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
iCONNECT 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:
[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%.