Profiling Library Customers
Newsletter #76 2/2007
Drilling Down - Turning Customer
Data into Profits with a Spreadsheet
Customer Valuation, Retention,
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Hi again folks, Jim Novo here, and welcome to the first newsletter
that also makes use of the Marketing
We've got a very interesting non-profit case today on library usage
- what do you measure and how do you calculate ROI for a
library? Especially when the role of a library is probably
changing because of access to the Web?
We also have a couple of great customer marketing links in the new
format supplied by the Blog, and a couple of Blog posts you might find
interesting. So let's get on with the Drillin'.
Best Customer Marketing Articles
The Medium is the Metric for Online Ads
Article with the title above is creating quite a stir in the
advertising media community, particularly among the “brand” folks.
One of the core points is that all media will become measurable and thus
“accountable” in terms of the effect ads placed in the media have.
New Look at the Org Chart
Interesting theory on why the internal organization of
multi-channel merchants differs (based on their roots) and some good
discussion of reporting chains. Personally, when it is all said
and done, I think you end up with customer service reporting to
Marketing - how else could a company possibly become customer
To access the full article reviews and links to the articles
Sample Marketing Productivity Blog Post
Accounting: How to Speak Finance
February 8th, 2007
Let’s say you have decided to build a relationship with the CFO or a peer in Finance. How do you get started?
Here are two report concepts and charts that will give you much more to talk about than you can squeeze into one lunch.
By taking Finance’s own numbers (Periodic Accounting) and recasting them into the numbers that matter for Marketing (Customer Accounting) you create a very solid bridge and basis for building out a plan.
on Customer Accounting...
You can subscribe to the Blog by e-mail if you want to, just go to
the Blog home page.
Questions from Fellow Drillers
Profiling Library Customers
Q: I work for a local council in England and was
recently asked to provide some local demographic profiles to help our
local libraries market themselves more effectively and hopefully
A: Hmmm...this is definitely the first time for this
Q: I'm no marketer, I usually muck about with crime,
economic and census data, but this seemed instinctively wrong to me
after reading how Tesco's had used its clubcard data to understand
it's market. When looking for some help, I've obviously found your
website, bought the book, got the software.
A: I would have to agree with you on that. If
you want people to "do something", you look at
behavior. If you want people to take out more books, you look at
book loan behavior.
Q: Firstly, I just wanted to thank you for making your
ideas so accessible, actionable and easy to understand. I've
picked up some other marketing textbooks for help and they seem to
mainly consist of dry schematic diagrams, and bland
statements. Great for a degree I'm sure, not so great for the
rest of us who have three weeks to write a report!
A: Well, thanks for the kind words. That was the
intent of the book - to give people the "how to do" as
opposed to the "what to do".
Q: Secondly, have you any advice or experience of this
model working in the non-profit sector or specifically in
libraries. For example, predicting life cycle / trigger points
seems a little more complicated than the examples you use.
People don't seem to stop using the service gradually, but stop
abruptly and then start up again without no warning. I'm also
dealing with thousands of records. My data seems a lot less
clear cut than the examples you talk about.
A: I'd agree it's not a "clear cut"
situation, but not because of the models or the channel. This
kind of behavioral profiling as been used offline for decades, and it
works in all kinds of situations. For example, you mention crime
data, so you have probably seen that the more Recently someone has
committed a crime, the more likely they are to commit another.
Not that you can really take any action on that information - you
can't lock people up for being "likely to commit a crime" -
And I think you face a similar challenge. You can run the
scoring models and generally predict who is likely to slow or defect
from their book loan behavior, but the question is, what do you
"do" about that? I have worked in other educational
situations (likely to graduate, likely to contribute to the school
after graduation) where the incentive is not straightforward but
nonetheless you can create incentives to encourage people to continue
their behavior. I'm struggling a bit with how to create one in
this situation, since the product itself is always free.
But before we tackle that issue, I want to run through a bit of a
"model" for this "business". It seems to me
you have a market or segment shift going on. If the primary
reason people go to the library is to research a topic, clearly access
to the Internet has suppressed the need for people to take books out
on loan from the library. For example, many of the trade
journals that used to be hard to access or expensive to subscribe to
are now available on the web. So you have this
"research" segment you have to deal with.
There no doubt is another segment, "core readers", who
simply for the love of reading visit the library to discover books and
read them. This segment is probably what I would call "good
customers" because the library provides a service to them they
cannot get elsewhere, the "value proposition" of the loan
program matches their needs precisely. This in contrast to the
"research reader", who now can do a lot of research from
work or home on the web.
