April 12, 2010

Digital Profiles: Merchandise Analysis

One of the logical ways to leverage Digital Profiles is within the context of merchandise analysis.

Let's use a greatly simplified version of a Digital Profile. Assume you only have four Digital Profiles:
  1. Loyalists: Customers who have been with you forever, they just keep shopping, year after year after year.
  2. Sale Shoppers: These customers are loyal as long as you offer them discounts, promotions, incentives, buy one get one free, gift with purchase, you name it.
  3. Gift Givers: These buyers skew their dollars to the Holiday timeframe, though they do shop on an infrequent basis during the remainder of the year.
  4. Infrequents: Customers who do not exhibit regular or predictable purchase behavior.
Ok. Now, pretend you are Apple, and you want to understand who purchased different items.
  • The new iPad.
  • The iPod Classic.
  • Beats Headphones from Dr. Dre.
You segment your customer base as of April 1, and then for the past two weeks, you analyze merchandise sales by Digital Profile.

iPod Beats

iPad Classic Headphone
Loyalists 78.0% 13.0% 9.0%
Sale Shoppers 3.0% 27.0% 12.0%
Gift Givers 2.0% 15.0% 15.0%
Infrequents 5.0% 20.0% 30.0%
Newbies 12.0% 25.0% 34.0%

Remember, this data is made up for illustrative purposes. You can see that each item entices a different composition of Digital Profiles. The iPad is craved by Loyalists, the iPod Classic is desired by sale shoppers (as the price slowly drops over time) and first time buyers, the Beats Headphone is strongly preferred by the infrequent or new shopper.

Knowing the customers that prefer each item allows you, the marketer, to customize your digital marketing activities. If you were sending an e-mail campaign to your loyal customer base, you probably wouldn't focus on the iPod Classic. If you were sending an e-mail campaign to infrequent shoppers, you might want to focus your efforts around the Beats Headphone.

Digital Profiles represent a logical way to segment and
analyze your customer base. If you had a new, fancy tool like Webtrends Segments, you'd absolutely love having Digital Profiles as part of your data warehouse.

If you need help creating Digital Profiles, please contact me.

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