Hillstrom's Targeting: A Big 'Ole Grid!!

Take a look at this monster!

Go ahead, click on it ... I'll wait for you.

Welcome back!

This table is for the best customers ... a grade of "A". Each row represents a preferred Weighted Category ... if a customer spent more weighted historical money on Category 11, then you read across the row for Category 11 ... the numbers are the probability of a customer buying from any category in the next month.

Read across the row for Category 11. Tell me what you see??

I'll simplify it for you.

• No customer is more likely (by a long shot) to buy from Category 11 next month than customers who have spent the most weighted historical dollars in Category 11.
• For these customers, their preferred future categories are Category 11 and Category 12.

What should your email campaigns focus on, for this customer?

• Category 11.
• Category 12.

Now go do something about it!

This targeting methodology makes it really easy to do the right thing for a customer. If the customer prefers Category 11, give the customer what the customer asks for! Feature new products from that Category, and heck, add some of Category 12 for the customer as well.

Hillstrom's Targeting pricing can be found here.

Hillstrom's Targeting: Value of Primary / Secondary / Tertiary

Ok, let's look at a practical example of Primary / Secondary / Tertiary categorization of merchandise categories.

In this case, we look at next-month repurchase rates based on Weighted Customer Quality and Primary / Secondary / Tertiary for a specific merchandise category (say Home merchandise). We use historical customer data to segment customers based on quality and if the customer's spend on Home merchandise yielded Home as a Primary / Secondary / Tertiary favorite, or none of those.

Ready? Here's the targeting table. The targeting table illustrates the probability of a customer buying from Home in the next month, based on Weighted Customer Quality and Primary / Secondary / Tertiary preference for Home merchandise.

The cells that are red are cells that, if you were to target Home merchandise in an email campaign, you'd ultimately target.

You'd target any 12-month "A" customer, period.

You'd target 12-month "B" customers who like Home as a Primary or Secondary preference.

You'd target 12-month "C" customers who like Home as a Primary preference.

You have what you need to execute an Email program that features Home merchandise. Those are the cells you need to target, if you want outstanding response.

If you want to add segments?

Add "B" customers with Tertiary preference.

Add "C" customers with Secondary / Tertiary preference.

Add "D" customers with Primary preference.

It's really quite simple!

You've just added a component to your Optimization Program ... good for you!!

Today's Presentation At Datamann Conference In New Hampshire

Maybe you're not joining me today (unlikely), and while I'm devastated by that fact, I thought you'd still like to see the presentation I'm giving while you toil in your office.

So click here and enjoy!

Hillstrom's Targeting: Primary, Secondary, Tertiary

This week I've shared with you my "Weighted Quality" process. It's an important process when considering who to target, as demonstrated yesterday.

I use the same weighting process to create six additional variables.

• Primary Merchandise Category Preference.
• Secondary Merchandise Category Preference.
• Tertiary Merchandise Category Preference.
• Primary Channel Preference.
• Secondary Channel Preference.
• Tertiary Category Preference.

These variables are pure gold!!

Primary / Secondary / Tertiary represent the categories or channels that the customer historically spent the most weighted dollars.

Example:

• $100 in Mens 0-12 Months Ago.
• $100 in Womens 13-24 Months Ago.
• $200 in Kids 25-36 Months Ago.

Weighted Values (recall earlier in the week?) yield the following:

• Mens = $100.
• Womens = $60.
• Kids = $70.

We now have Primary / Secondary / Tertiary categories.

• Primary = Mens.
• Secondary = Kids.
• Tertiary = Womens.

Tomorrow, I'll show you just how valuable Primary / Secondary / Tertiary categories are to a targeting process!

Hillstrom's Targeting: Rebuy Rates by Weighted Quality

In a recent project, I segmented twelve-month buyers by "Weighted Quality". Each "Grade" represents 20% of the twelve-month buyer file.

• Grade "A" = Weighted History of $665 or Greater.
• Grade "B" = Weighted History of $343 to $664.
• Grade "C" = Weighted History of $192 to $342.
• Grade "D" = Weighted History of   $99 to $191.
• Grade "F" = Weighted History of     $1 to   $98.

Then, I measured rebuy rates in the next month based on "Weighted Quality". Here's what the data demonstrated:

• Grade A = 19.8%.
• Grade B =   8.2%.
• Grade C =   4.7%.
• Grade D =   2.8%.
• Grade F =   1.5%.
• 13-24 Month Buyers = 1.8%.
• 25-36 Month Buyers = 1.1%.
• 37-48 Month Buyers = 0.6%.
• 49-60 Month Buyers = 0.4%.

From a targeting standpoint, "Weighted Quality" does a spectacular job of separating customers ... good to not-so-good. We easily identify the "best" customers.

Your Homework Assignment:  Create a database attributed called "Weighted Quality". Create another database attribute called "Weighted Quality Segment" with values of A/B/C/D/F.

Tomorrow we'll add another step to the process. Our goal? We want to be able to segment and target customers liberally, in an effort to improve the following:

• Welcome Program.
• Anniversary Program.
• Optimization Program.

Hillstrom's Targeting: Weighting Variables

The secret to my targeting strategy is in the weighting of data, specifically, prior purchase data.

Now, you might have your own weighting strategy, and if so, that's fine, go with it. I like to discount older transactions.

• 0-12 Month Transactions =   100% Weight.
• 13-24 Month Transactions =   60% Weight.
• 25-36 Month Transactions =   35% Weight.
• 37-48 Month Transactions =   20% Weight.
• 49+ Month Transactions =      12% Weight.

What does this mean?

Let's look at a sample customer:

• 0-12 Month Spend = $100.
• 37-48 Month Spend = $100.
• Weighted Spend = $100*1.00 + $100*0.20 = $120 Weighted Dollars.

Here's another sample customer.

• 0-12 Month Spend = $25.
• 13-24 Month Spend = $25.
• 25-36 Month Spend = $100.
• 37-48 Month Spend = $100.
• 49-60 Month Spend = $100.
• Weighted Spend = $25*1.00 + $25*0.60 + $100*0.35 + $100*0.20 + $100*0.12 = $107 Weighted Dollars.

The first customer - even though the first customer spent just $200 historically ... the first customer has more "weighted value" than the second customer.

In individual projects, I use a regression methodology to assign the weights. On average, the weights end up being similar to what is described above.

Tomorrow, I'll show you that the weights "matter", ok? We're in the process of building a targeting strategy to implement Welcome Programs, Anniversary Programs, and Optimization Programs.

Hillstrom's Targeting!

I know, I know, you're saying to yourself "... all of this theory you've been tossing at us is wonderful and all, and I'd like to have my own Marketing Management System, but I'm not sure how (from a targeting standpoint) I implement the ideas.

So it's time to change that.

Over the next several weeks, I'll talk about targeting opportunities, especially as they relate to email marketing.

Now, if you have a complex machine-learning process, the variables might be of interest to you, but everything else might be a bit simple. That's fine.

But for the rest of you, the concepts I'm going to talk about relate to "who" you target and "how" you target them. Rest assured, there are a lot of ways to positively impact your business via the following:

• Welcome Programs.
• Anniversary Programs.
• Optimization Programs.

Those are the three key areas where targeting works very, very well.

And specifically, the targeting tactics I'll discuss work best within your EMAIL MARKETING program!!!

So tomorrow, we'll begin with variable definition, and we'll go from there, ok? Let's make this information actionable!

P.S.: Yes, this will become a new product, one you are going to want!! Visit my project pricing page for cost details (click here).