Retention is the new acquisition

28 Sep 08 - Mark Klein

From here, it looks like the tide is turning.

When you fish the tidal estuaries of our New Hampshire coast, you quickly learn that fish bite when the tide is flowing. Many days I’ve sat in a boat at slack tide, waiting for the current to reverse, the tide to run, and the fish to bite. You watch for those first signs of the water moving, like a leaf or twig and then seaweed beginning to move past your boat. Right now, I am seeing indications that the tide in marketing is changing.

Top Ten Reasons Why Companies Don't Adopt Mathematical Marketing

11 Sep 08 - Mark Klein

10. Ignorance: They’ve never heard of it.

9. Irrelevance:  Most of their customers are one-time buyers, so how could mathematical marketing help?
 
8. Overconfidence: They think their current marketing program is working fine. They already know who their best customers are. They’re getting 80% of their revenue from 20% of their customers. What could be better?

7. Skepticism: They doubt it works; they believe all customers defect sooner or later.

6. Resistance to change: Regardless of whether it improves the bottom line in the long-run, they are unwilling to change doing business as usual.
 
5. Inexperience: Mathematical Marketing appears complex, requiring skills and people they don’t have.
 
4. Cost: It sounds expensive

3. Intimidation: Marketing is an art, and math belongs in the classroom.

How to become a customer-centric business

25 Aug 08 - Mark Klein

I was meeting with a new client recently who asked me what would be the effects on their business from adopting a mathematical marketing approach. I quickly responded with the obvious answers that came from my experience with many other companies, namely that they would see higher response rates and more revenue from their marketing campaigns. This was a results-oriented answer supported by multiple campaigns conducted by many different types of businesses.

Loyalty Marketing and the Stockholm syndrome

04 Aug 08 - Mark Klein

Some of my friends have helped me to a better understanding of the difference between loyalty and satisfaction.

They live in a mid-sized city in the mid-West. For a long time their city has been primarily served by Northwest Airlines, so they are frequent fliers on that airline. By many measures they are loyal customers of Northwest.

But when you talk with them you quickly learn that they are more trapped than loyal. They don’t have alternatives, and   to them the airline is “Northworst". Loyalty may be high, but satisfaction is not. If there was another carrier, my friends would switch in the blink of an eye.

I’m sure you know instances of customer loyalty being more  the lack of alternative vendors than of a favorable opinion. So how do you think  a company  should operate when many  customers who appear to be loyal are really trapped?

The fallacy behind "break-even point" strategy

23 Jul 08 - Mark Klein

We believe that there is a big fallacy buried in the strategy of companies that use direct mail.
Most direct mailers, especially catalogers, have a ‘house list’ of customers to whom they mail. This list is scored by one methodology or another, for example recency or RFM (Recency, Frequency, and Monetary value). These companies usually talk about “mailing down” the list to some point called the “break-even point”. By this they mean they have ordered their scored list with their best customers at the top and their worst customers at the bottom, and have identified a point on the list below which it is unprofitable to mail. “Unprofitable” typically means that the mailing cost to reach these lower ranking customers exceeds the gross margin dollars that the mailing generates.