I’ve been writing in this column about using formalized frameworks to analyze and better understand your customer-related business challenges and goals. There are many such models, and any good marketing textbook or manual will offer some variations you can work with.
I’m going to spend the next few weeks looking at a few of the kinds of models out there to give you a sense of how you can use those frameworks, or one you create for your own business situation, to get more from the analytics you do measure.
Some weeks ago, I referred you to a white paper on e-metrics by Jim Sterne and Matt Cutler. I know from their log files that many of you downloaded (and, I hope, read) that paper, so I’ll start by discussing the version of the customer life-cycle metric they used to illustrate that work.
It is a good model for many businesses, as long as the business goals involve building customer loyalty: That is, it’s good for frequent repeat purchases and purchases with high referral/word-of-mouth value, and it’s less important for once-in-a-lifetime buys or commodity items where loyalty is difficult to value.
In this model, the marketers pay attention to five discrete steps along the buying continuum: reach, acquisition, conversion, retention, loyalty. Ideally, a prospect is led through all those steps and kept satisfied enough to repeat the steps when the next purchase is called for; in reality, however, “fallout” can occur at each step along the way.
Because buyers can abandon a solution or be diverted to another one at so many points in the buying life cycle, marketers who pay close attention to behaviors at and between each step will learn just where their marketing efforts are most vulnerable to attack from competitors or, worse, inertia.
Sterne and Cutler describe the marketing terminology in some detail in the white paper, but they offer short, plain-English descriptions as follows:
- Claim someone’s attention.
- Bring that person into your sphere of influence.
- Turn that person into a paying customer.
- Keep that person as a customer.
- Turn that person into a company advocate.
Web marketers will disagree whether reach is achieved when an ad is displayed (an impression) or when the ad is clicked. (Some would call this step acquisition, but it certainly does not equal purchase.)
In the traditional media world, reach is accomplished when the message is seen (or presumed to be seen, in that the viewer could have seen the commercial on the show he or she was watching, or the magazine reader was likely to have looked at that particular ad page). In general, reach, online or offline, does not require proof that the advertising message was viewed, read, studied, or paid attention to, but it does assume that some attention to the message was possible, perhaps even likely.
Bringing the prospect into the marketer’s sphere of influence might be considered acquisition, though many of us prefer to measure acquisition only when a name or contact information is captured or the prospective buyer makes a purchase or takes some other purposeful action.
The rest of the steps are pretty self-explanatory, but the evidence of turning a customer into an advocate will require some careful thought for each type of product or service, making this another rather difficult metric to generalize. Think about how customers tend to interact with your product and what the impact of word-of-mouth praise (or word-of-mouth criticism) tends to be, and you’ll be able to come up with some useful measurements of this last element.
I hope it’s become a bit clearer that a life-cycle model is an important prerequisite to understanding which metrics matter to your selling process. Since the sales process and the customer experience are different for each different type of transaction, it makes no sense at all to generalize about what makes sense to measure.
Only by taking the time to understand how consumers tend to behave when it comes to each particular sort of sales process and purchase relationship can we begin to develop a feel for the measurements that will make a difference.
Next week, more on frameworks for defining the customer buying process.