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Customer Profiling?
Question:
I am looking for information resources on different methods to Segment and profile customers. My customer list is about 2000 names, mostly industrial companies. Specificaly, I am looking to identify who our true customers are and who is costing us money. Any Ideas?? Thanks
Response:
> I am looking for information resources on different methods to Segment and > profile customers. My customer list is about 2000 names, mostly > industrial companies. Specificaly, I am looking to identify who our true > customers are and who is costing us money.
You are going to need good data about your customer base to be able to answer your question "who are my *good* = most profitable customers" and "who are my unprofitable customers". IMHO, some pieces of data to start with include: * # Orders per Customer * Avg. $/Order per Customer * Processing cost per Order * Service costs (overhead) per Customer * "Age" of customer * Other "softer" factors such as # referrals from the Customer, potential sales volume, etc. Then, compare the profit to cost for each Customer and put them in a variety of categories, based on the data, and not just "profitable" and "unprofitable". Also consider "new" versus "old" and "maxed-out" versus "additional sales potential". Finally look at other ways to make the "unprofitables" profitable. Hope this helps 
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Response:
>Finally look at other ways to make the "unprofitables" profitable.
You make an excellent point… one that shouldn’t be ignored when analyzing the profitability (or unprofitability) of a customer. As a Special Interest Information marketing consultant, one of the questions I get asked most frequently is: "How do I know when to remove a customer from my mailing list?" The question arises when a customer has been inactive for so long that the business owner begins to wonder whether or not it’s profitable to continue to market to that customer. In my experience, I’ve had hundreds of customers who I seriously considered deleting from my active customer database. But then I introduce a new product or service and those very same customer who had been inactive for so long suddenly become active again. Remember that when someone has done business with you once, it will be much easier to get them to do business with you again (provided you delivered a quality product the first time around) than it will be to get someone who doesn’t know you to do business with you for the first time. So, chances are that there really aren’t many "unprofitables" in your customer database… just people who are waiting for you to make them the right offer so they can do business with you again you again. Hope this helps. Warmest Regards, Barb
Response:
:I am looking for information resources on different methods to Segment and :profile customers. My customer list is about 2000 names, mostly :industrial companies. Specificaly, I am looking to identify who our true :customers are and who is costing us money. :Any Ideas?? :Thanks Although it would be better to have a larger customer file, have someone experienced with RFM analysis take a look at your file. Michael Michael Whitenton M/W Direct Direct Response Consulting/Creative Services
Response:
> Although it would be better to have a larger customer file, have > someone experienced with RFM analysis take a look at your file.
And if your friends in the catalog/direct mail business are not familiar with how to do a Recency/Frequency/Money analysis, the direct marketing publications like DM News ( http://www.dmnews.com ) periodically run articles on RFM and other segmentation techniques. Cliff — Allen Marketing Group 919-859-5619 Web Site Profile and Raleigh, NC http://www.allen.com Tracking Software
Response:
I didn’t see your original post on customer profiling so I am not sure what objective you are trying to achieve. IF it is customer management or prospect management there are a number of key factors you may want to track. The basics are SIC code, geographic location, # employees, # locations, buying/decision making location, decision makers, influencers. I strongly recommend that a longitudinal tracking process be put in place to monitor each customer /prospect’s location in the decision making cycle so you can plan the timing and content of contacts. And sophisticated B-T-B marketers identify the buying philosophy of each company to determine if and how to do business with them. Needless to say this is sometimes dictated by the company and sometimes it is the philosophy of the key decision maker. The bottom line is to identify your reasons for wanting a profile and then append the necessary data. Russ Richmond