March 15, 2007

You've Got Data: Now What Do You Do With It?

This article from one of my favorite web sites, CRMguru, presents a four step process for making the most of your data. I am glad it points out predictive models don't predict customers. Rather, it points out they identify groups most likely to be customers. Similar to fundraising, predictive modeling will identify and prioritize your prospects to bring efficiency to your high-touch prospect research area or bring efficiency to your broad-based solicitation strategies.

For example, Toyota took customer data from previous repurchase campaigns and developed simple statistical models to predict which customers are more likely to repurchase in the future. The models identified the characteristics of customers who repurchased before and used this insight to identify, say, the 30 percent of customers most likely to repurchase in any given month in the future. The models were used to target customers in a number of repurchase campaigns to great success: The campaigns doubled the repurchase rate but at only one half of the volume (and cost) of mailings, a net 400 percent increase in campaign ROI.

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