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Customer-Driven Marketing VS Product-Driven Marketing. Where Do You Stand?

And the case for a best-of-both-worlds approach

In retail, there’s a somewhat clear separation between two main marketing strategies:

Product-Driven and Customer-Driven.

They differentiate in focus; Product-Based marketing centers communications around items purchased, their availability, and their usability. Customer-Based marketing is using data-driven customer- segments to determine the most effective communication.

Companies may choose to use one method or both depending on their marketing philosophy and the types of goods that they sell.

Let’s understand the two strategies’ pros and cons and look at the combinations of them – all while placing the client at the center.

Product-Based Marketing

Here, the main idea is that if a customer expresses interest in a particular product (based on purchase or browsing behavior), the marketer should probably target them with ads promoting a similar or related product.

The logic is straightforward. We identify an interest and want to “hunt” it.

But, when putting the client at the center, more questions come to mind. One, for example: Should a customer who never made a purchase, and a VIP customer, receive the same communication after browsing the same product?

Customer-Based Marketing

You can answer the question above by creating a relationships between the product, the brand, and the consumer.

It starts with identifying target customers and building a profile describing how to reach and engage each of those customer-types. This strategy places the customer at the center ensuring that they have the most personalized customer experience possible.

Let’s say we want to target a group of customers that missed its expected purchasing cadence (or what we call “Churn Factor” at Optimove). You should probably send them a message that specifically addresses this issue. For example, a “We Miss You” email, a discounted offer, or an invitation to see the newest collection could all work. This communication will be based on the customers’ behavior, regardless of the specific items they browsed.

Let’s Get Along

In this case, there is a way to combine the two strategies and get the best of both. So, if you want to put the customer at the center, but still address the product in relation to the customer – we have a few suggestions for you.

First, we should understand who the customer and persona we want to target are, by basing it on the following:

  • Lifecycle Stages

I.e., a new customer who just purchased VS a churned customer who did not purchase in the past year.

  • Attributes

I.e., customers with the highest loyalty points, customers from a specific country, age, income, etc.

  • Engagement History

I.e., Customers who opened/clicked on a specific email (or other personalization factors to take into consideration).

Then, to these Customer-Based points, we add the Product-Based touch.

  • Dynamic Tags

Use them to populate a single HTML template with relevant information such as “Username,” “Location,” “Preferred Category,” or “Favorite Brand. It’s a handy way to customize a fully personalized letter to each customer (that also saves you time, resources, and money as you only have to build one template).

Such a dynamic tag can include customer-driven information like “First Name” or “Email Address,” with which you can truly create a feeling of personalization for your customer. Do note that a dynamic tag can also support product-related behavior such as “Last Product Viewed,” “Last Product Purchased,” “Most Valuable Product Purchased,” and more. You should definitely be taking advantage of these essential factors when communicating with your clients.

  • Conditional Formatting

Conditional formatting puts the marketer in the driver’s seat as it allows you to personalize all your content in a single template. For instance, it shows each different customer images, offers, products, or links based on their unique characteristics such as gender, recent purchases, LTV, or Risk of Churn.

As such, a VIP customer who purchased product X should perhaps receive a personalized email expressing how much you value them. You can send a sneak peek, VIP sale, early reveal, special promo – all using the relevant product images to entice them. I believe you got the drift.

  • Recommendation Emails 

A recommendation model takes specific characteristics per customer and, in return, shows them the product they are most likely to engage with. We suggest you use the relationship and data you have on the customer first and then plant the seed of recommendation.

In other words, a recommendation model might not make a lot of sense for a One-Timer, as we only have one purchase to base the model on. But perhaps a churned customer that has not purchased in a year should receive an email along the lines of “It’s Been a While” (Customer Driven), which will be supported by three recommended items that might bring them back (Product Driven.)

Final Thoughts

While there are many products out there, each client is unique and wants to be addressed this way. Hone your marketing to celebrate the uniqueness of each client and their relationship with your product or brand. When clients (or potential clients) feel that the content and timing of the communications makes sense to them, they will appreciate the message (even subconsciously), which might be the most significant driver towards purchase.

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