The document describes "L-O-C-A-L" analytics, a methodology for data mining and customer segmentation. It uses five variables - Last time (L), Often (O), Cash or Credit (C), Analytics (A), and Loyalty (L) - to analyze customer behavior and identify the most loyal customers. By targeting communications only to the most loyal "L-O-C-A-L targets", the document shows merchants can improve marketing return on investment by capturing more buyers with fewer mailings compared to a mass mailing approach.

1. “L- O- C- A- L” Analytics™
“Keeping It Local”
Merchant Solutions

2. What is “L- O- C- A- L” analytics?
• If you don’t use “L- O- C- A- L” analytics it’s good
news because it will definitely reveal important
and actionable information for your business
• “L- O- C- A- L” analytics is a methodology we use
for data mining and customer segmentation
with the purpose of identifying certain customer
behavior to improve your business.

3. We uses five “L- O- C- A- L” variables to answer
very important questions for your business:
L = Last time (Answers the question: when is the “Last time”
a customer made a purchase from your business?),
O = Often (Answers the question: How “Often” a customer
makes a purchase from your business?)
C = Cash or Credit (Answers the question: How much a
customer spends in your business?).
A = Analytics ( We analyze your customers and assign a
ranking number of 1,2,3,4, or 5 (with 5 being highest) for
each of the L- O- C parameters above.
L = Loyalty (We then create a “Loyalty” relationship with you
and your customers).

4. How to use “L- O- C- A- L” analytics
We put together the first three variables: L- O- C
• LAST purchase
• How OFTEN they purchased
• CASH/CREDIT they spent
We then score your customers referred to as
“L- O- C- A- L” Targets

5. A= analytics chart. We then analyze
your “L- O- C- A- L” data
Marketing and Sales Dashboard – Profitability and Market Performance Scorecard

6. L = Loyalty - We then target your
L- O- C- A- L (most loyal) customers
Comparison between Loyal customers and Non-Loyal customers
• Non-Loyal Customers: We conducted a case-study and mailed
to all 50,000 customers (mass) in the merchants database
• Loyal Customers: We also mailed to only customers in the
L- O- C- A- L “target” zone, with response rates that were at
least 8.3%.
• Prior to “L- O- C- A- L” analytics a merchant cannot have
known which of the 50,000 customers to target.
• Now it allows the merchant to compare the mass mailing or
“no targeting” approach to a targeted mailing based on
L- O- C- A- L analytics

7. The Results?
“L- O- C- A- L” Profitability Analytics
Mass Mailing Targeted “L- O- C- A- L” Mailing
(a) A total of 22,731 customers were L- O- C- A- L” targets that had a response rate greater than
0.083
(b) The “L- O- C- A- L” targets with a response rate greater than 0.083 contained 3214 buyers
•Return on marketing Expenditures = Gross Profit/ Marketing Expenditures

8. “L- O- C- A- L” Results
• “L- O- C- A- L” analytics shows that a mass mailing approach to the
50,000 customers yields a small gross profit of $2,132 or 2.62% of
gross sales.
• In contrast, targeting only those customers likely to respond
(“L-O-C-A-L TARGETS”), yields a gross profit of $7918.5 or 13.69% of
gross sales.
• The L- O- C- A- L approach improves profitability by capturing 71%
of the buyers (=3214/4522) while mailing only 46%
(=22,731/50,000) of customers.
• The mass mailing approach spends $25,000 on marketing (i.e. cost
of the mailing) to generate $2,132 – a return on marketing
expenditures of 8.53%.
• In contrast, the “L- O- C- A- L” targeted approach spends
$11,365.50 on marketing to generate $7918.50 – a return on
marketing expenditures of nearly 70%.

9. The next phase is to
Build Your Continuity Program
• This phase sends the consumer a fresh offer
after the initial threshold has been met.
• Now we can build an incentive to continue
this behavior or build the next threshold offer
• We’ll target either the LAST time they
purchased, how OFTEN they purchased, or the
Cash/Credit amount they spent to tailor the
offer and thresholds.