Use Data Insights For New Customers
By Roy Wollen, head of customer engagement & data analytics, Hansa-Database Insight

New customers are either loyal advocates in training or a drain on company resources from the moment they land in the database. Taking the long-term view of customer acquisition programs helps you identify both types. Beyond sheer increases in database size, today's best marketers focus on the value of new customers, measuring it over the long term.

Most new buyers never blossom into loyal fans. In fact, the majority of new buyers never even buy twice. The trick is to recognize who will become your company's advocate — but with only one or two days' worth of history, how can you separate out the promising first-time customers? Using a customer database, you can turn back the clock to analyze what happened to new buyers two years ago, or even last year. These buyers were new once and will provide wonderful clues as to what your company did right. The real success is not getting customers to make a purchase, but getting one-time buyers to make additional purchases. Focus on the best customers, then build acquisition programs around finding more of them.

Look at metrics such as velocity—the average time it takes new buyers to order a second time—and product affinity—the kinds of products purchased on the first order, and in what combination, then what was purchased next. Another way to judge customer value is through context and influence. For business-to-business marketers, consider what else is happening at that site. Are there advocates to refer to? In the consumer world, consider what else is happening in the household you are targeting. Scrutinize the initial offer that attracted a customer. Bribery, premiums and discounts will often lead to high response rates, but will attract a disproportionate amount of one-time buyers.

Without a customer database, success is solely measured on response rate and initial sales — not activations, repeat purchases, renewals, and loyalty. This leads to binge acquisition, where an acquisition manager is rewarded for simply bulking up a customer database. That's a roller coaster ride with giant spikes of acquisition that may go nowhere.

---Source: DMNews July 13, 2009 (www.dmnews.com). Roy Wollen is head of customer engagement and data analytics at Hansa-Database Insight. Reach him at roy.wollen@hansa-marketing.com.