For these research readers, a possible alternative would be
providing access to internet terminals in the library. But now
we're starting to encounter a different definition of
"customer" and "loan a book", right? Let's
say, for a library, the "profit" in the venture is the
"contribution to the community", and this contribution was
always measured in the past by "books out on loan".
This metric has been the library's KPI (Key Performance Indicator), if
Let's also say that many libraries have installed internet access
terminals, as they have in the US. Because of these terminals,
you would expect that "books out on loan" would fall for the
"research readers" segment, correct? So to get a
proper valuation of the contribution the library was making to the
community, you would have to look at "books on loan + number of
web terminal uses" to approximate the old metric "books out
Follow? So let's say the real issue at hand here is the local
government is trying to be "accountable" for what they spend
on libraries, and they measure the "profit" of this spending
by looking at books out on loan. The library administrators are
feeling some kind of pressure to "serve the community
better" (increase "profit") because books out on loan
have fallen. The problem is that "books out on loan" is no
longer a viable metric - the "base" has changed, if you
will. The research segment is being served through a new method
- web terminals - and this has been overlooked in terms of measuring
the "contribution" the library is making.
In terms of tracking, if there is no login required to use a web
terminal, someone in the library simply needs to count the number of
people in a week that use the terminals x 52 weeks and use that as an
approximation. Better would be a system where in order to access
a terminal, you have to enter your "library card number" or
some other identifier. In this way, you begin to find out more
about your segments:
Researcher = only logs into computer
Core = never logs into computer
Multi = both logs into computer and takes books out on
These "multi's" would typically be the very best
customers, since they are engaging in more than one library offering.
Above this, the library probably offers other types of services and
special events. The more of these services and events a customer
engages in, the more valuable the customer is. These are
the customers the library should strive to keep active. And like
the example of books on loan, if the "value" of the library
is only being evaluated on books on loan, attendance at these other
services and events really should be included in the evaluation in
The landscape has changed, and it's quite possible that the metrics
have not kept pace. Perhaps it is not your place to
suggest this, but as the "evaluator", I would certainly be
curious about this metric "books on loan" and make sure it
accurately reflects what people think it does and is serving the
administrators in the way they think it is.
Now that we have a feeling for what the background might be,
you still have the issue of what do you "do" about
customers who appear to be defecting? As I said, the behavioral
models will give you this information, but then what can be done with
this information, especially given what are probably fairly strict
budget constraints? It's not like you can send them a coupon for
a discount on their next loan!
In situations like this, I think the best alternative might be
survey work. That is, when the behavioral models identify
customers who are likely to defect or have defected, the library
simply asks them about it. For example, the library conducts a
telephone survey using a sample of these people - "We noticed you
have not taken a book out on loan / used a terminal in the past 3
months, is there anything we have done to offend you? Is there a
particular kind of content you are now interested in that we do not
provide? What other events or services would you like to see us
And where possible, the library should respond and provide
what these customers want. It may not be able to keep these
particular customers from defecting (too late), but over time the
"mix" of content and services should improve in a way that
attracts and retains library customers.
I humbly suggest that the above approach will be far more effective
and less costly than a "CRM system". If the library
doesn't have one, what is really needed is a "tracking
system" that simply keeps track of what resources of the library
each customer is using. This will make your models much more
reflective of the true economic benefits provided by the library, and
give you the customer samples you need to construct effective,
segment-targeted retention programs.
This kind of work also provides very good tracking for "how
we're doing" as a library and can provide excellent
justifications for budgets and new requests, because it is directly
tied to what customers want - no guessing games. Over time,
budget should flow to the areas more desired by customers and away
from areas that are perhaps less desirable or are "pet
projects" of interested parties.
Q: Once again thanks, I can at least begin to show
management that we should start doing this work in Access/Excel before
spending £££ on a CRM system, but any further advice would be
A: Well, I don't know much about how libraries really
work, but I've given you my best guess as to what might be going
on. Hope that helps! And do keep in touch on this as you
get into the guts of it, should be a very interesting project!
If you are a consultant, agency, or software developer with clients
needing action-oriented customer intelligence or High ROI Customer
Marketing program designs, click
That's it for this month's edition of the Drilling Down newsletter.
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Any comments on the newsletter (it's too long, too short, topic
suggestions, etc.) please send them right along to me, along with any
other questions on customer Valuation, Retention, Loyalty, and
'Til next time, keep Drilling Down!
- Jim Novo
Copyright 2007, The Drilling Down Project by Jim Novo. All
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