Darren Contardo's Netrepreneur

CRM for a Gym Rat?

So I was training at my local gym the other day and was looking at the number of members who came in the door (I was doing cardio) and punched in their secret membership code into the gym's PC. It's a primary key (for all of those database guys out there) to recognize each unique member.

Seeing all of these members coming in and entering their information into the PC, made me think about how powerful a good CRM solution could be for the company. Think about it for a second? What if I had my Thai boxing class, general membership, and locker on that profile along with my demos and profitibility? Hmmm, as a business owner I could segment my most profitible customers (the ones who used the services and referred others), the occassional members, and the drop ins. I could send email messages or on-screen alerts to the front staff to let these members know about new "paid" services that could yield incremental income, such as massage, personal training, a new boot camp, etc.

Just Get'em, Keep'em, and Grow'em. This way a gym rat can grow their muscles and you the owner can grow your profits. Good exchange, no?

Never underestimate the Power of

Never underestimate the Power of the Point of Sale!

Yes, there is something to be said about the effect POS has on overall sales. A recent study says that 85% of all loyalty is created at the point of sale and after (well how else can they be loyal?). I thought I should rant on this for a second because I just got side-swiped at the POS.

I went into my local electronics store (actually it was a big box store) and I did my research online first about a new MP3 I wanted to purchase (you can see multi-channel retailing coming into play here). I had my eye on the Rio Forge 512 MB player that had a price tag of $179 CAN. My rationale was I could use the expandable SDRAM slot to add more memory if I wanted later on. Howeve, when I went to the store, I found myself actually having the player in my hand, when a sales associated asked my if needed any help. Well, I didn't really need any help at all, I already made up my mind, I did my research, it was a done deal! Was it?

Out of the corner of my eye I say the sexy and sleek looking Creative Zen 5GB player
and then of course I told the clerk my story of how I liked the Forge and but was also a bit partial to the Zen. That was it, next thing I knew I was paying for the Creative Zen 5GB for over $300. Now I'm trying to rationalize the purchase like everyone else who bought something they shouldn't have. Post-purchase dissonance or buyer remorse; call it what you will, but we all lie to ourselves after we pay for something so we don't feel as bad.

So the moral of the story is, get them into your store and upsell/cross-sell them before they knew what hit them...they have time to think about that the way home and will lie to themselves so they don't feel as bad.

Lifestage Marketing? Ever have a

Lifestage Marketing?

Ever have a major life event that seems to consume your every thought? Maybe it was when you got married or were looking to purchase your first home? Well, it looks like most people who are going through major life events rely heavily on the Internet to "educate" themselves on the event. According to Comscore, people are hitting website that tailor to these events in a significant way. Maybe an opporunity here for you? Check out the article at Comscore.

By the way, Banks are famous for using CRM apps in their lifestage marketing promotions too. First there is the bank account, credit card, car loan or personal line of credit, 401K or RRSP, Mortgage, refinancing loan, etc. See the stages?

The 5 phases of Customer

The 5 phases of Customer Valuation. No, this isn't a Peppers and Rogers blog on CRM, but I wanted to point out something that just makes sense. Customer modeling works...not necessarily segmentation for the purposes of targeting communication, but modeling.

Check out this article by Jeff Jarvis. I got this reading Seth's blog. Jeff describes how the presidential campaign was designed by consumer models. Brilliant!

Just to let you know what consumer models are, here's the lowdown:

Phase 1. Analysis and OLAP (online analytics) - measures past behavior such as revenue per customer
Phase 2. RFM (recency, frequency, monetary) - more of a predictive model
Phase 3.Consumer modeling - used for targeting customers
Phase 4. Segmentation - segment like users in groups for marketing research or product development (this is what Bush did)
Phase 5. Sophisticated Consumer Valuation such as Lifetime Value, etc

Wow, it's amazing that the presidential campaign crew did this. Imagine if the managed to consolidate all the government data on each individual? That would be the most sophisticated valuation model ever?!?! They would probably know your likelihood of having medical attention, Employee Insurance claims, and more...they would probably know who's in your family, your economic contribution per household, propensity to buy any product or service imaginable! Scary isn't it?

Let's hope they continue to champion privacy otherwise we're in for it!

Think Big!

CRM and Loyalty Marketing -

CRM and Loyalty Marketing - A Saviour or Just Another Fad? I'm sure we're all familiar with Mass Marketing. Mass marketing tries to hit prospects with a message that is supposed to resonate with them and have them take action (i.e. buy your stuff). Mass Marketing is massly expensive, is massly unfocused, and massly unaffective. Sorry, I think I just made up the word massly. Anyway, marketers around the world are now shifting their focus to 1-to-1 marketing; made famous by Rogers and Peppers. 1-to-1 marketing is the antithesis of mass marketing. In order for 1-to-1 marketing to work, you're going to need something called CRM (Customer Relationship Management). CRM basically consolidates all your customer information into one central database.

Here's the typical strategy of CRM:

1. Identify your customer
2. Segment your customer base based on profitibility
3. Interact with your customer base through different channels and measure campaign performance
4. Refine your message and channel and drill down to customer ROI

Basically, all you're doing is segmenting customers into 10 deciles, 1 = most profitable and 10 = unprofitable. Decile 1 on most cases accounts for 60% or more of the revenue of the company. Here's where you want to concentrate. Deciles 2-4 probably account for another 3o% or so, and the other remaining deciles 5-10 account for maybe 10% of the business revenue.

So Who's this #1 Decile Group? The Money-Makers!

So how do companies figure out who is in that #1 decile?.. Segmentation modeling. They gather information based on demographics, behaviour, psychographics, and sometimes third-party credit data. They use different independent and dependent variables (all of course attached to revenue per customer) and figure out trends in "like" customers who spend a lot of money. From there they will group those "like" customers into the top decile and send similiar messages to all of those "like" customers.

What About Me? I'm Loyal Too!

But what about those lonely guys at the bottom deciles? Don't they get any attention? Not really. Just because they don't spend money like the big boys in decile 1, the company just tends to ignore them. Why? Would you want to spend money on somebody who didn't buy barely any of your product/service? I didn't think so. But maybe those customers can't afford anymore? Maybe their not in the lifestage to afford it? Maybe they will be in a few years? But if you don't pay attention to them now, you may be losing them forever! So how do you figure out their lifestage? Ask them!

Numbers Don't Lie Right?

Why crunch the numbers like a geeky statistician (we all have deep inside us) when you can just ask your customers key questions to help understand them and service them today and in the future? Are we scared to hear the truth? Do we want to feel like we've won an epic battle because we've figured out who are profitable customers are through some sort of logistical regression analysis? Or are we so focused on LTV (Lifetime Value) that we forget customers are human and want to be heard?

Don't get me wrong, I'm a huge fan of CRM and loyalty marketing. I think it's far more effective than Mass Marketing, but it's not perfect. Customers always expect more, want more points, are sensitive about privacy, and know how to manipulate even your best loyalty progam. Just be careful and know it's not your saviour. Just ask your customer, he'll tell you.