The Power of Recency and Frequency in Growing Your Small Business
The Power of Recency and Frequency in Growing Your Small Business
As a small business owner, who do you think would be more valuable; someone that visited your website just yesterday or someone that visited 8 months ago? If you said the person that visited your website yesterday, I would agree. The person that came to your site yesterday is more recent than the one that came 8 months ago. While this seems like a very simple concept, it is a very powerful tool you can use to increase your business profits.
Suppose that you placed a "most recent" transaction date in your customer database every time a customer made a purchase. In other words, if a customer bought your widget on 2/06/08, you entered this transaction date within their customer record, overwriting the previous transaction date. Imagine sorting your entire database in order of most recent transaction to least recent transaction. You would then have a list of customer names sorted by most recent to least recent transaction.
Recency is the number one predictor of future behavior. The more recent someone has done something, the more likely they are to do it again. This has been proven time and time again within database marketing circles.
Recency is also the best predictor of customers that will respond to a marketing promotion. If you have a limited budget for promotion and have a customer list of 5,000 names, sort it by Recency and promote to the top 20%. You will save money and will be marketing to the folks that are most likely to respond.
Now suppose you have two customers and one of them ordered twice within the past 12 months and the other ordered four times within the past 12 months. Which one is more valuable? Well, you might say it depends on how much they spent and that would be somewhat true but forget about the amount spent for now. I would argue that the customer that had 4 transactions is more valuable than the one that had only 2 transactions. This concept is known as Frequency. The more frequent a customer, the more valuable they are. The best predictor of future behavior is past behavior.
Imagine now sorting your customer database by both Recency and Frequency. Now you have a list of customers sorted by not only the total number of transactions, but also the date of last transaction. Now you have an incredibly powerful indicator of future customer behavior. In fact, you can now reallocate your marketing dollars to the customers that are the most recent and have the highest frequency of transactions. These are the folks that will most likely respond to your marketing efforts.
A small business that sends the same piece of literature to every single customer every single time is just wasting money - period. By using Recency and Frequency data, you can budget a much larger percentage of your marketing dollars to the customers that are much more likely to respond. This is the best way to increase your profits while simultaneously reducing your marketing expenses.
Every small business needs to be taking advantage of these concepts. Recency and Frequency are two powerful tools you cannot afford to ignore!
What important information is your customer database hiding?
The Power of Recency and Frequency in Growing Your Small Business - To learn more about this author, visit Corte Swearingen's Website.
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Maybe you have heard the term Recency in connection with database marketing. While some small business owners are using it to their advantage, most others are not. The purpose of this article is to get you thinking about using the power of Recency to market to the right customers at the right time.
As a small business owner, who do you think would be more valuable; someone that visited your website just yesterday or someone that visited 8 months ago? If you said the person that visited your website yesterday, I would agree. The person that came to your site yesterday is more recent than the one that came 8 months ago. While this seems like a very simple concept, it is a very powerful tool you can use to increase your business profits.
Suppose that you placed a "most recent" transaction date in your customer database every time a customer made a purchase. In other words, if a customer bought your widget on 2/06/08, you entered this transaction date within their customer record, overwriting the previous transaction date. Imagine sorting your entire database in order of most recent transaction to least recent transaction. You would then have a list of customer names sorted by most recent to least recent transaction.
Recency is the number one predictor of future behavior. The more recent someone has done something, the more likely they are to do it again. This has been proven time and time again within database marketing circles.
Recency is also the best predictor of customers that will respond to a marketing promotion. If you have a limited budget for promotion and have a customer list of 5,000 names, sort it by Recency and promote to the top 20%. You will save money and will be marketing to the folks that are most likely to respond.
Now suppose you have two customers and one of them ordered twice within the past 12 months and the other ordered four times within the past 12 months. Which one is more valuable? Well, you might say it depends on how much they spent and that would be somewhat true but forget about the amount spent for now. I would argue that the customer that had 4 transactions is more valuable than the one that had only 2 transactions. This concept is known as Frequency. The more frequent a customer, the more valuable they are. The best predictor of future behavior is past behavior.
Imagine now sorting your customer database by both Recency and Frequency. Now you have a list of customers sorted by not only the total number of transactions, but also the date of last transaction. Now you have an incredibly powerful indicator of future customer behavior. In fact, you can now reallocate your marketing dollars to the customers that are the most recent and have the highest frequency of transactions. These are the folks that will most likely respond to your marketing efforts.
A small business that sends the same piece of literature to every single customer every single time is just wasting money - period. By using Recency and Frequency data, you can budget a much larger percentage of your marketing dollars to the customers that are much more likely to respond. This is the best way to increase your profits while simultaneously reducing your marketing expenses.
Every small business needs to be taking advantage of these concepts. Recency and Frequency are two powerful tools you cannot afford to ignore!
What important information is your customer database hiding?
The Power of Recency and Frequency in Growing Your Small Business - To learn more about this author, visit Corte Swearingen's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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John AlexanderJohn has taught keyword research and SEO skills to small groups of business owners and Webmasters from over 80 different countries world wide since 2002. John is also the Director of Search Engine Academy ; Co-director of Training at Search Engine Workshops offering live, SEO Workshops with his partner SEO educator Robin Nobles, author of the very first comprehensive online search engine marketing courses at SEO Training Online and the SEO Workshop Resource Center. I look forward to hearing from you! - Visit John Alexander's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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