Are We Prepared

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Are We Prepared?

• The Future of Information

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Agenda

• Perspective data to information
• RIO in customer analytics
• Case study combine RFM segmentation
• Tomorrow

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Connecting People and Information

• http//www.inma.org/microsoftvideo.cfm
• http//www.youtube.com/watch?vcL9Wu2kWwSY

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The Customer, IS THECompetitive Advantage

• Leverage analytics to drive
• Traffic
• Frequency
• Results
• Increase customer retention by
• Building value from meaningful connections
  communication
• Grow customer acquisition by
• Identifying best targets
• Communicating through their channel prefs

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The McKinsey Quarterly

• January 2009
•     The ability to take datato be able to
  understand it, to process it, to extract value
  from it, to visualize it, to communicate
  itthats going to be a hugely important skill in
  the next decades ...
• Because now we really do have essentially free
  and ubiquitous data.
• So the complimentary scarce factor is the ability
  to understand that data and extract value from
  it.
•     I do think those skillsof being able to
  access, understand, and communicate the insights
  you get from data analysisare going to be
  extremely important.

The McKinsey Quarterly, Hal Varian
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Today Focus on What You Can Control

• In the recession of 2009, marketers will be
  making cuts almost across the board, and will
  seek safe harbors and cost-efficient
  alternatives. Jack Myers, Jack Myers Media
  Business Report, October, 13, 2008
• There will still be people out there buying home
  improvement products, and the trick is to
  identify them and what triggers them to purchase.
• We want to help consumers be certain theyre
  making smart choices when every dollar they earn
  counts. A.G. Lafley, chief executive, Procter
  Gamble, as quoted in The Wall Street Journal,
  October 15, 2008

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Model Business Success With High-ROI Customer
Analytics

• RFM Segmentation
• The old RFM formula has got to be at the top of
  the list of information a retailer must know
  about its existing customer base.
• (RFM how Recently the customer has shopped,
  how Frequently the customer shops, how much Money
  the customer spends.)
• RFM drives a lot of behavior, and beyond that,
  a retailer should understand where customers are
  in their life stages including age, income and
  family status.
• This creates a segmentation approach to
  understand new customers, and it marries well
  with RFM for existing customers. 
• Jeff Milgroom
• Senior Vice President of Nielsen Claritas
  Analytical Consulting Services

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Combinewith RFM

• Customer
• Profiles
• Life stage
• Age
• Income

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Case Study

• Major hardware/home improvement retailer
• 11 local locations
• 64,319 unique customer records w/in our regional
  market area
• 54, 518 or 85 w/data append
• RFM score included

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RFM

• RFM analysis, is a simplistic scoring of the
  customer database
• Scores monitor change in future customer valuation

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Client Custom RFM (1-30)

• 2008 customer database
• RFM Scored

Customer Volume
1
30
Value
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Customers - Quintile Spending Groups
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Customers RFM Definition

• 2008 customer database
• Customers by Spending

34 of customers
49
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Value
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Beyond RFM

• Customer ID
• Recency/Frequency/Monetary
• ADD
• Demographic Age/Income
• Life Stage Prizm profile

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Primary Variable Appends

• Length of Residence
• Prizm Life Stage
• Age
• Income

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Data Mining Model
Ranks the relative importance of key descriptive
data elements
Length of Residence
Client Customer File
Life Stage
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Relationship to Media Channels
Integrated Communications
Bee print customers 13,950 56 Sacbee.com
customers 11,277 45 Both print online
7,555 30 Net unduplicated 17,672 71 MVP
Shared Mail HHlds 7,307 29
Individual Store
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Client Meeting

• Understand/Learn
• ID of customer
• ID customer value segments
• Review RFM segmentation analysis
• Strategy
• Reinforce the value of marketing channels
• Focus on segments for direct, varied messaging
• Sell our unique position to deliver integrated
  plan
• Continuous monitoring/adjusting/meeting

