The notion that a smart sales and marketing strategy distinguishes between suspects–consumers who MIGHT turn out to become profitable customers–and prospects–consumers who are highly likely to turn into valuable clients–is an old idea. Great sales people possess this intuition. Great marketers use customer insight, robust analytics and customer segmentation to do this more scientifically.
If you are anything like me, you may have noticed a lot of attention being given to companies that are posting seemingly impressive customer statistics.
The hot social media sites–from FourSquare to Yelp to Twitter to Facebook–have signed up millions of users (in the case of Facebook reportedly over 500 million!). But how many of these folks are actually buying anything?
Members-only “flash-sales” sites use free-shipping and high value gift cards to coax existing members to refer a friend. Are these newly acquired members turning out to be customers with a positive lifetime value, or is this mostly a land-grab to keep private equity money flowing and high-end vendors interested?
Groupon recently executed a promotion with Gap during which a reported 441,000 customers spent $11MM in just one day. That particular promotion offered $50 in merchandise for just $25. Most press reports deemed it “successful.” Really?
Successful in generating awareness? Apparently. Successful in acquiring a significant number of marketable e-mail addresses? Most likely. Successful in driving short-term revenue? Clearly. Successful in creating buzz about Groupon? You betcha.
But how many of these consumers were promiscuous shoppers, only enticed by the deep discount? And let’s face it, just about any reasonably desirable brand could generate an impressive incremental sales lift by cutting their prices in half.
Most of these hot brands are still dealing in the world of suspects. Only through time and more rigorous customer analysis will they know they are gaining prospects.
In the meantime, I remain suspicious.
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