Drive Your Buyer's Lifecycle, Increase Revenue and Retention

The process of acquiring and sifting traffic into engaged, and ultimately buying, prospects is critical to your customer acquisition efforts. Managing your audience is often referred to as the early stage of the “Customer Journey.” In this post, we’ll focus on the core and most pivotal part of your relationship with the consumer — purchasing from your brand. Based on some years of experimentation and measurement, we can share a simplified and highly actionable approach that can make a difference in how you value and grow value among customers. This is the buyer lifecycle. Prospects: Before They Are Customers Prospects, of course, come from many places: word of mouth and direct visits to your website and to your retail stores. Advertising and search drives them to on- and off-line points of sale. Prospects can be those who simply signed up on that ever-larger email signup popup on your homepage, or those who put items in a cart and “almost” purchased, but abandoned. But prospects can also be those who we leverage statistical intelligence to hand-pick. Not just look-alikes but the “buy-alike” prospects with the highest potential value. See my prior column called "The Most Important CRM Metric You Might Be Missing." All of these prospects have the same thing in common, they have not purchased, and a level of investment and communications will be required to drive them to the next step. This cannot be overlooked without consequence. Prospects, regardless of the level of engagement or targeting, have a massive, and in some cases, a predictable difference from the buyers you seek to drive incremental sales from — they lack the most powerful signal of all behaviors — actually spending with your brand. Commonsensical enough, perhaps — but the prospect ‘batch and blast’ marketing that pervades retail emailers typically makes the challenge harder. Customer Intelligence is required to target, learn and test your way into viable prospect conversion strategies. We reiterate this point as it is often assumed that prospects, when contacted, will just buy — and they don’t. The bar is higher (see "Bigger is Better: How to Scale Up Customer Acquisition Smarter" for how to target the right customers, and the sophistication your competitors may be leveraging already). To be sure, an analysis of your prospect base, which in a great many organizations is actually called the “email file” — another issue, in itself ― will help you determine who is likely to buy and who is not. This can be achieved by considering engagement measures, like opening and clicking your emails, visiting the website and micro-conversions. While these behaviors are correlated with the move from prospect to buying, it is not uncommon for the “average” prospect files to contain too many records of individuals who will never buy — they are lookers, not buyers. They may lack the means, intent or occasion to buy — or they may have experienced some change in their lifestage that moved them out of the market for your product. The opportunity is in identifying the highest value prospects and investing more thoughtfully in converting them. Active Buyers: Those Who Buy, and In Recent History Actives are the individuals who are currently spending with you. They have made purchases in recent history and are always comprised of two high-value groups. Those who made their first purchase, and those who have begun to develop loyalty and make subsequent purchases. One-time buyers can present a unique challenge to retailers who are focused on acquisition, but lack a functional strategy to develop loyalty. Your objective for active buyers is to keep them buying. Do so by identifying the purchase cadence they have exhibited and using that intelligence to inform communications when they are likely to buy again. As a strategy, you should keep a lid on the frequency you use to mail this group. They have a good relationship and higher likelihood to buy again, it is not necessary to over-promote to them. Instead of making every message a call to buy, test your way into messages that are appreciation-focused, and recognize them. You’d be surprised how that can lead to a bump in new sales. Also share the things that are new with them and distinguish the first-time buyers who you need to invest in educating about the brand and your unique value proposition from those who are more loyal and experienced in the brand. In-Market: Customers Likely to Buy Again Around … Now. In an ideal situation, you would know when every buyer in your database was prepared or even likely to buy again. Logically, that kind of customer intelligence would materially reduce missed opportunities. Marketers are beginning to use more sophisticated models, like a “Next Most Likely Purchase,” that pinpoint the window in which a customer is most likely to buy. When you do identify those customers who are moving to “In-Market,” you’ve got the highest-performing segment of your database primed for spending . That's not only based on who they are or what they bought in the past — but who they are to your brand at a given, and pivotal point in time. This can be accomplished through the statistical methods that look across your customer base and the purchases. It can use peer groups based on buying behavior and timing of purchases for various groups of customers. These models can be very effective and have stunning ROI when the lowest cost touch is used first, and escalating touches and offers are used subsequently. When we study marketing databases, it is fascinating to watch buyers moving into "In-Market" every day. Missing this opportunity gets expensive, as those individuals should have reverted to "Actives," but instead begin to “fade” in relationship and in value to the brand. Share positive reviews on new products to help accelerate the next purchase — and ensure the growth of your buyer relationship and customer value. As they approach the end of the likely purchase window, move to a more aggressive offer. Free shipping, special limited edition or hot product, or use a discount to keep them from leaving. Faders: Active Buyers Who Missed an Expected Purchase Faders are individuals who we expected to have bought — but did not. We may not know why, but the interrogation of a segment and other market conditions can help us understand. In one instance, a brand stopped a seasonal sale that it formerly had every year at the same time. Loyal customers looked forward to a chance to “shop the sale” — and it had become a part of the brand experience they knew. The sale wasn’t replaced — and the "Fader" metrics spiked accordingly. Having the customer intelligence to see this and quantify the impact is invaluable in developing pricing, promotion and general marketing strategies. Faders need a message with an edge. One edgy brand we’ve worked with used a creative treatment effectively. The message started with, “Was it something we said?” The objective was to break out of “standardized” messaging (that was usually about the product or sale) and ask them to take another look. It worked. Creatives enjoy producing situation-specific creatives that solve problems and capitalize on the opportunity that "Faders" present to the brand. At-Risk: The Buyer Has Stopped Spending With Your Brand When your customers fall into what we call the “At-Risk” category, they are statistically most likely to fall into attrition. They have missed multiple purchase windows. "At-Risk" customers can be rescued. Like all other stages in the buyer lifecycle, this is a behavioral view — which means there is behavioral (buying) evidence that those who are “At Risk” can be rescued, and moved all of the way back to "Actives." This group responds more to a change in messaging, resting the segment of the file, especially when there is evidence of over-promotion. Changing channels has shown evidence of working, as well. Sometimes marketers are uncomfortable going from an “email only” relationship to a “co-targeted” communication strategy — switching from email to a direct mail piece for a well-thought-out re-engagement touch. It's proven to be one of the methods that move individuals back to spending “Actives.” Inactives: Statistically, Most Won’t Buy Again Inactives are those who have missed numerous likely purchases and have not purchased on cadence or off. They have stopped buying. Inactives rarely convert back to buyers. Oftentimes, the buyer is a one-time buyer who wasn’t the “right customer" for the brand, price point, value proposition and may have engaged in a trial with your brand, but subsequently disengaged (for more on picking the right customers in the first place, see “The Most Important CRM Metric You Might Be Missing"). Strategies and expectations for the inactive are limited. One simple strategy is to be treated as prospects, because they are statistically not buyers any more. It is also advisable to rest that segment of your database before re-engaging them. You can also keep the highest value buyers from the Inactives as a holdout in your "Inactive Segment" — and engage in testing of promotions and multi-channel touches. The most important thing to do with inactives is not to ever get there. So time and effort needs to be invested in strategies to continue growing and renewing customer relationships when their behavior upstream changes and when they miss their first expected purchase. Become an Active Participant in Your Buyer's Lifecycle Buyers are the lifeblood of your business and, as is often the case, a small portion, usually fewer than 25 percent, are driving the majority of your revenue at any point in time. This being the case, it is imperative to have a methodical approach to keep your buyers coming back.

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Drive Your Buyer's Lifecycle, Increase Revenue and Retention

Mike Ferranti

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