How important is it to know who your most profitable consumers are?


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Recently we have been looking at the distribution of value, the pareto rule, or the 80/20 reality for one of our consumer goods clients its portfolio of brands which sells largely through retailers.

We knew there would be a consumer value skew, there always is – typically ranging from high e.g. 95/5 to low e.g. 60/40 depending on the company or brand in question but we were unsure what it would be in this case. Interestingly many experienced brand marketers have no idea there is a skew, or are not sure what it is and what they should do about it.

Using data our client already had in their business, coupled with data from research panels our SCHEMA Value Estimator™ tool found the skew to be in the order of 50/15 i.e. c50% sales come from c15% of consumers. The depth and longitudinal nature of the data allowed us to look at acquisition and retention behaviour of different values of consumers and, using scenario planning techniques, the possible worth of different precision marketing strategies for different value and behaviour segments (e.g. improving high value consumer retention, developing lower value/high potential, winning new high value share).

Through digital, social, mobile and near real time consumer management we believe we can ensure revenues are not only maintained but are developed within the high value group. We can also identify others in the consumer base who may be of equal potential value, but are currently buying competitor products on certain occasions. This deep understanding of consumer value and behaviour over time provides brand and category marketers with a new world of possibilities.

In the search for growth, we think knowing where your current profit comes from is an essential start-point to building a better strategy that will improve marketing effectiveness and efficiency. TCF’s methodology for acquiring, analysing and presenting this information for consumer brands provides a window on the kind of sales data that information-rich organisations take for granted. We are convinced that brands which understand this, will be better placed to differentiate and compete in the longer term. We would be interested in your feedback.

Republished with author's permission from original post.

Julian Measey
Julian Measey is a Director of The Customer Framework. Prior to joining TCF, Julian was Global Relationship Marketing Director at Diageo. For over 26 years he has been at the cutting edge of Digital and Relationship Marketing strategy and capability across FMCG, Retail, Travel and Financial Services. Julian joined Diageo in 2000 and set up the Marketing Development Team responsible for driving best practise across new marketing channels including RM, Digital and Experiential marketing, leading to award winning campaigns for Guinness, Gordon's and Bells.


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