In our example, there are six channels (your mileage will vary ... some folks use a hundred different channels/touchpoints in their analysis).
Each variable is expressed as a percentage of weighted historical spend. For instance, a customer that only ever purchases via the telephone will have 0% values for email, search, mobile, social, and your website, and 100% for phone.
A customer that purchased via search last year and via mobile this year might have 66% values for mobile, 34% for search, and 0% values for all other channel-based variables.
Finally, I add two 1/0 variables into the mix ... a variable that indicates whether the customer is a new customer in the past year (1 = new, 0 = otherwise), and a variable that indicates whether the customer is a loyal customer (1 = loyal, 0 = otherwise).
Up next ... the math that helps us map the customer life cycle.
RFM is great for targeting one catalog to one customer. However, RFM is tough to manage in a multichannel environment. This becomes clear ...
If you don't like geeky math, please skip this post, because I am about to show you how the sausage is made! I have eight variables in...
It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...