Red Fish, Blue Fish

“But if I ran the zoo,”
Said young Gerald McGrew,
“I’d make a few changes.
That’s just what I’d do …”
— Dr. Seuss

Dr. Seuss knew a thing or two about customer data analysis. His children’s classic One Fish, Two Fish, Red Fish, Blue Fish embraced the fundamental diversity of the human race. Similarly, embracing the fundamental differences among your customers and their changing relationships with your brand lets you to enhance your loyalty strategy — despite continual downward pressure on your budget.

How effective would you be if you could stretch your marketing dollars over a broader base of your customers, with more measurable results? The answer may be as simple as a Dr. Seuss verse. Know your customers. Embrace their diversity. Learn from their ever-changing transactional patterns what they need and when they need it. Customer data can tell you when one customer needs to be saved and when another is ripe for new products. Why not apply that knowledge in a systematic, continual process?

Chances are you have a set of customers with a high-attrition risk. Has their transaction frequency slowed? Average purchase size shrinking? An attrition probability model can flag those customers who have crossed into the red zone. Before they start shopping with your competitor, intervene. Let’s call these folks our Red Fish customers.

Conversely, do you have a customer set with untapped potential? You might convince them to transact one more time this month. They might buy your hot new product. A potential spending model can flag those customers who show the right buying signals to increase your share of wallet. Lets call these folks our Blue Fish customers.

Why blow through your marketing budget trying to cover all of your existing customers? Instead, use attrition and potential scores to market only to those customers in greatest need: your Red Fish and your Blue Fish.

An event-triggered communications system can sweep your database for both types of customers, apply preset business rules, filter the opt-outs and initiate targeted offers. Performed on a monthly or quarterly basis, this process lets you effectively focus your marketing budget. Re-score your customers often, and your loyalty strategy becomes dynamic rather than static.

But what if you must tighten the belt even further? What if you simply can’t afford to reach all of your Red and Blue customers?

Every enterprise operates under shifting marketplace pressures. Stretch the Seussean metaphor even further to create a system of Red and Blue markets. Markets where you’re especially vulnerable are Red Markets in need of specialized attention. Markets where conditions are in your favor become Blue Markets, ripe for cross-sell and up-sell campaigns. You simply shift resources from your neutral or “gray” markets to the Red and Blue ones.

The combined solution of event-triggered communications within Red and Blue Markets — to just those Red and Blue customers — could result in a bonanza for the cash-strapped marketing director. With a little help from Dr. Seuss, you may just be able to focus your very limited funds on the customers most in need of your attention.

Kelly Hlavinka is director of consulting services for Frequency Marketing, Inc. Spin her a rhyme at [email protected].