Cover Story: The Big Qs of 2011
Are You Talking to Them the Right Way?
"The old buying model—i.e., RFM: Recency, Frequency, Monetary—[asked about customers] 'When did I buy last? What did I buy? And how much did I buy?' That's gone," says Gary S. Laben, CEO of the marketing solutions provider KBM Group, headquartered in Dallas, Texas. "Now, it's about, 'Where am I at the moment? What is it that I'm purchasing right now? And with whom am I conversing at that moment?' ... The best direct marketers are already figuring out how to make all their conversations one-to-one."
Instead of focusing on RFM to predict customer value, Laben says marketers should focus on a new buying model that predicts purchasing behavior based on "geography, context and community." According to Laben, this breaks down in to:
- Geography is where the customer is at that moment—for example, in a competitor's store;
- Context, says Laben, is "about the conversation [the customer is] having right now"; and
- Community refers to who the customer is talking to at that exact moment.
Whether or not they share his view on RFM, our experts agree that marketers, as a group, have a long way to go before they can say with certainty and proof—as opposed to "just knowing"—that they are using the most effective techniques to communicate with customers today.
"Marketers [must] figure out how to deploy multiple elements of their media mix in an integrated manner ... based on the individual preferences of customers," says Ernan Roman, founder and principle of the consultancy Ernan Roman Direct Marketing (ERDM) in Douglas Manor, N.Y.
Roman uses in-depth customer needs assessments to help clients figure out what customers want and how they want to be treated. "Social media is the most exciting development" in direct marketing technology, he says, because of its ability to put the customer at the center of marketing campaigns. It "has finally completed the transformation [of marketing] to 'customer as center of the universe.' This humbling transition will force all marketers to finally adopt customer-centric marketing as a fundamental element of all they do."