Insider Marketing Tips

If you record the date of every customer transaction in your database, you can use the power of Latency to help improve your customer retention.

Latency is simply the average amount of time between customer transactions. You’ll typically find the Latency between the 1st and 2nd purchase to be different from the 2nd & 3rd purchase, the 3rd & 4th purchase and so on.

For example, if you own a retail business and find that the average time between the 1st and 2nd purchase for all your customers  is 3 weeks, anyone taking longer than 3 weeks to make their 2nd purchase is deviating from the average customer behavior.

If you send a promotional communication to customers that have just crossed over this “2nd purchase latency” period, you have a very good chance of tipping these customers into making that all important 2nd purchase. This is a smart way of building a customer retention strategy.

Of course, not everyone will respond to a latency-based promo, but that’s simply the nature of direct marketing. The smart thing about using latency is that it helps you deliver your message to the right customer at the right time.

Start Measuring Your Customer Latencies
So, what’s the best way to start promoting to your customers based on Latency?

To keep things simple, begin by calculating the average time between the 1st & 2nd purchase of all your customers together. The, calculate the Latency between the 2nd & 3rd purchase and so on.  Here’s an example of what a latency table might look like.

Transaction &  Latencies
1st & 2nd purchase  30 days
2nd & 3rd purchase  20 days
3rd & 4th purchase   15 days
4th & 5th purchase   90 days
5th & 6th purchase   150 days

The first thing you may notice is that you have a lot of customers that purchase from you once and then never buy again. You may also find out that you don’t have a lot of customers that have purchased from you more than 3 times. That is good information to know as well. You certainly can’t design an effective customer retention strategy if you don’t know the latency characteristics of your customers.

Looking at the above table, we can say that any customer that passes the average number of days for a particular transaction, and does not make a purchase, is deviating from the average customer behavior. Sending them a promotion right after a particular latency period passes is smart marketing. It’s sending the right promotion to the right customer at the right time.

Latency Patterns
Another interesting thing you have noticed from the above latency table is that the latency decreased for each purchase up to the 4th purchase and then it drastically increased after that. If this is what my customer purchase latency table looked like, and assuming I had a lot of customers that only purchased once, I would have 3 questions to resolve.

1. Why does the latency take a drastic increase after the 4th purchase?

2.  What can I do to reduce the latency between the 4th and 5th purchase?

3.  How can I reduce the number of customers that just make a single purchase and then never come back?

Had I not created a latency table, I might have never even thought of the above questions. Now, having knowledge of my latency data, I might create a welcome package for new customers with an incentive to make a 2nd purchase.

I would also look at ways I might decrease the latency between the 4th and 5th purchase. Perhaps a larger incentive communicated at day 25 or 30.

Another advantage to using Latency data in your marketing program is that it will tell you the best time to communicate with your customers. Do you send the same marketing communication piece to all your customers regardless of where they are in the purchase cycle? Using Latency, you only promote to the customers that pass their Latency periods, allowing you to only spend when you need to.

I recommend you take a little time to monitor your customer purchase latencies. It’s the smartest and most effective way to reduce your spending while increasing your profits and customer retention.

Corte Swearingen has been a marketing professional for 20 years and is the creator of the Integral Marketing System, CEO of SmallBiz Marketing Tips and the The SmallBiz Marketing Blog.

In today’s world, your business website is an essential part of your company’s development. Simple word of mouth is a thing of the past. Now more than ever, companies are relying on the success of their websites to account for a significant portion of their sales. What are some ways that a company can further legitimatize their website? Here we will find out by going over some simple Internet Marketing Basics.

Our first Internet Marketing Basic is to create an email campaign. This will help you to spread your company’s product or services popularity to those who want to know more about it. Promote your business everywhere you go and with every email you send. Even if a person is disinterested in what you have to offer, they will still know about your service or product, and that alone will allow your company’s reputation to begin to spread and grow abundantly.

Our next Internet Marketing Basic is to really spend the time and money necessary on your business website, possibly even adding in audio or video media for your customers. This will enhance the appeal of the product of service you are offering. Remember, your website is your image. Your website will provide the first impression between your business and your potential customer. When you go to a job interview or plan to meet someone for the first time, you always make a point to get extra nice looking as to make a good first impression. The growing relationship between you and your customer is no different, and your website will do the meeting and greeting for you. Make it look nice and legitimate.

The next Internet Marketing Basic is to take full advantage of pay per click advertising. This makes the very process of buying from your site quicker, and the most valued thing in today’s world is time. Pay per click will be an added expense on your business, but it is the fastest way to get your website exposed to your targeted customer.

The next tip is to strategically plant your business banner or advertisement on websites that will be sure to catch the eye of your target demographic or audience. This not only pin points your desired customer base, but saves you wasted and unnoticed advertisements, which in turn saves you money. Remembering these simple but useful Internet Marketing Basics will constantly give back to your business and you.

Thinking about starting an online business?  Don’t wait any longer!

Internet-BasedBusiness.com will show you easy and honest techniques on how to be a success on the Internet.