Tripwire Marketing

When you can foresee the possibility of an average customer becoming a best customer and proactively promote this behaviour, or detect and reverse a customer defection before it happens, then your long term profitability and success is guaranteed.

Tripwires let you know when customers cross specific thresholds

By analysing the data available regarding the way your customers are buying or defecting you can set up tripwires that let you know when customers cross specific thresholds. We talked briefly about this in the customer retention section about latency. Latency allows you to measure the time between customer events and can tell you which customers are behaving out-with the norm.

Latency allows you to spot when customers are about to defect and gives you the opportunity to intervene and encourage those customer to continue their relationship with your company. Other tripwires could identify when one of your best customers buying pattern slows or when one of your slower buyers shows a significant ramping of purchases.

Defectors provide an opportunity for high ROI marketing

The identification of potential defectors provides an opportunity for high ROI marketing much of which can be automated. But first let me say that there is no point in spending part of your marketing budget on customers that are behaving or buying within the parameters of your average customer.

Offering discounts to customers who would have bought again regardless of any discount is simply a waste of money. Think about maintaining the motivation of this group of customers naturally via intrinsic motivators rather than coercively via extrinsic motivators such as 'buy one get one free' or discounts.

Through analysis of latency and other metrics it is possible to define the potential value of a customer (the future value of a customer) and the current value of a customer (the value of that customer up till now). This information makes it possible to present different offers to customers with different buying behaviors.

Customer Types

A customer with high potential value and high current value would represent a valuable customer who should be maintained. Conversely you may want to think carefully about how much time and expense you want to spend on a customer with low potential value and low current value, is it worthwhile maintaining these customers?

Customers can be broken up into four distinct types:

  1. High potential value and high current value
  2. High potential value and low current value
  3. Low potential value and high current value
  4. Low potential value and low current value

One should never forget the value of every customer, however, most businesses calculate the value of a customer on their current activities or spend. The above list puts a new twist to this and uses both current and potential value to calculate customer value and is ordered with the most valuable first and the least valuable last.

Different Strokes

Each business will differ in the levels of customer activity that defines whether a customer belongs in group 1 or group 3, for example. Once established customers can be tracked and tripwires put in place that flag you when a customer moves up or down in value or even ceases to be a customer (possible defection).

N.B. Because a customer stops buying does not automatically indicate defection, for example the lifecycle new parents buying diapers is finite, i.e. limited or restricted in nature.

If you can foresee the possibility of an average customer becoming a best customer and proactively promote this behaviour, or reverse a customer defection before it happens, then your long term profitability and success is guaranteed.

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