Riddle: How can one person be many people at the same time?
Answer: When they fall into different segments for different companies.
To my One Hour Martinizing drycleaner, I am a Best Customer and also an evangelist. To Barnes & Noble, I am a frequent customer, but not a best one since the largest share of my spending now goes to Amazon to feed my Kindle. To Punch Pizza, I am not even a best customer. I don't eat that much pizza and the bulk of my pizza money goes to frozen pizza we eat at home.
If you look at my demographics -- age, income, family size, education, neighborhood -- I would look like the same person to every store. But if you use the transactional data -- my frequency, dollar amount, product mix, and combine that information with share of wallet (the percent of my spending going to that store) --you see a very different picture.
That different picture is why segmentation should begin with behavior. Behavior is what we need to understand, since behavior is what we, as marketers, want to influence, by building stronger relationships and brand affinity.
Behaviors are composed of three elements: transactions, interactions and attitudes:
- Transactions keep the lights on. There is no question that maintaining and expanding transactions are key to a company's success. Yet, paradoxically, the more you focus on transactions in communications and offers, the less likely you are to have long-standing customer relationships. Transactions MUST be measured as an output, a lagging indicator. But if you constantly sell, sell, sell, you will forget to converse and to listen.
- Interactions fuel relationships. Interactions are actually the leading indicator for transactions, although many companies still do not realize it. Interactions, as I refer to them here, are the non-transactional contacts that a company has with customers -- customer service calls, website research, social media interactions with fans, detractors and others, sales force visits, etc. Exceeding expectations on those interactions are often the greatest predictor of the next transaction, and the next, and so on.
- Attitudes are the end result of interactions plus transactions. They start with preconceived notions about the company and then are either disproven or proven out through the tenor of the interaction plus satisfaction with the end product.
How do you measure attitudes? Well, the normal answer is to conduct surveys, but those only touch the survey-friendly portion of your customer base.
So how do you understand customer attitudes? The only way that I have found to work is to collect, collect, collect information at every touch point, every interaction, every transaction. Collect these little "sparks" and gradually you will accumulate a light that can shine on your customers and provide insight for your contact and interaction strategy.
Discussion Questions: What are the opportunities as well as challenges in segmenting customers based on their individual behavior? Is it an attainable goal for bigger retailers or only an opportunity for smaller stores? Do you agree that a focus on interactions and attitudes has to drive such behavioral marketing?