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RETAIL CUSTOMER ANALYSIS
Prepared by : Lambert TanDate: May 7, 2016
1
Agenda
◦Background◦RFM Analysis◦Demographic Information◦Purchase Behavior Analysis◦Appendix-1 (Hypothesis and results)◦Appendix-2 (SAS Code)
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Background◦ Introduction
◦ The retail store has gathered customer purchase behavior information to make further marketing decisions
◦ The purpose ◦ Targeting valuable customers to craft marketing strategy and conclude features of
valuable customers◦ To profile the valuable customers base on purchasing behaviour
◦ Inclusion◦ Recency, order frequency and dollar spent◦ All purchase records, customers’ income, home value, age, sex, travel time and
education level◦ Exclusion
◦ Rents, Apartment Number, Kids, Car Number, Telemarket, Total Returns, Purchase, County Code, Marriage Status, Job Category, Race. Heating Type, Value per Mail
◦ Definition◦ The Most Valuable customers: RFM Groups 1,2◦ The Medium Valuable customers: RFM Groups 3,4,5◦ The Least Valuable customers: RFM Groups 6,7,8◦ RFM: Recency, Order Frequency and Monetary Spent 3
Key FindingsDemographic ◦ There are only 21% customers who are males.◦ The age level has no significant difference between all RFM Levels, but the
last three levels are intending to be older than others.◦ The RFM Group 1 has the lowest average travel time.
CUSTOMER PROFILE◦ Customers in RFM Group1 have contributed 43.79% of the total purchase
with 18.57% of the total population.◦ RFM Group 6 and 8 made nearly 50% of the total purchase during the two
promotions.◦ RFM Group 7 showed huge individual purchase power during the two
promotions◦ When a promotion was launched, the RFM Group 6 and 8 will make
purchase dramatically more than usual periods.
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RFM Clustered Groups
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Total1 18.57%2 7.99%3 0.97%4 1.83%5 10.68%6 25.69%7 2.39%8 31.89%
18.57%
7.99%
0.97% 1.83%
10.68%
25.69%
2.39%
31.89%
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%
1 2 3 4 5 6 7 8
Demographic Information
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79%
21%
Gender
female male
30.7430.15
33.84
29.36
30.37
31.60 31.8731.19
27.00
28.00
29.00
30.00
31.00
32.00
33.00
34.00
35.00
1 2 3 4 5 6 7 8
Total
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
140000.00
1 2 3 4 5 6 7 8
Average of INCOME Average of HOMEVAL 1 2 3 4 5 6 7 8
1 2 3 4
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Geographic Information
19.2820.42
23.53
20.4619.33 19.32 20.15 19.47
0.00
5.00
10.00
15.00
20.00
25.00
1 2 3 4 5 6 7 8
Total
Promotion
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Individual Average Purchase Power for Promotion 1-7
50.63
43.0446.68
42.2538.90
29.49
47.06
28.42
0.00
10.00
20.00
30.00
40.00
50.00
60.00
TOTAL
1 2 3 4 5 6 7 8
Promotion
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Individual Average Purchase Power for Promotion 8-13
30.43
26.22
33.21
26.2523.27
17.77
34.89
18.84
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
TOTAL
1 2 3 4 5 6 7 8
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PromotionComparison between Two Promotions: Total Purchase
26.13%
9.55%
1.25% 2.15%
11.55%
21.05%
3.13%
25.19%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
TOTAL
1 2 3 4 5 6 7 8
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PromotionComparison between Two Promotions: Total Purchase
25.18%
9.33%
1.43% 2.14%
11.08%
20.34%
3.72%
26.78%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
TOTAL
1 2 3 4 5 6 7 8
Total Purchase Distribution
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Excluding the promotions: Individual Average
41.72
20.6323.21
13.25
18.82
10.10
23.70
7.70
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
TOTAL
1 2 3 4 5 6 7 8
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Total Purchase Distribution
44.29%
9.42%
1.28% 1.39%
11.50%14.84%
3.24%
14.04%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
TOTAL
1 2 3 4 5 6 7 8
Excluding the promotions: Group Total
Purchase Break Down
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Apparel
3.25
1.44 1.37
0.560.96
0.52 0.490.17
4.83
1.511.11
1.50
2.58
1.08
3.89
0.821.29
0.420.79
0.170.60
0.27
0.91
0.160.00
1.00
2.00
3.00
4.00
5.00
6.00
1 2 3 4 5 6 7 8
Male Apparel Ladies Apparel Unisex Apparel
Purchase Break Down
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Luxury and Jewelry
0.48
0.32 0.370.47
0.09 0.08 0.06 0.03
2.70
1.50
1.05
0.72
1.23
0.62
1.55
0.44
1 2 3 4 5 6 7 8
Average of LUXURY Average of JEWELRY
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Purchase Break DownTotal dining
2.67
1.66
2.53
1.00
1.20
0.95
1.96
0.76
TOTAL
1 2 3 4 5 6 7 8
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Purchase Break DownHome Products: Lamp and Home Accesory
0.99
0.39 0.37 0.330.52
0.31
0.89
0.25
4.20
2.03 1.95
1.11
2.19
1.00
2.74
0.93
1 2 3 4 5 6 7 8
Average of LAMPS Average of HOMEACC
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Outdoor ProductsPurchase Break Down
2.89
1.55
1.84
1.331.43
0.72
2.30
0.55
1 2 3 4 5 6 7 8
Total
Total
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Purchase Break DownLeisure Products
2.51
1.491.58
0.780.69
0.500.34
0.15
Total
Total
Conclusion and Recommendations
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Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8Men Apparel 3.25 1.44 1.37 0.56 0.96 0.52 0.49 0.17Ladies Apparel 4.83 1.51 1.11 1.5 2.58 1.08 3.89 0.82General Apparel 1.29 0.42 0.79 0.17 0.6 0.27 0.91 0.16Luxury 0.37 0.47 0.48 0.32 0.07 0.03 0.09 0.08Jewelry 1.05 0.74 2.7 1.49 1.59 0.43 1.22 0.62Total Dining 2.53 1.06 2.67 1.64 1.98 0.76 1.2 0.95Lamps 0.37 0.35 0.99 0.38 0.91 0.25 0.52 0.31Furniture 1.95 1.18 4.2 2.01 2.78 0.93 2.18 1Outdoor 1.84 1.15 2.89 1.58 2.35 0.55 1.42 0.72Leisure 1.58 0.79 2.51 1.48 0.35 0.14 0.69 0.5Preference Ladies Apparel Ladies Apparel Furniture Furniture Furniture Ladies Apparel Ladies Apparel FurnitureSecond Preference Men Apparel Men Apparel Outdoor Dining Ladies Apparel Furniture Furniture DiningThird Preference Dining Furniture Jewelry Outdoor Outdoor Dining Outdoor Ladies Apparel
Preference Table
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◦Conclusion: RFM Analysis showed that the group 1,2,3,4 are regularly active customers, but the group 7 and 8 showed huge potential during the promotion periods.
◦Recommendations:Focus on female customers Focus on apparel productsConduct promotion for home furniture and outdoor products
to boost the sales
Conclusion and Recommendations
Appendix-1
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◦ According to the RFM Analysis, the customers could be divided into four segments:
Highly Active Apparel Purchaser (Including Group 1, 2)
Affluent-Medium Active Furniture and Outdoor Products Purchaser (Including Group 3, 4)
Lady Apparel, Home furniture and Outdoor Light Purchaser(Including Group 5,7)
Promotion-driving Inactive purchaser(Including Group 6,8)
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Appendix-2
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