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Part 2 Strategy and applications
Sense, Respond, Adjust – delivering relevant e‑communications through
monitoring customer behaviour
To be able to identify customers in the categories of value, growth, responsiveness or defec-
tion risk we need to characterise them using information which indicates their purchase and
campaign- response behaviour. Past and current actual behaviour is often the best predictor
of future behaviour so we can then seek to influence this future behaviour.
Digital marketing enables marketers to create a cycle of:
●
Monitoring customer actions or behaviours and then . . .
●
Reacting with appropriate messages and offers to encourage desired behaviours
●
Monitoring response to these messages and continuing with additional communications
and monitoring.
Or, if you prefer, simply:
Sense →
Respond →
Adjust
The sensing is done through using technology to monitor visits to particular content on a
website or clicking on particular links in an email. Purchase history can also be monitored,
but since purchase information is often stored in a legacy sales system it is important to inte-
grate this with systems used for communicating with customers. The response can be done
Mini Case Study 9.11
Euroffice (www.euroffice.co.uk) targets small and mid‑ sized companies. According to George Karibian,
CEO, ‘getting the message across effectively required segmentation’ to engage different people in differ‑
ent ways. The office sector is fiercely competitive, with relatively little loyalty since company purchasers
will often simply buy on price. However, targeted incentives can be used to reward or encourage buyers’
loyalty. Rather than manually developing campaigns for each segment, which is time‑ consuming, Euroffice
mainly uses an automated event‑ based targeting approach based on the system identifying the stage at
which a consumer is in the life cycle, i.e. how many products they have purchased and the types of product
within their purchase history. Karibian calls this a ‘touch marketing funnel approach’, i.e. the touch strategy
is determined by customer segmentation and response. Three main groups of customers are identified in
the life cycle and these are broken down further according to purchase category. Also layered on this seg‑
mentation is breakdown into buyer type – are they a small home‑ user, an operations manager at a mid‑ size
company or a purchasing manager at a larger company? Each will respond to different promotions.
The first group, at the top of the funnel and the largest are ‘Group 1: Trial customers’ who have made one
or two purchases. For the first group, Euroffice believes that creating impulse‑ buying through price promo‑
tions is most important. These will be based on categories purchased in the past. The second group, ‘Group
2: The nursery’, have made three to eight purchases. A particular issue, as with many e‑retailers, is encour‑
aging customers from the third to fourth purchase; there is a more significant drop‑ out at this point which
the company uses marketing to control. Karibian says: ‘When they get to group two, it’s about creating
frequency of purchase to ensure they don’t forget you’. Euroffice sends a printed catalogue to Group 2 sepa‑
rately from their merchandise as a reminder about the company. The final group, ‘Group 3: Key accounts or
Crown Jewels’, have made nine or more orders. They also tend to have a higher basket value. These people
are the Crown Jewels and will spend an average of £135 per order compared to an average of £55 for trial
customers. They have a 90% probability of re‑ordering within a six‑ month period. For this group, tools have
been developed on the site to make it easier for them to shop. The intention is that these customers find
these tools help them in making their orders and they become reliant on them, so achieving ‘soft lock‑in’.
Source: Adapted from the company website press releases and Revolution (2005).
Euroffice segment office supplies purchasers using ‘touch
marketing funnel’ approach
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Chapter 9 Customer relationship management
through messages on-site, or in email, and then adjustment occurs through further sensing
and responding.
This ‘Sense and Respond’ technique has traditionally been completed by catalogue retail-
ers such as Argos or Littlewoods Index using a technique known as ‘RFM analysis’. This
technique tends to be little known outside retail circles, but e-CRM gives great potential
to applying it in a range of techniques since we can use it not only to analyse purchase his-
tory, but also visit or log-in frequency to a site or online service and response rates to email
communications.
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