Maximizing Customer Value With Behavioral Marketing

  |  September 8, 2010   |  Comments

A comparison of Pat's King of Steaks and The Palm restaurant shows that by understanding who may see your message, you can better predict those that will effectively digest it.

The heart of behavioral targeting, or behavioral marketing, starts with measurement. That measurement can take place online, where businesses can obtain robust segmentations and behavioral data, or can take place using surveys, DMA lists, media segmentation, or by simply breaking down the composition of the body of individuals with access to your message. By understanding who may see your message, you can better predict those that will effectively digest it.

As programs that measure and draw inference from user behaviors mature, those related insights can provide valuable perspectives on where segments diverge. Using this data, whether you are a small services provider or a global retailer, can help maximize the lifetime value of your customer.

To draw a comparison, take two restaurants: Pat's King of Steaks (of Philly cheese steak fame) and The Palm (a high-end steakhouse chain). Pat's is successful in that it has a grand distribution model built around a dog and pony show. You order a steak, in line, by simply referring to "Cheese Wit" or "Wit-out." You're not making a decision based on any other factor than whether or not you are willing to eat onions. On the other hand, take The Palm, which has 18 menu variations per steak. In order to appeal to its target market, the creative team which constructs its menu needs to carefully choose their words and craft the delivery to massage the expectations of the guests. Essentially, the Cheese Wit at The Palm is, instead, "Sliced Filet with Cippolini Onions and Wild Mushrooms and Boursin Glaze." Where the former is appropriate for a shopping trip, or capping off a late night visiting friends, the latter more effectively conjures a dinner date or private dining. The offline experience clearly participates in what your expectations are when interacting with either of these "brands."

Consider the lifetime value calculation of a customer for each of these businesses. Pat's depends on maximizing your engagement and revenue on an ad-hoc basis. For its profitability to increase, it has to handle every transaction personally, enthusiastically, and on the premise that it probably won't see or recognize you ever again. While Pat's has your attention, it has to point you to the t-shirts and other odd items, along with its limited menu of side items to sell you. It markets on "tradition" and leverages that to send you to other local businesses which it has agreed to push on tourists. Pat's consumes your attention, makes its play, and redirects you to the best possible course to make you move its widgets for it. For The Palm, its model is based on many fulfilling experiences, in many locations, over what it hopes will be a lengthy courtship.

Strangely enough, this is where the two brands converge in approach. The key is enriching the touchpoints, which are pivotal to serving the right message at the right moment, to the right people, when they're most capable of acting on it. With analysis of online response data from collection systems, The Palm can build tradition and distribution into social strategies and redemption mechanisms, without resorting to selling t-shirts, which might damage its brand positioning. It can align its menu with brands of wine which appeal to its market based on sales data, and reinforce these through its website. Further, the dynamic medium of the Web allows The Palm to alter those combinations based on geotargeting, user interactions, input strings, time of day, or referring venues. Better still is that the tools exist now which allow relatively non-technical users to test and deploy these strategies to best optimize the personal preferences of the user - based on who they are offline and by what they do online. Each positive step in optimization increases the chances of impacting the marketplace of potential - increasing lifetime value.

Offline or online, the fundamentals of providing recommendations, offers, and customization is the same - the speed and delivery mechanism being the difference.

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Andrea Fishman

Andrea Fishman, VP of strategy and a partner at BGT Partners, leads BGT's Chicago office and has extensive experience in marketing and management consulting. She and her team drive value to BGT's clients through the development of behavioral marketing programs, web analytics, measurement programs, industry benchmarking, competitive assessments, and the design of integrated marketing programs.

Andrea has been with BGT since 2003 and is credited with strengthening partnerships with such clients as ADT, Sony, ADP, and Avaya. Prior to joining BGT, she served as global vice president at divine, inc. She's also held strategic positions within marchFIRST, The Lewin Group, and the office of U.S. Sen. Edward Kennedy.

A graduate of Brandeis University, Fishman was awarded the Wasserman Scholarship for academic achievement and was named a 2010 Stevie Awards Finalist as Best Executive in a Service Business. She is a frequent judge for the eHealthcare Leadership Awards and is involved with the Special Olympics and Chicago Cares, a community service organization.

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