Analysis

1. Segmentation

segment-profitability-1segment-profitability-2Analysis is a great tool for making difficult policy decisions. In this case, the retailer was contemplating implementing a policy that would have adversely affected lower-spending customers. But this segmentation analysis showed that the lowest spending customers were so numerous and were increasing their spending at such a rate that they were actually the 2nd most profitable customer segment.

 

2. Decay Trees

decay-tree

 

The “decay tree” is a tool we created years ago to measure the loyalty of customer segments.This chart shows individual customer shopping habits in 4-week intervals, and demonstrates that of the 9,737 households that were shipping in the store in January, 1,876 (19.3%) did not show up again even once in the next five months. Pretty humbling