Using Math Marketing to Find And Convert Your Most Profitable Customers
“A rose by any other name would smell as sweet,” as Mr. Shakespeare reminded us in one of his most famous plays. When it comes to merging the traditionally disparate practices of quantitative analysis and marketing in order to improve marketing ROI, a lot of different terms have cropped up over the years to describe the field itself. Some of those terms, as well as some of the specific techniques used in this field, are:
- Business intelligence
- Database marketing
- Marketing analytics
- Marketing ROI analysis
- Econometric modeling
- Lifetime value analysis
- Market segmentation
- Customer analytics
- Predictive analytics
- Big data
Another term that is coming into popular use is math marketing, which perhaps is the most descriptive, straightforward, and general of these terms.
The truth is, when applied to marketing, all of these techniques and tools have in common one thing: they take a scientific, tidy, left-brained approach to improving what has traditionally been the very creative, messy, right-brained field of marketing. And, while math marketing has been relegated to the regal halls of Fortune 100 companies with access to big budgets, access to reams of data and readily-available supercomputers, these das any size firm can directly benefit from engaging in math marketing. In fact, it may be the main differentiator between companies that succeed and fail in this decade.
Marketers, Meet Your Whole Brain
The related fields of marketing and advertising have always been about being creative and clever: employing clever product names, attractive packaging, memorable taglines and catchy advertising to grab the attention of your prospective customers. Media channels of choice were mailed-out catalogues, as well as TV, radio, magazine and newspaper ads. Throw in a billboard or two and you pretty much understand what makes traditional marketing tick.
The winners in the traditional marketing world – those who converted the most new customers while spending the least amount of money – were defined by their wit and having a healthy dose of understanding human psychology. In short, right-brained thinking always won out. Think AMC’s hit show “Mad Men” and you will have a pretty good picture of traditional advertising.
Today, things are different. Nowadays, the best marketers are also tapping into their left brains: the place where math and statistics live, work and play. They are doing so for three reasons: 1. More than ever before, there is an overwhelming amount of data available to them – data about their customers, their prospects, and the competitive marketplace; 2. Anybody who has access to even a basic personal computer can effectively crunch this data to gather valuable new marketing insights; 3. Marketing campaigns themselves – which are the results of all of that analytics work – are now imminently track-able, with results that can be fed back into the data-drive models that created them in order to squeeze even more profit out future campaigns.
In short, it’s math marketing for everybody.
Math Marketing And Your Most Profitable Customers
You can leverage your existing customer data to find out very specific things about them – and about people most like them. Such an analysis can help you to market more effectively to your existing customers. And, it can help you to build models of your best customers in a way that helps you identify the prospects in your target market who are most like your best customers.
Why does this matter? Why should you bother to engage in math marketing? Here’s why: because your competitors are already doing it. Your competitors – large and small – are figuring out ways to spend less money while marketing and advertising in ways that capture more new sales (i.e., converted customers) for each marketing dollar spent.
Now that math marketing techniques are well within the budgetary reach of even small and medium-size companies, there is no excuse to continue to miss out on reducing your marketing costs and improve your conversion rates by 2-3 times or more.
The Tools Of Math Marketing
Math marketing is a broad field that encompasses the use of any number of tools, techniques, and methodologies. The common thread of all math marketing techniques is to reduce marketing costs while improving the conversion rate (i.e., the percentage of prospects who actually make a purchase among those who have seen or heard your marketing message).
Most or all math marketing techniques involve some combination of the following components:
- Raw customer and transaction (i.e., order history) data; this can also be broadened to include, Website analytics, trade area demographics/psychographics, and/or competitors’ product or service data
- A database to store that data, usually residing on a local personal computer, on a shared or dedicated server, or in the cloud
- Spreadsheet software employing mathematical or statistical models, which are used to extract, manipulate and organize the raw data into meaningful results
- Newly-created or revised marketing campaigns or tactics, which serve as forum for reflecting the results of your analysis “out in the real world” and then tracking, measuring, and acting upon those results in a profitable way
Notice how none of these required tools involves making more of an investment than most companies spend on a single month’s worth of online advertising, a direct or radio ad campaign, or even printing several hundred brochures. In other words, you do not need to be Proctor & Gamble or IBM to benefit from math marketing. Instead, you just need to realize that NOT engaging in math marketing means risking your joining the ranks of companies with great ideas who were yet unable cost-effectively attract and retain enough customers to bring their business to the next level – or even to remain in business at all.