March 08, 2011

Forecast Forensics + Digital Profiles: Forecasting

Today is a transition day ... we're moving away from the segmentation part of this series, moving to the forecasting part of this series.

Recall, Forecast Forensics is all about using conditional probabilities to illustrate how customers are likely to migrate between segments.

In other words, if we have a customer that belongs in the "Web Masters" segment, we can calculate how likely that customer is to purchase again next year ... and if the customer purchases again, we can calculate the probability of a customer migrating to any one of the sixteen Digital Profiles.

And if we can do that for one year, well, we can do that out into infinity, or at least for five years, right?

And if we can do that, well, then we can literally "see" what the future might look like.

So take a look at the image.  This is the forecasted count of twelve-month buyers by Digital Profile, for each of the next five years.

Tell me what you see.

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...