Action Streams: Compatibility Scores

It's 2001 at Nordstrom.

The e-commerce Executive wants to tailor email campaigns to the merchandise customers previously purchased. Her team tells my team they can support ten (10) different versions of an email campaign twice per week. My team is brilliant. They tell her they can develop a methodology to pair customer purchase history with the content offered in a version of an email campaign.

What they came up with is similar to what I currently call a "Compatibility Score".

Let's oversimplify the process. Say you have two versions of an email campaign, and you want to decide which version the customer should receive. Now, there are better ways to do this, and if you don't like how I oversimplify my example below, by all means, add the level of complexity necessary to suit your needs. But for the love of Nordstrom, do something, ok?!

Ok, here is the merchandise composition of email version #1.

• Mens = 70%.
• Womens = 20%.
• Kids = 10%.
• Home = 0%.
• Accessories = 0%.

Here is the merchandise composition of email version #2.

• Mens = 0%.
  
• Womens = 50%.
• Kids = 30%.
• Home = 20%.
• Accessories = 0%.

Finally, we have a customer with the following weighted purchase history (I weight historical transactions ... often along a 100% for 0-12 month orders, 60% for 13-24 month orders, 35% for 25-36 month orders, 20% for 37-48 month orders, 12% for 49-60 month orders ... your mileage will vary).

• Mens = 15%.
• Womens = 40%.
• Kids = 10%.
• Home = 12%.
• Accessories = 23%.

Which version of the email campaign should the customer receive? I multiply weighted historical percentages by product percentages in each campaign, then sum the multiplied percentages to acquire a "Compatibility Score".

The second version of the email campaign has a 25.4% Compatibility Score, compared to 19.5% in the first version. You'd assign an Action Stream for this customer where the customer receives Version 2. 

Yes, you should test this concept to see if it works for your customers.

As you can see ... it's terribly easy to create a Compatibility Score.

Twenty-four years ago at Nordstrom ... an entire generation ago, we obtained sales increases of 20% within email marketing using Compatibility Scores.

Are you using Compatibility Scores within your Action Streams?