• Cross-sell - This form of business modelling allows you to predict the likely response of different customer groups to different marketing campaigns. This maximises the penetration and effectiveness of your marketing campaign to your existing client base. This form of analysis is extremely valuable when combined with portfolio segmentation as it allows you to target the customers who are most likely respond positively and generate the most profit for your business.
• Cause/effect analysis - Models of customer activity enable you to focus on the main drivers of customer behaviour. You can ask valuable questions including:
  • What do the data items tell me about the causes of the customers' behaviour?
  • How can I use this knowledge to influence customer behaviour? For instance, if you know that a group of customers are likely to leave your company and how to characterise them, you can ask "why are they leaving and what can I do about it?"
    You would then be able to:
    • Formulate an intervention to prevent them leaving; and
    • Pilot the intervention.

It is very difficult to do these types of analyses objectively and exhaustively without sophisticated statistical tools. Many managers believe that they have an intuitive feel for customer behaviour and in some cases they are right. However, in many other cases the analysis challenges their assumptions and leads to a much better understanding of the dynamics of customer behaviour and profit.

For more detailed information contact Richard Brookes or Alan Greenfield.