Page 94 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 4: Customer Retention, Acquisition and Expectation

Today’s demanding customers and savvy competitors are causing many companies to rethink Notes
and restructure their new customer acquisition marketing efforts significantly.

Some Key Concepts

There are usually many kinds of customers, and it can often take a significant amount of time
before someone becomes a valuable customer. When the results of an acquisition campaign are
evaluated, there are often different kinds of responses that need to be considered. The responses
that come in as a result of a marketing campaign are called “response behaviours.” The use of
the word “behaviour” is important because the way in which different people respond to a
particular marketing message can vary. How a customer behaves as a result of the campaign
needs to take into consideration this variation. A response behaviour defines a distinct kind of
customer action and categorizes the different possibilities so that they can be further analyzed
and reported on.
Binary response behaviours are the simplest kind of response. With a binary response behaviour,
the customer response is either a yes or no. If someone is sent a catalogue, did they buy something
from the catalogue or not? At the highest level, this is often the kind of response that is talked
about. Binary response behaviours do not convey any subtle distinctions between customer
actions, and these distinctions are not always necessary for effective marketing campaigns.

Beyond binary response behaviours are categorical response behaviours. As you would expect,
a categorical response behaviour allows for multiple behaviours to be defined. The rules that
define the behaviour are arbitrary and are based on the kind of business you are involved in.
Going back to the example of sending out catalogues, one response behaviour might be defined
to match if the customer purchased women’s clothing from the catalogue, whereas a different
behaviour might match when the customer purchased men’s clothing. These behaviours can be
refined a far as deemed necessary, for example, “purchased men’s red polo shirt.”
Some of the general categories of response behaviour are the following:
1. Customer inquiry: The customer asks for more information about your products or services.
This is a good start. The customer is definitely interested in your products – it could signal
the beginning of a long-term customer relationship. You might also want to track
conversions, which are follow-ups to inquiries that result in the purchase of a product.
2. Purchase of the offered product or products: This is the usual definition of success. You
offered your products to someone, and they decided to buy one or more of them. Within
this category of response behaviour, there can be many different kinds of responses. As
mentioned earlier, both “purchased men’s clothing” and “purchased women’s clothing”
fit within this category.
3. Purchase of a product different that the ones offered: Despite the fact that the customer
purchased one of your products, it wasn’t the one you offered. You might have offered the
deluxe product and they chose to purchase the standard model (or vice-versa). In some
sense, this is very valuable response because you now have data on a customer/product
combination that you would not otherwise have collected.
There are also typically two kinds of negative responses. The first is a non-response. This is not
to be confused with a definite refusal of your offer. For example, if you contacted the customer
via direct mail, there may be any number of reasons why there was no response (wrong address,
offer misplaced, etc.). Other customer contact channels (outbound telemarketing, email, etc.) can
also result in ambiguous non-responses. The lack of response does not necessarily mean that the
offer was rejected. As a result, the way you interpret a non-response as part of additional data
analysis will need to be thought out (more on this later).

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