Sterling Marketing: Database analysis marketing


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Database analysis marketing by Will Lewis

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Sterling Marketing: Database analysis marketing

  1. 1. Customer Database Analysis & Marketing
  2. 2. What we’re covering <ul><li>Defining the customer </li></ul><ul><li>Developing customers </li></ul><ul><li>Segmenting your customers </li></ul><ul><li>Understanding your costs </li></ul><ul><li>Optimising performance </li></ul><ul><li>Data and Testing </li></ul>
  3. 3. Defining your customer
  4. 4. Who are we talking about? … . you know about and have bought from you … .. you know about and have never bought from you … .. you know nothing about and have bought from you You know nothing about and have never bought from you
  5. 5. Customer Acquisition vs Customer Development
  6. 6. How does a customer define you? <ul><li>Customers buy from you because </li></ul><ul><ul><li>You provide a product or service they want at a point in time </li></ul></ul><ul><ul><li>At a price they consider realistic </li></ul></ul><ul><ul><li>With a service that they find acceptable </li></ul></ul><ul><ul><li>And because they trust you (or at least don’t distrust you) </li></ul></ul><ul><li>Generally they won’t buy from you any more if any one of these elements is no longer true </li></ul>
  7. 7. Defining ‘a customer’ <ul><li>‘ Customer’ is a very broad concept </li></ul><ul><li>Many ways to define a customer </li></ul><ul><ul><li>buyer </li></ul></ul><ul><ul><li>multibuyer </li></ul></ul><ul><ul><li>active </li></ul></ul><ul><ul><li>best </li></ul></ul><ul><ul><li>lapsed </li></ul></ul><ul><ul><li>new </li></ul></ul><ul><ul><li>profitable </li></ul></ul><ul><ul><li>………… .. </li></ul></ul>
  8. 8. Defining ‘a customer’ <ul><li>‘ How you define ‘customer’ in your business depends on a variety of factors </li></ul><ul><li>Such as: </li></ul><ul><ul><li>Cost of recruitment </li></ul></ul><ul><ul><li>AOV </li></ul></ul><ul><ul><li>Purchase frequency </li></ul></ul><ul><ul><li>Lifetime value </li></ul></ul><ul><ul><li>Contact cost </li></ul></ul><ul><li>Final analysis – it’s all down to profitability </li></ul>
  9. 9. Developing customers
  10. 10. Developing customers <ul><li>You’ve just spent money on acquiring a customer </li></ul><ul><li>What do you do next? </li></ul>
  11. 11. Developing customers <ul><li>How do you ‘tempt’ customers to buy more? </li></ul><ul><li>How do you decide which customers are most likely to buy? </li></ul><ul><li>How do you decide on the most appropriate temptation(s)? </li></ul><ul><li>How do you decide how much to spend and when? </li></ul>
  12. 12. Developing customers <ul><li>The big advantages of marketing to customers are: </li></ul><ul><ul><li>You know who they are </li></ul></ul><ul><ul><li>You know what they bought </li></ul></ul><ul><ul><li>You may know what triggered the purchase </li></ul></ul><ul><ul><li>You certainly know the channel they chose to buy it through </li></ul></ul><ul><li>Developing customers is about using, and building on, this information to drive sales through a planned contact strategy </li></ul>
  13. 13. Developing customers <ul><li>Who’s going to give the best return? </li></ul><ul><li>Most common modelling is RFM </li></ul><ul><ul><li>Recency </li></ul></ul><ul><ul><li>Frequency </li></ul></ul><ul><ul><li>Monetary </li></ul></ul><ul><li>More complex modelling can refine this - but get the basics right first. </li></ul>
  14. 14. Segmentation & RFM
  15. 15. Segmentation <ul><li>You’d like to treat every customer as an individual.. </li></ul><ul><li>… .. but you can’t </li></ul><ul><li>So segmentation is a way of identifying groups of customers with similar behaviours </li></ul><ul><li>Typically the strongest indicators of customer performance are </li></ul><ul><ul><li>How recently they bought </li></ul></ul><ul><ul><li>How often they’ve bought </li></ul></ul><ul><ul><li>How much they’ve spent </li></ul></ul>
  16. 16. Segmenting your customers
  17. 17. Segmenting your customers <ul><li>Which groups contribute most - and least </li></ul>
  18. 18. Segmenting your customers <ul><li>And how many customers in each? </li></ul>95% of profitable customers?
  19. 19. Segmenting your customers <ul><li>And how many customers in each? </li></ul>95% of profitable customers?
  20. 20. Understanding costs
  21. 21. Understanding your costs: example Customer Mailing Orders:1,500 Demand:£96,900 CPO: £7.50 Affiliates Orders:315 Demand:£14,475 CPO:£5.97 PPC Orders:236 Demand:£11,575 CPO: £8.15
