Applied AnalyticsCount your customers - multiply your sales!

Introduction

•What is analytics?

•Basic ‘customer scoring’

•Loyalty and Defection

•Cross and Up-Selling

•Advanced Techniques

What is analytics?

•The scoring and ranking of customers and products based on key ‘metrics’

•Primarily used to segment customers and create highly relevant, targeted offers into your customer base

•This information is readily available from the accounting system

Basic Customer Scoring

•Three key ‘metrics’ or measurements used in scoring:

•Recency - When a customer last purchased

•Frequency - How often a customer buys

•Monetary - How much a customer spends

Customer Scoring (contd.)

•Break large customer bases down into deciles or quartiles

•Apply further scoring to each decile to adjust number of customers per campaign

Recency

•How recently a customer bought is a good indicator of loyalty

•Campaigns can be created to re-invigorate customers e.g. create an offer to all those who have not bought in the last 90 days.

•Can also be used to prevent possible customer defection

Frequency

•Determine your best customers from those that buy most regularly

•Or target a campaign specifically to infrequent buyers

Monetary

•Simply put, those customers that spend the most!

•Typically scored independantly of the Recency and Frequency metrics as it can ‘skew’ data

Cross and Up-selling

•Determine which customers have bought which products and measure buying ‘patterns’ within your stock ledger

•Use the ‘amazon’ model; Customers who bought X also bought Y - at most critical time - just before purchase

Advanced Techniques

•Latency

•Customer Lifetime or Lifecycle value

•Automatic ‘Trigger’ and exception marketing

•Combine one or more metrics to generate a ‘Customer Value Portfolio’

Latency•Latency is the amount of time between

each customers’ purchases

•Each interval is measured (days between purchase 1 and 2, 2 and 3 etc.)

•An ‘average’ can be applied to produce a ‘trigger’ campaign

•Use latency for loyalty and to prevent customer defection

Customer Lifetime/Lifecycle

Value•An extremely important metric for the acquisition of new customers

•Lifetime is the length of time a customer remains a customer and the total revenue in the ‘lifetime’

•Once a ‘value’ has been obtained this can be used to determine the budget to incentivise new customer acquisitions

Trigger Marketing

•Use triggers based on exceptional behaviour or to follow patterns

•e.g. average latency determines that customers make second purchase 21 days after first purchase

•Setup a trigger 21 days from when customer buys to send them an offer

Customer Value Portfolio

# Sales# Sales > 180 > 180 DaysDays

91-180 91-180 DaysDays

61-90 61-90 DaysDays

31-60 31-60 DaysDays

< 30 < 30 DaysDays

> 25 > 25 SalesSales

12170 543 121 169 2053

10-24 10-24 SalesSales

7905 432 71 73 1452

4-9 Sales4-9 Sales 4433 299 32 58 817

3 Sales3 Sales 569 57 0 15 173

2 Sales2 Sales 617 51 2 10 143

1 Sale1 Sale 382 33 6 7 128

Potential Value

Potential Value

Cu

rren

t V

alu

eC

urr

en

t V

alu

eLow potential Low potential

valuevalueHigh current valueHigh current value

Grow these Grow these customerscustomers

Low potential Low potential valuevalue

High current valueHigh current valueGrow these Grow these customerscustomers

Low potential Low potential valuevalue

Low current valueLow current valueSpend money Spend money

here?here?

Low potential Low potential valuevalue

Low current valueLow current valueSpend money Spend money

here?here?

High potential High potential valuevalue

Low current valueLow current valueGrow these Grow these customerscustomers

High potential High potential valuevalue

Low current valueLow current valueGrow these Grow these customerscustomers

High potential High potential valuevalue

High current valueHigh current valueKeep these Keep these customers!customers!

High potential High potential valuevalue

High current valueHigh current valueKeep these Keep these customers!customers!

Summary

•Your accounts system is the key to analytics data

•Measure the basic metrics first and run small scale trial campaigns

•Use technology as much as possible, email is a cheap and effective way to communicate

•More info? e: gary@hybridmarketer.com