Find Out How Do-It-Yourself Customer Modeling / High ROI
Marketing is Done
( Site Map )
This site and the book "start simple" and work towards more
complexity. As you scroll down this page, the topics get more complex.
You can teach yourself easy to implement yet powerful customer
profiling and predictive models, step by step, using the articles (and examples) listed here.
Visitors familiar with this topic and the Drilling Down site may want to jump down to
the Advanced Articles.
If you're brand new to the study of Customer Behavior
/ Predictive Modeling...
Did you come here from a page you thought was interesting, but still want to
know what's in it for you? A backgrounder on the Drilling Down method can be
(the home page). If you have your bearings, you should read one or more of the
following articles as an introduction to behavioral modeling:
If you want to turn server log analysis data into actionable information,
For a very "nuts and bolts" overview of customer modeling and
topics on this site, see What Can I Do
with Behavioral Modeling?
Those coming from a retailing
perspective should read Three
Steps to High ROI Customer Marketing, which covers
For those with an analytical CRM orientation, see CRM and the Customer LifeCycle.
You might also look over past issues of the Monthly
Newsletter, a no-nonsense "here's how you do it" response to
e-mail I get from customers and visitors to the site.
Also, you can check out the first 4 Chapters of the Drilling Down book, a
great introduction to behavioral modeling concepts; click
here. Or get the first 9 Chapters of the book free by signing
up for the monthly newsletter.
If you are not in "do it yourself" mode, please review my
hands-on needs discovery, pre-CRM ROI analysis /
teaching programs tailored to
where you are on the Database Marketing / CRM Analytics learning
curve. If you represent a marketing agency or software
company, see the subcontracting
Customer Marketing Models
If you've got the general idea and you want to see
some modeling in action...
This is the simplest of all the predictive models for tracking future or
potential customer value. It uses Frequency to assess value and Recency to
determine the likelihood of this value actually making it to your bottom line:
(Recent Repeater model)
A slightly more complex version of this model for tracking the ROI of CRM can
be found here:
ROI for B2C CRM Implementations
If you are ready for some more advanced (but still quite simple to understand
and implement) Predictive Modeling...
Here is another very simple behavior model, which is effective and very easy to
implement. The foundation is measuring Latency - the time between two
customer events, like between first purchase and second purchase, or between
installation and first trouble call. This type of model can be more
effective that the previous two in service businesses, those that have a regular
billing cycle, and those selling durable goods or with long sales cycles.
This article is set up as a tutorial with an example of how to use Latency to
drive High ROI Customer Marketing campaigns in addition to predicting potential
Making Money with the Customer LifeCycle:
Trip Wire Marketing
When you are ready to see how a slightly more complex model translates into a
"real world" situation (and you have a few minutes), I put together a tutorial
outlining a simple model for comparing the potential
value of customers
generated by different ads, products, and areas of a site. The core idea:
looking at acquisition cost is half the story. During the tutorial, you will see
how "bad" customers can turn into "good" ones, how you can
track this effect, and why you don't need to calculate LifeTime Value
to do it.
You can use this model to maximize the long-term ROI of marketing campaigns. It also
demonstrates how High ROI Customer Marketing concepts like Customer
and Lifetime Value are linked, and how ROI
is calculated using these concepts. If you have always wanted to know how
all this database marketing stuff fits together, you finally get the chance
right here! This tutorial takes about 10 minutes and covers 5 pages:
Recency Predicts Future Value
The following are more complex models for special purposes and more detailed versions of articles in the
may be of interest to visitors who want to "Drill Down"
(couldn't resist) more deeply into behavioral
Customer Response, Retention
and Valuation Concepts
Projecting ROI with Pre-CRM Testing
Recency- Optimizing Response and Discounts
Managing Customer Retention with E-Mail
Advanced Versions of Tutorial Articles
Calculating LifeTime Value (LTV)
Calculating Return on Investment
If you've had some experience using
Customer Behavior Modeling (or are the curious sort - you know who you are)...
This section is where I post all new articles I write
(at least one a month), introducing new ideas to subscribers of the newsletter
who "get" what I'm talking about, and addressing trends in the e-mail
questions coming in from the site. Note: Some terms used in the articles below may
be unfamiliar to you; they are usually linked to an article describing them.
Six Sigma Marketing
Recency: The Web Retailing Example
Case Study: Non-Profit Scores 192%
Increase in ROI using RFM Model
Latency: The B2B Software Example
Latency: The Hair Salon Example
RFM versus Predictive Modeling
Lifetime Value, I'd Like
to Introduce You to the CFO
Extending the Customer LifeCycle
Should You Build a Data Warehouse?
High ROI Latency
Making Money with the Customer LifeCycle: Latency
Customer Retention and Modeling in the High Ticket / Durable
Behavioral and LifeCycle Modeling in the Utility / Telecom / Insurance Business
Making Money with the
Customer LifeCycle: Customer Latency
Making Money with the Customer
LifeCycle: Trip Wire Marketing
Save Money Marketing
to One-Time Buyers
Use Recency Metrics to Make
More Money on Your Promotions
Micro versus Macro Analytical
Approach to CRM
Testing Techniques - Determining
Potential for Marketing ROI Before You Buy
Measure Future Customer Value and
Manage it with High ROI E-mail
Tracking the Potential Profitability
in Online Retailing
Real Campaign ROI Links