Data-Driven Marketing

Data-Driven Marketing: Five Insights

Mark JefferySenior Lecturer of Executive Education, Kellogg School of Management and Founder, President and CEO, Aquimo [email protected]

© Mark Jeffery 2014, All Rights reserved


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Your challenges:

• I don’t have the right metrics?

• It’s not that I have too little data, I have too much data?

• I don’t have the time or the resources to apply data-driven marketing?

• I don’t know where to start?

• I’m not sure what will have the most impact?

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Data-Driven Marketing: Five insights

1. The marketing divide

2. Big-data analytics works for Big and Small Companies

3. How to create the “wow that’s exactly what I need!” effect

4. All customers are not equal: Value based marketing

5. How do you do it? Data mining for bottom line impact

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Source: Lucas Films


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Data-Driven Marketing: Five insights7


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• UK's second-largest food retailer

– More than 400 stores, serving over nine million customers

– 10 million transactions per week, 200 million items of data,

75,000 SKU’s

• Segment the market

– 10 segments based on spending and foods selected

– ‘Quality oriented’ to ‘less affluent family’

• EDW technology enables accurate profiling of customer

mix for each store

– Key segment; ‘foodies’ – passionate about food

• 21% of customers and 24% of spend

• Geographic specific – 70% of some London branches are

foodies, only 6% in parts of West Midlands

– Stores remodeled and customized based upon these data

– 75,000 SKU’s analyzed: 30,000 SKU’s contribute < 1%

• Rationalization based on customer profiles for each store

• Results

– Overall sales increase of 12%

– 14,000 SKU’s are candidates for delisting = £12 million of

purchasing spend that can be shifted to bestsellers


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12

• Weekly Scoring of 14 million customers

• Targeted email marketing based upon propensity model

• Not more than one Email Sent to a customer per week

– If opened or clicked may receive an email the next week.

– If no response wait 4 weeks to send another email

• Results

– 29 – 50% increase in take rates for all Email campaigns

– 20 – 40% more email subscriptions compared with the previous year without targeting


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Source: Mercer Management Consulting

0% 20% 40%-$5,000

$5,000

$15,000

$20,000

$0

100%60% 80%

$10,000

CustomerLTV($)

% of Customers 5.2% of customershave negative LTVs

Lifetime Value (LTV) Distribution of Existing Wireless Customers

18% of customers make up 50% of total portfolio value

Customer A has an expected LTV of $10K and is a mobile manager: retain her

A

Customer B has an expected LTV of $800 and is a soccer mom: cross-sell long distance, DSL

BC

Customer C is unprofitable -pays late: increase late fees or encourage pre-paid service

14


Accounts (In order of CLTV from high to low).

Pro

ject

ed C

LTV

…and not spend any

resources on these.

How can we keep these?

Total churn rate is approx25%. This is a BIG

opportunity.

Strategy: Acquire, retain and grow profitable customers through analytic marketing

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Value Based Marketing:


Results: 30% reduction in churn20X improvement in profitability of retained customers


1. The marketing divide

2. Big-data analytics

3. “Wow that’s exactly what I need!”

4. Value based marketing

5. Data mining for bottom line impact

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