Kevin Hillstrom: MineThatData
Helping CEOs Understand How Customers Interact With Advertising, Products, Brands, and Channels
August 04, 2022
A Version of the 80/20 Rule
August 02, 2022
Email is Different
Yesterday I talked about digital marketing in general, and the fact that one business generally attributed digital marketing efforts to either the very best customers or new customers.
Email is different. For the same business I discussed yesterday, here's what I learned.
- 31% of email sales were attributed to the best 4% of the customer file.
- 61% of email sales were attributed to the top 16% of the customer file.
- 5% of email sales were attributed to new customers.
August 01, 2022
That's How We Get Our New Customers
At least that's what the Executive said when I asked him about various online marketing tactics.
A look at his customer file told a different story.
- 19% of his digital marketing budget was attributed to the top 4% of his customer file.
- 31% of his digital marketing budget was attributed to the 5th percentile to the 24th percentile of his customer file.
- 24% of his digital marketing budget was attributed to new customers.
July 31, 2022
File Power In Practice
So I'm exchanging emails with a digital marketing expert - this person is excited because he acquired new customers at a $10 ROAS.
Now, I already knew the answer (as do you), but I asked the expert if that was a profitable outcome?
His response? "I don't know. I just know that's a good ROAS".
In practice, you have an existing customer base. The existing customer base is capable of spending "x", you'll spend "y" marketing to the customer, yielding "z" dollars of profit.
Profit is a function of the life stage the customer is in. Somebody acquired customers five years ago, and the work that somebody performed back then ends up in your pocketbook via a bonus today, because those customers keep generating profit.
In practice, we want a powerful file. We want as many customers as we can afford, and we want them to generate as much subsequent profit as they can possibly generate. When we figure out ways to generate more profit out of a customer, we are allowed to spend more money acquiring customers ... this behavior is circular because then we have more customers, generating more File Power, allowing us to acquire even more customers.
In my projects, I keep seeing instances of companies that cannot acquire enough new customers to grow. This seems like a Customer Acquisition problem (and it most certainly is a Customer Acquisition problem), but it is also a Customer Loyalty problem. When we cannot figure out how to generate more profit out of a customer, we have to back off on Customer Acquisition to make sure we generate enough short-term profit. Our Customer Loyalty problem accelerates our Customer Acquisition problem.
What drives Customer Loyalty more than anything else?
Merchandise Productivity.
In other words, there's a lot of interconnected pieces. If we take our eyes off of any one of the connected pieces, we lose profit, which hurts our ability to acquire new customers, which shrinks the customer file, which lowers File Power, which costs us more profit, and the circular problem continues iterating through the business.
Everything we do impacts File Power.
So yeah, we want to study File Power, don't we?
July 28, 2022
Updated Project Offering
To reflect the style of work I'm performing in 2022, I updated my "Hire Kevin" page. Click here for details.
I do have an opening for a project beginning August 15, so if you were thinking about something regarding customer behavior, let's talk.
July 27, 2022
The Power of File Power
Nice use of words, huh?
Here's something that I frequently see in my work. Look at rebuy rates by segment.
In each segment, rebuy rates are identical on a year-over-year basis.However, rebuy rates in 2022 are 26.3% whereas rebuy rates were 24.3% the year prior.
This happens because of File Power ... you have 50 more 1x buyers, 200 more 2x buyers, and 250 more 3x+ buyers in 2022. Those customers pay you back.
Management cannot take credit for the increase in Rebuy Rates.
Well, that's not entirely true ... the increase in Rebuy Rates isn't because of anything they've done special this year, it's because of the hard work done by the entire company in previous years.
July 25, 2022
Story-Based Customer Acquisition
Here's an ad I received. Tell me what the story is that the author is communicating to me.
Now tell me what story is being told here.
The clients I work with who have the best customer acquisition results also have what I'd call "Story-Based Customer Acquisition". They're not just slapping horrifically intrusive/boring ads upon people and saying they're leveraging an "omnichannel advertising approach".
Instead, the best clients have a story to tell, and they use channels to tell the story.
A Version of the 80/20 Rule
Here's the share of next year's sales from existing customers (y) as a function of customer file quality (0.1 = great customers, 1.0...

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It is time to find a few smart individuals in the world of e-mail analytics and data mining! And honestly, what follows is a dataset that y...
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There's a fraction of the population who says "nobody wants to work". Well, don't tell that to this guy, who manned a busy...
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As is my tradition, I'm going to take a long weekend. No posts until early next week. I've been doing this for almost twenty years, ...