Marketers to gain by cloning loyal customers

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By: Wise Marketer Staff |

Posted on November 4, 2009

Marketers to gain by cloning loyal customers

Knowing your customers is one of the first rules of marketing but, during a recession, it arguably even more important for marketers to know which potential customers best match the profiles of their existing loyal and profitable customers, according to database marketing firm KDB.

When times are good, potential customers may be willing to take a chance on a new brand, product, or service. In that case marketers usually have a certain amount of leeway in their approach to new customers. But today consumers are more careful about their spending habits, and speculative marketing campaigns are therefore likely to produce a lower yield.

So, with a smaller margin of error (and usually a smaller available budget), it is increasingly important to ensure that marketing campaigns are aimed at the right people. According to KDB, the difference between a good campaign and a bad one can be determined by the people it targets. Certainly, if incorrect or obsolete data is causing marketing materials to wasted on consumers in the wrong market segments, or if the campaign targets consumers with profiles that are unlikely to produce profitable relationships, any campaign will be a failure.

Despite this, the firm's most recent study found that fewer than 50% of the financial decision makers in major British companies feel that companies in their industry sector are using customer data to effectively drive marketing initiatives. In fact, when asked if most firms in their sector were able to access and analyse customer data and then use that intelligence in their marketing efforts, only 43% of the finance directors and senior financial managers surveyed thought so.

However, using customer data to drive more intelligent marketing strategies is critical in the current economic environment. Another study the company recently published noted that the majority of UK consumers feel that companies are failing in their efforts to reach them through relevant direct marketing communications.

In fact, only 12% of consumers said they were receiving offers via direct marketing that was of personal relevance to them, while 54% said that almost none of the offers received were relevant to them. At the same time, 42% said that most of the direct marketing offers they received were from companies they already deal with.

Customer data is a tool that is quite simple to access for most marketers and, when used smartly, it can help ensure that marketing efforts are focusing on both existing and potential customers that will help keep margins and cash flow up.

According to KDB, marketers should be using all their available customer data to gain new insights and business intelligence that will help them up-sell and cross-sell additional products and services. But, rather than stopping at existing customers, this intelligence then also needs to be applied to prospective customers who match the same profile as existing profitable ones.

Segmentation and modelling techniques can be used to create detailed profiles (from the existing customer base) of who the best, most loyal, most frequent, and most profitable customers are, and to establish what they buy, how they buy it, when they buy it, how much they spend, and their preferred channels of communication. This provide a comprehensive picture of the key customer groups which can then be used to approach 'look-alikes' (i.e. potential customers who are most likely to be interested in, and respond to, a similar offering).

The study also found that being recognised as a valued customer has an overwhelming influence on the likelihood of a customer coming back to the same company or brand.

Consequently, marketers who want to promote a responsible corporate image and foster true customer loyalty should be reluctant to cause tension with customers by contacting them in a way that does not suit them. The danger is two-fold: not only does an irrelevant communication waste money, but it also leads the consumer to think the company is "out of touch".

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