Guest Post: Red Fish, Blue Fish: What Dr. Seuss can teach us about customer data

In Big Data, Featured on App, Loyalty & CRM by Vaughn Highfield

Kelly Hlavinka

“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

So what does Dr. Seuss have to do with customer data analysis? Embracing the fundamental diversity of the human race was the premise of his beloved children’s classic One Fish, Two Fish, Red Fish, Blue Fish. Similarly, embracing the fundamental differences among your customers and their changing relationships with your brand may allow you to enhance your loyalty strategy- despite the continual downward pressures on your budget.

I have the data, I have it all.
Advanced analytics? We’ve had a ball!
But using it means a budget call,
And that is where we hit the wall.
—Dr. Hlavinka

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 deceptively 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?

Let’s use Seuss as a metaphor. Chances are you have a set of customers with a high attrition risk. Perhaps their transaction frequency has slowed. Perhaps their average purchase size is shrinking. An attrition probability model can help flag those customers who have crossed into the red zone. Before they start shopping with your competitor, you have a chance to intervene. Let’s call these folks our Red Fish customers.

Conversely, you likely have a customer set with untapped potential. You might convince them to transact one more time this month. They might buy that hot new product you’ve introduced. A potential spending model can flag those customers who show the right buying signals and help you increase 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.

Implement an event-triggered communications system that sweeps your database for customers of both types, applies preset business rules, filters the opt-outs and initiates targeted offers. Performed on a monthly or quarterly basis, this process allows you to effectively focus your marketing budget. Re-score your customers often, and your loyalty strategy becomes dynamic rather than static.

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

Every enterprise operates in a patchwork quilt of varying marketplace pressures. Stretching our Seussean metaphor even further, you can create a system of Red and Blue markets. Markets where you’re especially vulnerable are Red Markets in need of specialized attention. Markets where the 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 Nirvana 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.

This post comes courtesy of Kelly Hlavinka, Managing Partner, Loyalty One Consulting Contributing Editor, COLLOQUY.