Monday, January 19, 2009

Predicting the "Savables" from your Profitable Customers

Reading: Predicting the "Savables" from your Profitable CustomersTweet this Post

Read this interesting article "Predictive Analytics Can Pinpoint Profitable Customers" on DestinationCRM that is based on a Forrester report "Optimizing Customer Retention Programs" by Suresh Vittal. While I haven't read the report yet, this article really got me thinking.

In a slowing or contracting market new customers are hard to come by so the focus often turns to retaining existing customers. Of those existing ones the smart marketing guys soon narrow down to the profitable ones. Now this is where this new report makes it interesting. They further segment profitable customers into segments based on the likelihood of their response;

  • "Savables": Receiving an offer won't induce these customers to leave, but not receiving one might. This is the group that marketers must focus on.  
  • "Sleeping dogs": An unwelcome marketing campaign can provoke this group to end the relationship altogether.
  • "Sure things": Customers who don't need to receive offers to stay.
  • "Lost causes": Customers who will leave regardless of the offer.
Of these the Savables are the ones where marketers should focus their dollars and that segment can be further split into sub-segments or customers as well since not everyone is equally savable.

Now this is where it can get tricky predicting behavior cause how do you determine that a "Savable" is not a "Sleeping Dog". I'm assuming that macro-trends matching the consumers profile might be one determining criteria, however it might actually be more interesting for companies to analyze their own pipeline and sales order trends to determine how successful they've been in selling to or converting these "Savables" after a campaign. I'll try getting into the report to determine what Forrester thinks might be determining factors for each of these segments.

But will surely keep an eye out on more about the Uplift model as we market through the current economy.

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