Customer Behavior: Make the Most Out of What You Know

Jun 17, 2008 12:39 AM  By

Most merchants know how to capture customer data. But they fail to take it to the next step. Some ignore data hygiene, and others fail act on what they’ve learned.

Here are the tools you can use to make the most out of what you know.

· Data Hygiene. It is incredibly important that the wealth of customer and purchase data a merchant accumulates is maintained appropriately. While lists can be merged and address correction can be applied at a service bureau prior to mailing, any analyses that are performed in-house will be highly inaccurate unless the customer files are de-duped and addresses are correct.

You can accomplish this a number of ways, perhaps the simplest being to upload changes from the merge and address correction processes back to your housefile.

· Internal Reporting. While most order management systems have a number of standard operational and marketing reports, not many are useful tools for divining the types of trends necessary to optimally target your marketing. If you are dependent on a query tool to drill into your data, you need to be sure that you have an expert available that thoroughly understands how to use the tools effectively and knows the data architecture.

The disadvantage to this approach is that it stifles the creativity and development of intuition for you or your marketing process owners.

· Reporting Database. If queries are performed on the same database that is used for order production, there is a risk that queries will bring system performance to a crawl. It is far better to aggregate the data to be queried in another database.

Developing a reporting database is something best left to an expert, as there are many techniques that need to be used in order to keep the data in sync with your production database and efficiently accessible for queries and reporting.

Here are some ways in which these data can be used to boost sales and ROI:

· Product Brand or Category Loyalty of Buyers. Most product assortments span multiple categories and, in the case of merchants that re-sell national brands or that have developed strong house brands, can span multiple product brands. Being able to drill into purchases by category can help you understand how different groups of your customers behave.

At a macro level, it may be possible to segment your buyers into major categories based on their aggregate purchases. At a micro-marketing level, identifying product brand loyalty trends would suggest many opportunities for highly targeted and consumer-relevant e-mail campaigns.

· Behavior of Buyers by Season of Acquisition. Seasonal businesses acquire buyers year-round, but not at the same rates. Do the buyers acquired out of season behave the same way as those acquired in season? We have found that they do not.

A gift merchant might find that while 65% of new buyers are acquired during the Christmas shopping season, there are clusters of buyers acquired around Valentine’s Day and Mother’s Day. That “micro-seasonal” behavior could make it profitable to expend a lot more effort and resources with these buyers in these seasons, where it would not for the whole housefile.

· Regional or Climate Zone Purchase Behavior. Obviously, horticultural product merchants must time their marketing carefully to the growing season. The better merchants pay close attention to how spring arrives across various regions in the country, and time their marketing efforts to various regions differently to trigger demand when interest is peaking.

Clearly, sporting goods are seasonal. Other industries may be seasonal in less obvious ways. For example, indoor hobbies such as woodworking may behave in manner that is counter cyclical to great outdoor weather. Understanding buyer behavior in different climate zones and finding those micro-segments of prime targets will help a merchant develop campaigns that target peak demand periods and generate high ROI.

· Purchase Behavior of Buyers by Channel of Acquisition. As we have noted in many studies we have done, buyers acquired via different marketing channels often exhibit profoundly different behavior. An extreme example would be Holiday gift buyers that are acquired by a paid search term for a national brand (not a house brand).

The bottom line is this: you and your marketing process owners need to be able to mine the data that you have in a quick, effective manner in order to identify all of the pockets of opportunity you have already paid for in your customer file. The intensity of competition, changing consumer behavior, and financial challenges in the marketplace make this an imperative.

Al Bessin is a partner with San Rafeal, CA-based catalog consultancy Lenser.