Drilling Down

Turning Customer Data into Profits

 with a Spreadsheet

Site and Book topic:

Maximizing marketing ROI with customer behavior analysis

Customer Marketing / CRM ROI Testing

Yes, it's true.  You can test your business and customer base for responsiveness to Database Marketing or Analytical CRM-driven techniques - and you don't need a data warehouse to do it.  Doing a test before diving into database marketing or CRM will cost a lot less in the long run, because after the test, you will know the answers to questions like these:

• What are the values of my customers and how can
  they be segmented?
  
• How responsive are my customers to data-driven
  marketing techniques?
  
• Does the 80/20 rule apply to my business and customers?  
  To what extent?
  
• How much can I spend on a "solution" and still get a
  reasonably fast payback?
  
• What type of software functionality do I absolutely need, what functionality would be nice to have, what can I do without?
  
• How do I measure and report on the ROI success of data-driven marketing?  What is likely to be my ROI on his activity?

For the test, we will craft a short-term plan of attack based on your resources, looking for the best "big idea" for creating an immediate impact on profitability.  Then we will execute a test of this idea, and measure both the direct results of the test and other customer metrics leading to a conclusion: a fact-based report on the ROI you can expect from data-driven customer marketing techniques.  We will also keep an eye on the long-term picture, making sure anything we do in the short-term is something you can use in the future.

If you are brand new to data-driven customer marketing and want your staff to be involved in the Test, consider scheduling a Database Marketing / Analytical CRM Roundtable session first to get everybody up to speed.

How It Works

1.  Customer - You provide an overview of your business and customers, any customer reporting you might have, and a snapshot of a customer record to let me know the kind of information you keep on a customer.

2.  Data -  get the data into a format we can use.  If you have a data warehouse or some smart programmers who can easily extract data from operational systems, I can specify all the requirements for this step.  If you don't have this capability, I can provide it by having an ETL (Extract, Transform and Load) expert create a temporary solution.

3.  Reporting - we do a snapshot analysis of your customers, discovering segments, profiling current / future value, and determining a test approach in conjunction with marketing.

4.  Test - run the test, either through offline direct contact through the mail / phone, or online through a web site / e-mail, or both.

5.  Analysis - run results and the ROI models to determine the propensity of the customer to respond to database marketing techniques and the potential ROI of using this approach.

6.  Deliverable - Provide a final report summarizing the test, interpreting the results, and making specific recommendations on how much can be spent pursuing the data-driven customer approach while still generating a specified ROI.  I will also provide you direction on software functionality you will need to drive profitable programs - not specific software packages, but minimum requirements to accomplish your ROI goals.

That's it.  The Customer Marketing / CRM ROI Test can be completed with direct involvement of IT and marketing staff in a "teaching mode" or as a turn-key operation with the barest minimum of time involving your staff.  Using this testing approach is the most reliable way to ensure you only implement the customer marketing / CRM programs you can generate an acceptable ROI for.  At the same time, you will begin to understand your customers in ways you have never had access to before.

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