I took two-dozen-ish customer attributes and leveraged a Factor Analysis to create two factors ... the two factors were divided into quintiles ... and then customers were placed into each quintile by factor, giving us 5x5 = 25 File Power segments.
There - we got the geeky math out of the way!!
I then measured how much customers spent in the next year by segment, giving me a solid estimate of File Power.
We easily see that customers falling into segment 55 have the most File Power ... they are worth $864.43 in the next year.
In a separate analysis I evaluated who the customers are that reside in segment 55:
- Average Spend 0-12 Months Ago = $1,158.
- Average Spend 13-24 Months Ago = $1,101.
- Purchases Full Price Items.
- Skews to Email Marketing, Doesn't Buy via Search.
- Tends to Purchase via E-Commerce, Minority of Dollars in Stores.
In other words, high-value "omnichannel" customers.
Now look at the middle/bottom portion of the table.
- Customers in Segment 55 3 Years Ago = 53,971.
- Customers in Segment 55 As of Today = 62,515.
This brand is growing the number of customers in the highest value segment ... good work!!! This is good news for File Power.
Is the brand growing customers across all segments? More on that topic next.