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Data Measurements

Customer buying patterns are measured and interpreted using a scoring method based on one or more purchase indicators that include Recency, Frequency, Monetary and Latency. The overall score is a weighted calculation of customer purchase history based on their most recent visit, number of visits and dollars spent.

CONNECT gives businesses the ability to know the value of each customer to their business.  Armed with this data, businesses have the ability to more efficiently use their time and marketing dollars to maximize profit return from their customer portfolio.

Following is an explanation of the data compiled to measure customer value:

Recency [R] = Represents when a customer last visited, purchased or interacted with a business. Considered the most accurate predictor of future consumer behavior, Recency scores help businesses increase sales as the data allows companies to market to customers most likely to respond.  It is a given fact that customers who purchase from a business within 15-30 days are more likely to repurchase than customers who were last in 12 months ago. Businesses who know their customers by timeframe have the ability to maximize their marketing efforts and return on investment.

Frequency [F] = Represents the number of customer visits, purchases or interactions over a set period of time. Frequency scores help businesses minimize "pay and pray" marketing and instead target offers to the customers most likely to respond. The end result is greater response and sales to the business.

Monetary [M] = Represents the financial impact specific customers or groups of customers will have on net profit to a business.  Monetary data shows which customers spend the most and which spend the least.  Knowledge of this data gives businesses ability to target market and spend time and money where it is likely to have the most impact.  Customers are assets, knowing which assets are the most profitable is extremely valuable data.  Example: If Customer A spends $10,000 a year at your store and Customer B spends $10, who would you like to focus your marketing toward?

Latency [L]
= Represents the time that passes between visits, purchases or interactions. Latency data gives businesses the ideal opportunity to maximize customer retention. Consumers have deliberate purchase patterns. They shop at the same stores, eat at the same restaurants, etc. Latency alerts a business if a customer falls out of their normal purchase pattern.  Knowledge of Latency gives the business an opportunity to send a communication to its customer (via e-mail or mail) with an incentive, perhaps to come back in. This module alone can increase profits significantly. A study conducted by Bain & Co. found a 5% increase in customer retention can increase profits by 85%.


  A 5% increase in customer retention can increase profits by 85% (Bain & Co.)

  It is 7-10 times cheaper to sell to an existing customer instead of bringing in a new customer.

  Top customer segments can be 45 times more likely to respond to your offers. than bottom segments...the key is knowing who is in your top segment.