Do You Know How to Increase Sales Without Spending More Money?

Would you like to know? It starts with using the information you have hidden in your database.

Do you really know your customers? Philosophically, do we ever REALLY know anyone? Human beings are such complex creatures that we spend millions of dollars and hours of counseling to try to learn about ourselves. So, how can a company improve their relationships with folks who don’t fully understand themselves?

We try to identify buying patterns by sorting out customers with similar history. We rank customers by recency, frequency, and monetary value (RFM). We expand into multiple regression and neural analysis. And, we celebrate minute increases in response rates and average order.

It is a process that works, so we continue to do it. We look at the requirements for breakeven and aim slightly above it. We find that most anything above the breakeven is acceptable. Doesn’t it strike you as odd that a campaign with a 94% failure rate would be considered a roaring success? Can you imagine a ball player bragging, “I hit 3 out of 50 shots!” without an accompanying laugh track?

I know the challenges of managing a multichannel marketing plan, constantly striving to for slight improvements on the status quo, seeking bottom-line dollars in a highly competitive market, and balancing the need for profitability with the desire for growth. Marketing analysis tools, like RFM and regression, are utilized because they work! They help us identify the customers most likely to order again.

But, what if…

What if you developed your marketing plan based on personal preferences? What if you understood your customers’ needs and wants better than anyone else did? What if you used your understanding to provide individual service and sales? What if your customers always shopped with you first? What if response rates doubled or tripled?

People are creatures of habit. This is very advantageous to direct marketers. If there is enough history, specific patterns will start to appear. Orders will be placed in response to specific offers, events, or timing. For example, some customers will never respond to a free shipping offer and always respond to 15% off. Others will order every spring and fall and never order in summer or winter. The potential patterns are endless, but every company has individual customers following their own buying pattern. Since people are creatures of habit, it is very hard (and expensive) to break them out of the cycle.

It is better to market to the cycle. Identify the customers that are following a specific pattern and only market to them when they are in the habit of buying. Your marketing costs will be significantly reduced without reducing sales.

The time to start is now. To get started:

    Make a list of potential patterns without looking at customer history. Patterns may be general or specific to product lines. Having a list allows you to quickly confirm or eliminate a pattern when looking at individual customers.

    Start with the top 10% of your customer base. Look at the lifetime history for individual customers. Try to find buying patterns in items, dates, offers, and any other area where information is available.

    Think “What if?” and follow the thought process to the end. Do not allow anyone to second guess or deter you from seeking new strategies.

    Choose the strategy with the most benefits and develop an implementation plan.

    Test the plan with a segment of your customer base. If the test is successful, roll it out, and celebrate the results! If not, go back to step three.

This process has benefits from actually improving your marketing strategy to simply helping you understand your customers better. It can guide you to new sources of income. For example, if you sell a consumable product that typically has a usage life of six weeks, you might decide to mail postcards reminding customers to order. Or, you could create a program where the replacement is sent automatically.

The return on investment can be determined by comparing your typical marketing plan to the revision. If you mail six catalogs per year and can change to four without affecting the sales, then you have reduced your mailing expenses by 33%. It is certainly enough to be interesting.

Click here for more information on using the information hidden in your database.



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