Customer Report Card

Here is a summary of the data you have given us. The quality of your analysis is a function of the quality and amount of data you’ve uploaded. You have uploaded a customer database for analysis with these attributes:

• 17,000 customers
• 85 products
• 787,702 transactions from 10/03/2001 date to 04/02/2008, a 2,373 day period
• $31,081,880 in customer revenue
• The average revenue per customer per year $1,839
• The average number of transactions per customer is 46

A. Customer Dashboard

Definitions for purposes of this report card:

• A new customer is one who made their first purchase in the last 3 months
• An existing customer is one who made their first purchase more than 3 months ago
• An active customer is one who has purchased within 24 months
• An inactive customer is one who last purchased more than 24 months ago

Resource: Explaining Dashboard Metrics

Customer Segments	Value
Active customers	15,151
Newly inactive	258
1x buyers	4.19%
2x buyers	3.70%
Multiple product buyers	93.41%
Company Performace	Value
Inactive ratio	1.51
Active customer growth	-0.57%
New customers	1.13%
New customer revenue	2.62%
Existing customer revenue	97.38%
Current purchasers	53.15%

• 15,151, or 89% of your customers are active, having purchased something within the last 24 months.
• 258, or 2% of your customers are newly inactive. They passed a 24 month interval from their last purchase this last quarter.
• 1.13 % of your active customers in this period are new. 2.62% of your revenue is from them.
• 97.38% of your active customers in this period are existing customers. 97.38% of revenue is from them.
• 4.19% of customers have placed only one order in the time period you submitted.
• 3.7% of customers in this time period have placed two orders.

Inactive Ratio

The inactive ratio is an important indicator of the health of your customer base. It is the number of inactive customers divided by the number of new customers. If the ratio is less than or equal to one, you are growing the active customer base. If the ratio is greater than one, your customer base is growing smaller.

Your ratio is 1.51

B. Existing vs. New Customer Revenue

The chart below tracks revenue from your existing customers vs. your new customers over time. If the relationship between the revenue from existing customers and new customers isn’t consistent over time you may have an opportunity to increase total customer revenue by changing some marketing strategies relating to that part of the population that is lagging.

C. Revenue Distribution

The Loyalty Score is a proprietary measure of the likelihood of a purchase in the near future. Each customer has a Loyalty Score and is ranked relative to all other customers.

The chart below shows the revenue contribution of your customers by Loyalty Score. The more the curve looks like a hockey stick, the larger the revenue contribution of your top most customers. While many marketers focus on their ‘best clients’, the most efficient opportunity to grow revenue lies in the crook of the hockey stick with customers in the 40-80th loyalty rank. The area under the curve is proportional to total revenue, so a hockey stick shape is not optimal. An ideal curve would run diagonally from lower left to upper right.

D. Revenue at Risk

This behavior map plots revenue rank vs. purchase delay in order to show which high value customers have the greatest risk of defecting.

Of your customers which are in the top 3 deciles of revenue rank, 20% have a 50% or higher probability of defecting. If a quarter of them did defect, you would lose $1,000,000 in revenue.

E. Customer Movement

The chart below is a snapshot of your customers’ behavior and shows how your customer population is changing. The customers with highest loyalty scores are in deep red. Customers in the upper right quadrant are growing in loyalty and revenue. The customers in the upper left quadrant are growing in loyalty but their revenue is declining. In the lower left quadrant, customers are declining in loyalty and revenue. Customers near the center are relatively steady. The more customers (dots) away from the center, the more volatility there is in your customer set. Each of these groups can benefit from targeted campaigns with different messages and tactics.

A. Upsell

This table ranks products according to how many customers have any likelihood to buy more of the same products. The number of target customers is also segmented by how likely they are to buy. A high likelihood has 75% or greater, medium 25-74% and low is 0-24%.

Description	No. of Target Customers	High 75+%	Medium 25-74%	Low 0-24%
Digital Imaging Camera, Scanners	5736	97	369	5270
Cables, Cable A	5638	110	2470	3058
Data Storage, Drives and Disc Drives	5289	31	1488	3770
Video, Monitors, Cards, Porjectors	4988	216	1352	3420
Sound, MultiMedia, Speakers	4794	61	2003	2730
Accesories, Connectors	4712	13	1183	3516

B. Cross Sell

This table ranks products according to how many customers who haven’t bought a product have any likelihood of buying them. The number of target customers is also segmented by how likely they are to buy. A high likelihood has 75% or greater, medium 25-74% and low is 0-24%.

Description	Total No. of Target Customers	High 75+%	Medium 25-74%	Low 0-24%
Accessories, Adapter C	14852	1931	5050	7871
Sound, MultiMedia, Receiver A	14825	2520	2224	10081
Sound, MultiMedia, Receiver H	14620	2193	2485	9942
Digital Imaging Camera, Scanner, Scanner Fax	14506	1015	3191	10300
Sound, MultiMedia, Home Theatre A	14505	1305	2756	10444
Dry Sound, MultiMedia, BoomBox C	14391	1583	2878	9930

A. Upsell

One of our analysts on staff has also reviewed your data results. Here are a few observations and campaign ideas that he/she noted:

1. Run win-back campaign to the 1800 customers who have a 10% chance to be recaptured. Of these, 50% have a suggested product recommendation for a personalized campaign.
2. Run an up-sell campaign for the top 10 (or 600) products in the opportunities table. We estimate such a campaign would yield $16,573 dollars.
3. Suggest a campaign using category score to cross-sell. We estimate that with thresholds at 10, such a campaign would yield a response rate of 8% to purchase a new product, with $205,192 of revenue.
4. Comment on dispersion in change in loyalty map.

This is just a sample of the things you can learn about your customer base with Longbow. Now that your data is uploaded, you can login to www.longbowdirectmarketing.com at anytime and analyze your customer base, segment it, develop campaigns and view a full range of reports about your customers at no cost.

We are happy to help you along the way. When you are ready, you can create direct marketing lists and download them for $.10 per downloaded record. Support plans are also available to help you get the most from Longbow or you can begin with a Pilot Program.

If you have any questions about these results or would like to find out more about Longbow contact Elayne Dudley at (603) 610-8814 or via email at elayned@loyaltybuilders.com.