Counting Cards

Think of your customer file like a deck of cards, where each card is a customer. Would you like to learn a card trick? Take a close look, I’ll go slowly. “Notice that my hand never leaves my wrist.”  Say that when you start this trick; it usually gets a laugh.

Ok, pay attention. Each card is different in how it trends over time – each year some are new to your file, some are growing in value, some are shrinking in value, some are flat, some are lapsed (inactive) and some are reactivated. I do a slight variation of the trick where I deconstruct some of the groups even further (e.g., breaking out the inactive into high-value customers who went away, low-value customers who were never really engaged, one-and-dones, etc.). But for now, let’s keep the trick simple.

Come a little closer. I’m going to create six piles based on how each card has engaged with your brand year over year. I’m going to do this three times actually – once for 2013 vs. 2014, then 2014 vs. 2015, and then 2015 vs. 2016. Here’s how the six piles work:

  1. NEW are customers who are new to file in the last 12 months
  2. INCREASED are customers who have increased their spending year over year
  3. FLAT are customers who spent roughly the same year over year
  4. DECREASED are customers who have decreased in value year over year
  5. ATTRITE are customers who were active 12 months ago but are now inactive
  6. REACTIVATED are customers who were inactive last year but are active this year

This is one of those mathematical card tricks. We are going to start counting cards next – counts, percentages, sales, average sales per customer. It’s all automated, so just say the magic word, “abracadabra” – we now have a report! Please hold your applause until the end; it’s just a report. The real magic happens when the cards talk to us. They are going to tell us how your business is trending, where you’re winning and losing, where you’re growing and shrinking. This is a brand health report.

Hopefully we will see upward trends in our NEW, INCREASED, REACTIVATED and even our FLAT piles of cards (upward in both counts and spending). We also want to see downward trends in DECREASED and ATTRITE (fewer customers spending less, less attrition). What we see will drive what we do next. If we see downward trends in NEW, it’s time to invest in acquisition analytics and campaigns. If we see our DECREASED customers trending up, we know it’s time to invest in re-engagement and cross-sell analytics and campaigns. Where we see good movement, upward trends, we want to do more of what has been working.

Wait, the trick isn’t over. Let’s recap where we are. We started with a normal deck of cards, YOUR cards actually (no trick decks here). We created six piles based on migration patterns and reported on the movement from pile to pile. Based on that movement, we have a sense of where your business is winning and losing, where the pain is. We now have our brand health report card. But a good card trick has layers. Just when you’re amazed and you think the trick is over, it fools you again. Like a sucker punch, it hits you when you’re not looking.

The sucker punch here comes from the drill-downs. We’re going to do two drill-downs. The first drill-down is by line of business (LOB). Now that we’ve been through this for the overall business, the LOB drill-down goes quickly. It’s the same trick; we create six piles for each of your major lines of business. The goal here is to see, for example, from which LOBs are we seeing more customers who fall in the DECREASE category? From which LOBs are we seeing more customers who are in the ATTRITE groups? Our goal here is to isolate the pain and the success with our customers who fall into the INCREASER and NEW categories.

The next drill-down I did in advance. In preparing for this trick, I put each card into 10 piles based on several behavioral key performance indicators I know are important to you (e.g. gross margin, promotional spend, cross-category engagement, etc.). If you have your own behavioral segmentation, you can skip this part of the trick. Think of the 10 piles as your value chain, where one is the top of the chain and 10 the bottom. The purpose of the value chain is to monitor and get people to move up the chain and also stop them when they begin to move down (before they begin to move down actually).

So let’s recap. We now have every card (every customer) coded one to six based on how they are trending overall, one to six on how they are trending by LOB, and one to 10 based on where they are on your value chain. That means that in addition to your brand health dashboards, we have now coded every person on your file. The key word in that last sentence is… “person.” Person = people-based marketing. The card trick points us to people (individuals) on your file who need attention based on how they are trending overall, by LOB and where they are on your value chain.

Now you can STOP running ad hoc campaigns, to ad hoc audiences, with ad hoc publishers and START doing laser-focused people-based marketing to the audiences that matter the most to achieving and sustaining growth. Voila!

I hope you enjoyed learning this card trick. If you enjoyed learning it half as much as I enjoyed sharing it, then I enjoyed sharing it twice as much as you enjoyed learning it. Say that when you finish this trick; it usually gets a laugh.

A nuance. The insights are important here. You may think your business is healthy because you see lots of INCREASERs and lots of NEW, but watch what’s happening with their average spend. If their average spend is declining, look at the net-net of that impact. We tend to worry and focus on the ATTRITERs, but the real pain may be coming from a declining value chain. The same is true with the other piles – look at the counts but also the spending. Practice this trick. When you get good at it, do it quarterly moving forward to identify problems and opportunities early on. Better yet, let Acxiom do it for you as an ongoing managed service.

To learn about how Acxiom Analytics can help your people-based marketing efforts please contact us at info@acxiom.com.

 

 

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