June 07, 2010

Summer Segmentation

This summer, we're going to talk a bit about segmenting customers.

See, it turns out that this is one of the most important times in history to actually slice and dice customers. Our customers are going in a myriad of different directions. Back in 1995, you could do a simple RFM analysis, and you'd be in good shape, because you had a one-dimensional business.

In 2010, your customer is a few years into the early stages of a great diaspora ... a once homogeneous audience is now dispersing itself across a nearly infinite number of micro-channels. What is important, here, is that while customers adopt an increasing number of micro-channels, overall response does not improve --- you know this because you look at annual retention rates, and your annual retention rates have not improved in a decade. When the number of micro-channels increase and overall response fails to increase, you have tremendous "optimization" opportunities!

So, we're going to explore segmentation this summer. Get ready!

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...