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Customer Data-Driven Plan
Multi-Channel Communication Plan
Mix mass and targeted marketing vehicles for
flexible, variable messaging designed to appeal
to customers that drive your business.
Knowledge of the current and prospective
customers allows us to carry a highly effective
and efficiently balanced program to the
marketplace.
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Client Customer Analysis March 2009
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Hardware Store Customers Age Profile
Customer record integration data append.
Database System Diagram
Bee Subs
sacbee .com
MKT
Client File
Hardware Store - Confidential
Source Customer File. Claritas
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Hardware Store Customers Age Profile
Fully 76 of YOUR customers are over the age of
45 a concentration 34 higher than the market
average.
Hardware Store - Confidential
Source Customer File. Claritas
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Hardware Store Customers Income Profile
A full 38 of the YOUR customer group earn over
100,000 per year an index of 145 to the market
average for annual household income.
Source Customer File. Claritas
Hardware Store - Confidential
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Your Customer Age/Income Profile
Among your customers the segments highlighted in
red (index of 125 to the market average) comprise
45.8 of all of YOUR customers. Those highlighted
in green (index is between 100 and 124)
constitute 20.1 of YOUR customer base. In total
these two groups represent 65.9 of YOUR
customers.
This grouping comports to our earlier findings
regarding age and income independently. Your
customer base is affluent and slightly older than
the market.
Index of 125
Index of 100-124
Source Customer File. Claritas
Hardware Store - Confidential
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PRIZM Lifestage Segmentation
Younger Years
Family Life
Mature Years
26.7 of Sacramento
33.4 of Sacramento
39.8 of Sacramento
Under 45 Singles Couples No Children
Between 25 and 54 Families with Children
Over 45 Singles Couples No Children
Y1 Midlife Success 12.3 of Population
F1 Accumulated Wealth 4.9 of Population
M1 Affluent Empty Nests 11.4 of Population
Y2 Young Achievers 11.9 of Population
F2 Young Accumulators 13.4 of Population
M2 Conservative Classics 15.4 of Population
Y3 Striving Singles 2.5 of Population
F3 Mainstream Families 12.0 of Population
M3 Cautious Couples 8.85 of Population
F4 Sustaining Families 3.15 of Population
M4 Sustaining Seniors 4.2 of Population
Source Scarborough 2008R2
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Hardware Store Customers PRIZM Lifestage
In keeping with the earlier findings regarding
the age and affluence of YOUR customer, it is not
surprising that the M1 and M2 groups constitute
29 of the total file. Those Lifestage groups
appearing more often among YOUR customer group
(Y1, F1, F2, M1, M2) than the market at large
comprise 69.7 of customers.
Under 45 Singles Couples No Children
Between 25 and 54 Families with Children
Over 45 Singles Couples No Children
Source Customer File. Claritas
Hardware Store - Confidential
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Hardware Customer PRIZM Monetary Value
Comparing the monetary value of each Lifestage
group finds over concentrations in the Y1, F2 and
M1 segments. Underscoring the importance of these
segments.
Under 45 Singles Couples No Children
Between 25 and 54 Families with Children
Over 45 Singles Couples No Children
Source Customer File. Claritas
Hardware Store - Confidential
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Hardware Store Customers PRIZM Lifestage
We can also use the PRIZM Lifestage segmentation
model to assess YOUR customer profile against
that of home improvement shoppers in general as
well as those inclined to make larger purchases.
Although there is perfect alignment between the
segments that over-index for shopping at Your
stores and those that are strong shoppers of the
home improvement category, this serves to
underscore how important it is to market to these
groups in this highly competitive climate.
Source Customer File Scarborough Claritas
Hardware Store - Confidential
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Competition Is Strong Among Top Groups
As this chart demonstrates even those groups with
the highest propensity for shopping at Your
Stores M1, M2 are not as likely to shop major
competitors. However the remaining groups all
have preferences for other home improvement
stores that exceed yours. As such messaging to
these groups should keep these retailers
strengths and media usage top of mind.
YOUR Index
Comp. 1
Comp. 2
Comp. 3
Comp. 4
Comp. 5
PRIZM
104
115
132
88
138
123
Y1
112
137
109
201
150
93
F1
119
108
96
113
53
93
F2
231
116
129
97
72
96
M1
179
107
116
148
95
113
M2
117
93
73
187
79
102
M3
Source Customer File Scarborough Claritas
Hardware Store - Confidential
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Hardware Store Customers Bee Products

• Among YOUR Customers we see the following
• 40 are current subscribers
• 21 are both subscribers and sacbee.com
  registrants
• 36 are sacbee.com registrants
• 55 are Bee Print or Online customers
• 45 are MVP (shared mail) recipients

Source Customer File. Claritas
Hardware Store - Confidential
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Hardware Store Customers Spend GRID
Print Only
Shared Mail
Print AND Online
Online Only
Source Customer File
Hardware Store - Confidential
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Hardware Customers Utility GRID
Source Customer File Scarborough Claritas
Hardware Store - Confidential
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High-Value Customers Channel Relationship
Customer Life Stage Relationship to Channel
Customer Life Stage Relationship to Channel
6 Life Stages Index high for being your customer
and ours


Represent 73
customer revenue
customer revenue


Additional opportunity exists with Y2,
mid-income younger segment thru our Internet
channel
Source Customer File Scarborough Claritas
Hardware Store - Confidential
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Optimized Channel Delivery Customer Use
Right Customer
- Customer profile(s) - Match profile within
X-Miles of your location
Right Channel
Preferred Channel
- Efficient Mix of Mass Targeted Reach
Vehicles - Newspaper -Insert - Shared
Mail -Niche products - Solo
Mail -Online/Mobile/Social
Right Time
Flexible Timing
-Flexibility for the consumer
Hardware Store - Confidential
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Strategies Forward
Integrate - messages and actions
Sell integrate marketing communications plan Best
channel to deliver consumer segments that drive
business Stay close to customers, understand
who Know each consumer segment, reading,
online, social networking, etc. Engage
prospects and customers Use consumer channel
preferences and speak to their needs
(messaging/channel) Integrate social media into
CRM activities other online touch points  SEO
show SMBs how to use the Internet as a
marketing tool Yahoo! BT local consumer
segments of interest eMail use strategically
based on permission for wants Mobile most
personal SMS short code in your traditional
marketing messages Location-based advertising
enabled by smart phones New Product
Development SMB Product launch keep pushing
ahead/evolving Are we ready for the future
Continuous change, continuous improvement
Hardware Store - Confidential
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Thank You