Geoff Wolf, EVP Client Strategy
Data’s role in customer acquisition
The role of data within customer acquisition involves capturing and maintaining a record of the person or business that made a purchase. The basic information includes 1) who made the purchase, 2) when that purchase occurred, 3) what media channel the order was placed through and 4) the value of the purchase. Beyond the basics, there is a wealth of intelligence that can add value to customer acquisition programs. Above all, this record needs to be easily accessible for analysis in a query environment.
Basic Information to Capture
The data record for a customer—either a person or a business—includes both names and addresses. On the B-to-B side, there are additional layers that make customer data more complex, like key person fields and multiple location addresses. The date of purchase must be captured, along with the media channel. The media channel that gets credit for the order channel is usually determined by the “last touch” or the media that was recorded just prior to the order being placed.
Each record is assigned a customer number by the order management system, and this number is critical to all future intelligence around the customer.
Two other fields that are common in today’s world are an “opt-out” field—requests not to receive marketing messages—and an email address.
A basic customer record would have fields such as:
- Company name
- Key contact
- Customer number
- Address (street, city, state, ZIP code)
- Opt-out status
- Media
Additional Data to Support Advanced Marketing Strategies
Each individual brand has unique needs, so it follows that there’s no single blueprint for additional data fields. Phone numbers, shipping addresses, gifting activity and a broad range of flags that indicate kinds of purchasing behavior may be needed.
The most interesting additional intelligence for a customer record is the marketing/promotional source that drove the sale. The rules to determine the promotional source of any given order are hammered out over time with much effort, and also vary with each brand. Once that process is in place, it’s possible to understand costs for different media channels.
Another important piece of analytical intelligence necessary for acting on customer acquisition data is the total cost to acquire the new-to-file customer record. This includes all variable marketing costs associated with driving new customers to place their first orders. The reason it’s needed is rather simple: any business must understand what it costs to acquire a new-to-file record in order to eventually make that record profitable.
Understanding the actual acquisition costs can be very complex, which is why data and analysts are integral to any acquisition strategy. Each brand will have unique key performance indicators (KPIs) around their acquisition costs, but some fundamental ones include sales, average order, gross margin, variable fulfillment and variable marketing. What is left over after all these variable costs are accounted for is the key to understanding customer acquisition costs. The cash left over after accounting for these is what really matters and can be acted on.
In the chart to the left, the different media channels clearly offer different contributions to overhead and profit for customer acquisition. When customers can be acquired for a profit, the business is positioned well to succeed. When there is a cost to acquire, there must be a strategy to make this investment back in a known period of time, and quickly following that, a profit. The role of data is to define all these fields and values, in order to control costs and set strategies. Analysts must be at the table for these discussions and provide visibility of the data in a query environment.
Accessibility of Customer Records in a Query Environment
Perhaps the most important element in a customer record is the field that links this table to others in a database environment. Customer records will need to be accessed in a query environment where value is created by allowing different data tables to be linked and then reported on for a single customer record.
The two most important elements to be aware of before acting on customer data are 1) making sure the record is new-to-file and 2) that the customer number can be linked to all customer touches with the brand. One common pitfall is that duplicate customer numbers can easily be assigned to the same record in some enterprise systems, so this has to be examined constantly as new media channels are introduced to the brand.
Linking customer data from disparate media sources tends to be very difficult when customer numbers are not present or do not line up with the order management system. This is a common challenge in today’s world with so many new media opportunities and data collection variances. This problem can be solved with email addresses and other fields when customer numbers are not available.
In summary, the role of data in the important arena of customer acquisition is fundamental to the success of any business. Analysts must help management understand 1) when customer records really are new-to-file (however that may be defined for your brand), 2) the basic and advanced elements of each customer record, 3) the real cost that was incurred to acquire customer and 4) how that data will be available in a query environment for analysis.
As published in Target Marketing magazine, March 2015.
Tags: analytics, data, Geoff Wolf