  22. 22. Understanding your costs: example Total Orders:2,051 Demand:£122,950 CPO: £7.34
  23. 23. Understanding your costs: example Customer Mailing Affiliates PPC
  24. 24. Understanding your costs: example Customer Mailing Affiliates PPC Orders 150 Order s 165 Orders 1,200 Orders 86 Orders 150
  25. 25. Understanding your costs: example
  26. 26. Understanding your costs: example Total Orders:1,751 Demand:£106,450 CPO: £8.60 Total Orders:2,051 Demand:£122,950 CPO: £7.34 ACTUAL LOOKED LIKE
  27. 27. Understanding your costs: example
  28. 28. Understanding your costs: example
  29. 29. Understanding your costs: Channel Matrix <- CHANNEL ->
  30. 30. Understanding your costs: Channel Matrix Knowing what elements of marketing spend are driving orders helps you to make decisions about where to spend your money
  31. 31. Understanding your costs: Channel Matrix
  32. 32. Understanding your costs: Channel Matrix
  33. 33. Understanding your costs: Channel Matrix
  34. 34. Optimising performance
  35. 35. Optimising customer performance <ul><li>For the vast majority of your customer base basic analysis tools will work fine. </li></ul><ul><ul><li>RFM analysis </li></ul></ul><ul><ul><li>Source of initial order </li></ul></ul><ul><ul><li>Possibly initial product category </li></ul></ul><ul><li>This will identify both </li></ul><ul><ul><li>Your existing ‘best’ customers </li></ul></ul><ul><ul><li>Those customer types which provide the best potential lifetime value and thus the ones you want to target and encourage </li></ul></ul><ul><li>Once you’ve got this data and acted on it you could look at more sophisticated modelling – it will fine tune the boundaries but is unlikely to change the general approach </li></ul>
  36. 36. Optimising customer performance RFM <ul><li>Monitor the structure of your database </li></ul><ul><li>If the numbers in the top left are rising you’re winning </li></ul>
  37. 37. Optimising customer performance RFM <ul><li>RFM would lead you to focus on the top left hand </li></ul><ul><li>More sophisticated modelling, such as regression analysis, might find subgroups to rule in or out linked to other variables </li></ul><ul><li>But this is more likely to impact the yellow areas than any other </li></ul>
  38. 38. Optimising customer performance Retention
  39. 39. Optimising customer performance Retention Retention is critical – the more customers you can get to reorder – profitably, of course – the fewer you have to recruit or the faster you can grow
  40. 40. Optimising customer performance Retention
  41. 41. Optimising customer performance Modelling your business
  42. 42. Data & Testing
  43. 43. Data & Testing <ul><li>Data is key to understanding and managing costs and performance </li></ul><ul><ul><li>Collection </li></ul></ul><ul><ul><li>Structuring </li></ul></ul><ul><ul><li>Analysis </li></ul></ul><ul><ul><li>Reporting </li></ul></ul><ul><li>Testing is critical to decide what works better (and best) </li></ul><ul><ul><li>There is no right answer </li></ul></ul><ul><ul><li>Customers’ behaviour changes in response to what you, your competitors and the outside world does to them </li></ul></ul><ul><li>Without accurate collection and correct structuring of data </li></ul><ul><ul><li>Testing is increasingly difficult </li></ul></ul><ul><ul><li>Results are inaccurate </li></ul></ul><ul><ul><li>Grey areas become more, rather than less, murky </li></ul></ul>
  44. 44. Sterling ‘Insight’ <ul><li>‘ Insight’ brings together retail consulting and data analytics. </li></ul><ul><li>‘ Insight’ integrates existing data and then gives a ‘single view’ of customer and campaign performance by channel. </li></ul><ul><li>‘ Insight’ provides ‘retrospective’ analysis to allow history to be built in the present. </li></ul><ul><li>‘ Insight’ delivers the results to you - based on your requirements, measured against your plans and your KPI’s. </li></ul><ul><li>‘ Insight’ shows the ‘health’ of your business </li></ul><ul><ul><li>where sales can be increased. </li></ul></ul><ul><ul><li>how to profile customers and use that process to boost revenues. </li></ul></ul><ul><ul><li>where marketing spend could be better deployed. </li></ul></ul><ul><ul><li>what will happen in the future if current trends are maintained. </li></ul></ul><ul><li>‘ Insigh t’ is fundamentally an open platform; so your businesses can have access to the same analytics and reporting as our largest clients – at an affordable price. </li></ul>
  45. 45. Thank You For more information regarding how ‘Insight’ can help your business [email_address] 020 7386 0856