April 16, 2019

Hillstrom's Targeting: Rebuy Rates by Weighted Quality

In a recent project, I segmented twelve-month buyers by "Weighted Quality". Each "Grade" represents 20% of the twelve-month buyer file.
  • Grade "A" = Weighted History of $665 or Greater.
  • Grade "B" = Weighted History of $343 to $664.
  • Grade "C" = Weighted History of $192 to $342.
  • Grade "D" = Weighted History of   $99 to $191.
  • Grade "F" = Weighted History of     $1 to   $98.
Then, I measured rebuy rates in the next month based on "Weighted Quality". Here's what the data demonstrated:
  • Grade A = 19.8%.
  • Grade B =   8.2%.
  • Grade C =   4.7%.
  • Grade D =   2.8%.
  • Grade F =   1.5%.
  • 13-24 Month Buyers = 1.8%.
  • 25-36 Month Buyers = 1.1%.
  • 37-48 Month Buyers = 0.6%.
  • 49-60 Month Buyers = 0.4%.
From a targeting standpoint, "Weighted Quality" does a spectacular job of separating customers ... good to not-so-good. We easily identify the "best" customers.

Your Homework Assignment:  Create a database attributed called "Weighted Quality". Create another database attribute called "Weighted Quality Segment" with values of A/B/C/D/F.

Tomorrow we'll add another step to the process. Our goal? We want to be able to segment and target customers liberally, in an effort to improve the following:
  • Welcome Program.
  • Anniversary Program.
  • Optimization Program.

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