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Do you want to find out more about your best customers? Do you need a better solution to retain and expand business with your existing customers? Do you want to find new customers who are the best fit for your products and services? Predictive modeling can help you answer these questions and identify your most productive and profitable customers and prospects. Read on to understand more about modeling techniques and processes.
Step 1: Understanding the Lingo
Each of these processes uses existing customer information to provide insights about your customers’ behavior. “Descriptive Modeling” can define what your best customers “look like” from a mathematical standpoint. “Segmentation Modeling” identifies subgroups of customers based on many factors, including Recency, Frequency and Monetary value (RFM) or Customer Loyalty Analysis. And, “Predictive Modeling” gives you an estimation of likely outcomes, based on your business’s historical data.
Step 2: Picking a Partner
Be sure to ask your potential vendors the right questions. How do they establish modeling goals? What level of collaboration do they need from your staff? Where do they source their data? How flexible are their solutions, and how will they incorporate testing? Be sure you find a partner that can address your business needs today, and grow with you over the long haul.
Step 3: Addressing Your Pain Points
When you engage in a modeling initiative, be prepared to learn a lot about your customers. First, you’ll examine your customer profiles and market penetration. Once you’ve discerned your “best” customer profile, you can explore how to prospect for similar leads. By addressing your pain points, you can ultimately uncover your most likely responders for particular campaigns, or even predict more accurate customer attrition.
Step 4: Educating Your Partners
Once you’ve identified your pain points, you’re ready to give your data to your modeling partner. Be sure to include your current customer files, mail files, campaign examples and transactional data. The more data you can turn over, the more efficient your models will be.
Step 5: Profiling
It’s time to find out who your customers are, and how your business has penetrated the market. By matching, enhancing, comparing and scoring your customer database, you’ll get a fresh new picture of the core of your business.
Step 6: Segmenting
Here’s where things can get really interesting. By looking for relationships and overlap between your customers and transactions, comparing your files with other customer groups, and then ranking your customers based on their “good customer” status−you can create a solid vision of your “best customers. Better yet, you can learn how to find prospects that look just like them.
Step 7: Pausing to Debrief
At this point, your modeling partner should provide an Executive Summary and detailed debriefing on all their findings. With a collaborative exchange of the intelligence you’ve gained, your staff can come together to learn who, where and how your business should be marketing to. Ask your partner for recommendations for list selection, or you can proceed to score your customers and learn even more.
Step 8: Precision Targeting
Now that you have a foundation of understanding, you can address the pain points you identified in Step 3. Which prospects are most likely to respond? Which responders are likely to become customers? And how can you better identify where to invest your marketing dollars? Find out now.
Step 9: Scoring and Validating
You can expect to receive a scored “universe file” containing information for your new world of best prospects and likely responders. Along with this actionable list, your modeling partner should create a interpretive narrative that details the scoring and validation of the recommendations they provide.
An entire modeling project can be done in about a month, from kick-off to completion. Case studies have shown that predictive modeling initiatives have produced returns of up to 1800%. For more information, contact your AccuData sales representative today.
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