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Customer Event Modeling
Identifying Your Best Customers to Meet Your Marketing Objective
The Challenge
Total incentive expenditures had grown significantly for our consumer credit services client over the previous few years. Given this change in the business environment, customer event expenditures needed to be understood as a component of the total marketing plan.
Our client came to the realization that previously developed predictive redemption models constructed prior to its relationship with SIGMA were underperforming. Changes in the business environment suggested that the current models were obsolete. As a result, sales goals were in jeopardy and additional customer insights were scant. The success of current and future promotional campaigns was limited.
The Breakthrough
SIGMA analyzed source data and aggregated it into categories. The data was further aggregated into a time series profile of products redeemed and mean amounts paid. The profile data was used to estimate demand curves at the aggregate and segmentation levels. New predictive redemption models were constructed using a revised set of considered variables that made sense, keeping in mind the client’s business objectives. These models were built for all brands and partitions, which allowed for tighter targeting.
SIGMA’s goal was to:
- Form recommendations for the optimization of marketing dollars.
- Identify which customer event triggers drive redemption and which products these triggers align with.
- Develop insights about consumer buying patterns that change the way we plan and time promotions.
The Win
- In addition to providing campaign reporting, analyses were conducted that converted data into concrete customer insights with actionable strategies.
- SIGMA determined that the meaning of triggers was dependent on the product selected.
- While key drivers varied across segments, the event trigger was most effective.
- SIGMA presented an opportunity to simplify the customer event model and reduce expenditures with minimal impact to redemption volume.
- There was a campaign conversion lift over control of 30 to 98 percent.