A Philosophy of Customer Understanding: Looking Backward While Looking Forward

Martha Bush

At the heart of great marketing you’ll always find a kernel of truth, a flash of insight that reveals a special understanding of the hopes and needs of an audience.  I don’t frequently look to philosophy for my marketing guidance, but occasionally you’ll find wonderful advice where you don’t expect it:

“To understand the heart and mind of a person, look not just at what he has already achieved, but at what he aspires to.” ~  Kahlil Gibran

For years, the only way we could really get a grasp on our audience’s needs and aspirations was through primary research — and asking consumers directly is still a terrific first step. But the tools and data now available to us to enhance those research findings are really exciting – and at the core of creating great, relevant marketing that can break through the clutter.

At the start of new client relationships, prior to implementing a new campaign management solution or a major investment in database marketing, clients should have some customer- and market-focused analytical benchmarks that can be used to help them make decisions about new ventures. Most clients have done campaign-focused analytics, but often think they don’t have the time to look for insights that can come from a 360° view of their customers.

For looking backwards, we use a Strategic Profiling exercise at SIGMA Marketing Group to answers questions such as:

• What do best customers look like in comparison to less profitable customers?
• What is the value of a customer?
• What are the key triggers for a sale?
• What does the typical sale look like?
• What are the stages in a customer’s lifecycle?
• What are the key segments in the customer base?
• What is the cost to acquire a customer, the cost to retain?
• What is the level of customer retention now, and what’s the impact if it improves or weakens?
• What does the sales cycle look like?
• How are web customers different from catalog or store customers?

For looking forward, we use predictive modeling to create what we call “Knowledge assets” – new variables we land on the customer database that predict their future behavior (their aspirations?). Some of these might include:

• Likelihood to purchase a new product
• Likelihood to stop purchasing, or to leave
• Likelihood to respond to marketing materials
• Likelihood to be profitable, or unprofitable
• Likelihood to become a customer evangelist

The big picture we create is a robust, holistic view of the customer – all information that can be used to create great marketing.

How do you make it happen?  There are definitely some critical steps in creating customer understanding.  The must-haves include:

• Data Consolidation and Cleansing – A solid, repeatable process for data consolidation and cleansing is the only way to bring all the pieces together at the customer level to drive smarter marketing.
• Data Enhancement – For both B2B and B2C consumers, you need to bring together hundreds of demographic, firmographic, behavioral, lifestyle and life stage data variables to your customer data for the most robust customer and prospect profiling possible.
• Customer Insights That Drive Action – The strategic profiles you create will direct you towards a wide range of findings and customer insights you can use to make recommendations for marketing actions, database improvements, multichannel messaging, further analytics, and innovations in campaigns and program implementations.
• Action Recommendations – Don’t stop with findings.  Push through all the way to create an actionable list of program recommendations to take advantage of the customer insights – too many great insights get shelved by not forging through to actions. This important last step – figuring out how to actually implement on the findings to drive your business results – is the key to success. This usually comes in the form of an action plan for campaign testing, data enhancements, operational changes and/or the application of further marketing or predictive analytics.

Looking backwards and looking forwards at your customers isn’t metaphysics, it’s just good customer-focused marketing. Building your own philosophy of customer understanding should be a strategic initiative at the top of your marketing team’s list for 2011.

About the Author:

Martha Bush is SVP of Strategy & Solutions at SIGMA Marketing Group.  Follow Martha on Twitteror connect with her on LinkedIn.

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