Database: Grow Your Customers
Life event-driven marketing (EDM) can be a useful tool in unearthing new opportunities to find or serve customers. Very different from an RFM-driven, transaction-based approach, EDM seeks to find changes in prospect and customer circumstances that signal a break from past behaviors.
When life events occur, abrupt changes in behavior often accompany them. Graduations, marriages, buying a home, the birth of a child and retirements are examples of life events that signal when past buying behaviors may not relate well to future behaviors.
Focusing on past behavior, in the short run, does an excellent job of predicting future behavior. In the long run, however, "best" customers still leave or buy much less. Expanding targeting to include life events can explain why some customers are leaving and uncover ways to find new customers who will be tomorrow's "best."
One problem with targeting customers based on past buying behavior is that targeting is not so much selection as it is deselection.
Another problem is focusing on short-term marketing objectives. Because prospecting often is done at or below breakeven, focusing more tightly on customers and placing less emphasis on prospecting improves ROI in the short run.
A third problem is a tactical marketing focus as opposed to strategic. For example, response rates, average order and product sales goals are tactical objectives. Methodically building a customer base that supports future sales goals is strategic.
Strategy is priority- driven—and if one has more than three priorities, he really doesn't have any. Fortunately, marketing strategy can be built around just three priorities:
- getting customers
- keeping customers
- growing customers
Marketers often focus on only one or two goals—usually acquisition or retention, the "getting" and "keeping" part. They often ignore that sales swings frequently are driven by customers spending more or less, rather than by customers arriving or leaving.