Ok, let's look at a practical example of Primary / Secondary / Tertiary categorization of merchandise categories.
In this case, we look at next-month repurchase rates based on Weighted Customer Quality and Primary / Secondary / Tertiary for a specific merchandise category (say Home merchandise). We use historical customer data to segment customers based on quality and if the customer's spend on Home merchandise yielded Home as a Primary / Secondary / Tertiary favorite, or none of those.
Ready? Here's the targeting table. The targeting table illustrates the probability of a customer buying from Home in the next month, based on Weighted Customer Quality and Primary / Secondary / Tertiary preference for Home merchandise.
The cells that are red are cells that, if you were to target Home merchandise in an email campaign, you'd ultimately target.
You'd target any 12-month "A" customer, period.
You'd target 12-month "B" customers who like Home as a Primary or Secondary preference.
You'd target 12-month "C" customers who like Home as a Primary preference.
You have what you need to execute an Email program that features Home merchandise. Those are the cells you need to target, if you want outstanding response.
If you want to add segments?
Add "B" customers with Tertiary preference.
Add "C" customers with Secondary / Tertiary preference.
Add "D" customers with Primary preference.
It's really quite simple!
You've just added a component to your Optimization Program ... good for you!!
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