February 09, 2010

Digital Profiles: Creating Each Profile

You have your data in a "spreadsheet", if you will, one row per customer, each column telling us something about that customer during the past year.

Now, it is time to generate each Digital Profile.

You are free to use whatever methodology you wish to use. I personally adore a methodology known as a "Factor Analysis", because the methodology is elegant, reducing the dimensionality of a complex dataset to a series of "factors".

Here's what I do:
  1. I calculate the mean and standard deviation of each variable, for later use.
  2. I run a Factor Analysis.
  3. I extract three or four "Factors".
  4. I run a frequency distribution, to determine the median value for each Factor.
  5. I re-code each Factor, 0 = below 50th percentile, 1 = above 50th percentile.
  6. I score the customer file at multiple points in time, so that I know the "Digital Profile" of the customer at many different times. This information is saved for analysis purposes.

Personally, like using sixteen Digital Profiles (four factors split into two groups each).

Enough for today. Next week, we'll dive into naming strategies, analysis and reporting, and Multichannel Forensics / Online Marketing Simulation examples.