Marketers love to see those return-on-investment (ROI) numbers creeping upwards. The bigger the margin, the bigger their smiles seem to get. However, those numbers won’t inch upwards on their own. Good marketers know there’s more to successful campaigns that gut feelings and intuitive hocus pocus. These days, marketers need analytics and science if they want to sell their products.
Consumer preferences are measurable
And you don’t have to send out surveys to find out their preferences, which is lucky because so few people feel like filling such things out. Marketers can “mine” information from social media interactions, past purchases, and products viewed on the website. Rajkumar Venkatesan, a research professor of Business Administration at the University of Virginia Darden and writer for Bloomberg Businessweek, siad, “If I find out what someone’s preference is today, I can predict his or her actions tomorrow—and try to influence the future behavior I anticipate.”
He also related the results of a research study he conducted at a pharmaceutical company. He said, “We found that by knowing physician drug preferences, we could tell early on if a doctor could be retained as a customer. . . . That information also allowed the sales force to focus on high-potential doctors based on preferences.” Marketers could employ the same strategy by analyzing user data and focusing on those who seem to have interests similar to specific products.
Coupons work in more ways than one
The obvious ROI for a coupon is when a person chooses to purchase a product they wouldn’t have bought otherwise, had they not received the coupon. However, Venkatesan said his research team has also found a second benefit of coupons: Even nonredeemers who were emailed or snail mailed coupons were more likely to make a purchase than someone who received nothing at all. In a way, coupons act as good faith actions. Customers appreciate and respond to these actions, even if they don’t take you up on your original offer.
Loyalty rewards less necessary in crowded areas
Though it sounds counterintuitive, the more competition retailers have in the are, the less loyalty lures you might have to employ. Venkatesan explained, “One might think the loyalty rewards a store needs to offer increases with the density of stores in a neighborhood. Analyzing the data, however, we find that the opposite is true. Stores can in fact provide fewer rewards if several other competing stores are nearby.” After all, people will likely already be out and about shopping—that’s the point of a mall layout. You can do less to reel them in if they’ve already stepped into your pond.
Applying this to online markets is easy, too. You just have to figure out what complementary or related items consumers might be looking for and then establish affiliate marketing between companies or blogs to help people find what they’re looking for.
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Source: businessweek.com/articles/2014-06-23/the-new-science-of-marketing
