 80 percent of your revenue and profit.

With a smarter marketing database, you can easily identify these customers who are so crucial to your business. Once you have them, you can develop programs to retain and delight them. Here’s the “trick” though — don’t just personalize the website and emails to them. Don’t give them a nominally better offer. Instead, invest resources that you simply cannot afford to spend on all of your customers. When the level of investment in this special group begins to raise an eyebrow, you know for certain you are distinguishing that group, and wedding them to your brand.

Higher profits come from leveraging this target to retain the best customers, and motivating higher potential customers who aren’t “Gold” Customers yet to move up to higher “status” levels. A smart marketing database can make this actionable. One strategy we use is not only IDing the VIPs, but the VVIP’s (very, very important customers). Think about it, how would you feel being told you’re a “VVIP” by a brand that matters to you? You are now special to the brand — and customers who feel special tend not to shop with many other brands — a phenomenon also known as loyalty. So if you’d like more revenues from more loyal customers, resolve to use your data to ID which customers are worth investing in a more loyal relationship.

  • Target Customers Based on Their Next Most Likely Purchase. What if you knew when your customer was most likely to buy again? To determine the next most likely purchase, an analytics-optimized database is used to determine when customers in each segment usually buy and how often.

Once we have that purchase pattern calculated, we can ID customers who are not buying when the others who have acted (bought) similarly are buying. It is worth noting, there is a more strategic opportunity here to focus on these customers; as when they “miss” a purchase, this is usually because they are spending with a competitor. “Next Most Likely Purchase” models help you to target that spending before it’s “too late.”

The approach requires building a model that is statistically validated and then tested. Once that’s done, we have a capability that is consistently very powerful.

  • Target Customers Based on Their Next Most Likely Product or Category. We can determine the product a customer is most likely to buy “next.” An analytics-ready marketing database (not the same as a CRM or IT warehouse/database) is used to zero-in on the customers who bought a specific product or, more often, in a specific category or subcategory, by segment.

Similar to the “Next Most Likely Purchase” models, these models are used to find “gaps” in what was bought, as like-consumers tend to behave similarly when viewed in large enough numbers. When there is one of these gaps, it’s often because they bought the product from a competitor, or found an acceptable substitute — trading either up or down. When you target based upon what they are likely to buy at the right time, you can materially increase conversion across all consumers in your database.

  • Develop or Improve Your Customer Segmentation. Smart direct marketing database software is required to store all of the information and be able to support queries and actions that it will take to improve segmentation.

This is an important point, as databases tend to be purpose-specific. That is, a CRM database might be well-suited for individual communications and maintaining notes and histories about individual customers, but it’s probably not designed to perform the kind of queries required, or structure your data to do statistical target definition that is needed in effectively acquiring large numbers of new customers.

Successful segmentation must be done in a manner that helps you both understand your existing customers and their behaviors, lifestyles and most basic make up — and be able to help you acquire net-new customers, at scale. Success, of course, comes from creating useful segments, and developing customer marketing strategies for each segment.