Who Are My Best Customers? Get Greater Value From Your Customer Database.

Technical report
Who Are My Best Customers?
Using SPSS to get greater value from your customer database
Table of contentsIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Exploring customer data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Where do our customers live? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3What is the household income of our customers? . . . . . . . . . . . . . . . . . . . . . . . . . . . .3How long have our customers been customers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4How much money do our customers spend with us? . . . . . . . . . . . . . . . . . . . . . . . . . .4How do customers respond to different promotional offers? . . . . . . . . . . . . . . . . . . . .5Does customer retention vary by area? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Did customer response to Offer 1 vary by area? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7How much have customers spent? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8How much will customers spend? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Taking action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11About SPSS Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
SPSS is a registered trademark and the other SPSS products named are trademarks of SPSS Inc. All other names are trademarks of their respective owners. © 2004 SPSS Inc. All rights reserved. DATABWP-1104IntroductionWho are my best customers? If you manage sales, marketing, or customer service, you want an answer to this question. Infact, you want to know more about all your customers-from the best to the worst. That's because planning and implementingsuccessful, cost-effective strategies for every customer segment is critical to increasing business profits. This paper will focuson how a company might identify its best customers, but the same process could be used for other customer segments.
Knowledge about your best customers-their attitudes, purchase patterns, and demographic profiles-is the key to developingand implementing successful marketing and customer relationship management programs. Such knowledge helps you effectivelytarget your promotional, advertising, and marketing campaigns, as well as develop up-sell and cross-sell programs and long-term customer loyalty, retention, and rewards programs.
Coordinating these efforts is particularly important as marketing moves away from mass marketing and toward more targetedmessaging, with an emphasis on positioning particular products or services for specific types of customers. Reliable, detailedinformation about customer behavior, attitudes, and other characteristics offers a real competitive advantage and helps improvethe return on investment for all your customer interactions. The insight gained from even the most elementary analysis ofcustomer characteristics can have profound implications for your business.
This white paper demonstrates how you could analyze a customer database using SPSS. This integrated suite of products forstatistical analysis and data management supports you throughout the data analysis process, whether you perform youranalysis from a single desktop computer or across an extended network.
In this paper, the marketing database of 2,000 customers includes the following information:?Date when customer first became a customer?Purchase history by dollar value of orders?Response to different offers?Household income level?Geographic classification?Gender and other demographic variables
Our goal is to identify unique customer segments that make up our company's best customers. While this paper doesn'tdescribe the process for classic recency, frequency, and monetary value (RFM) scoring, it does provide all the preliminaryanalysis needed to do so. We use various data analysis techniques to extract this information and suggest how it can be usedto guide busine... [download for more]