Mobasshir Hasan

Mobasshir Hasan Business Situation​ • Addressing the challenge of tailoring engagement strategies across diverse six customer segments—from High Value Champions to Casual Clickers—to boost loyalty, elevate CLV, and maximize revenue for Champion.​ CRM Objectives​ • To strategically segment the customer base and implement targeted engagement strategies that elevate customer satisfaction, enhance loyalty, and increase retention rates across all segments, with a particular emphasis on converting promising customers into more valuable segments and re-engaging less active ones. Marketing Communication Objectives: ​ • To deploy personalized and segment-specific marketing communications that resonate with each customer group's preferences and purchasing behaviors. The aim is to create meaningful connections through exclusive offers, loyalty rewards, and tailored content, thereby encouraging higher frequency of purchases, increased monetary spending, and stronger brand advocacy among the high-value and potential growth customer segments.​ 2 Focused on achieving insight-driven customer segmentation through strategic analysis for optimized marketing impact Segmentation Framework • Data Synthesis: Integrated customer data focusing on RFM metrics—recency, frequency, and monetary values. • Behavioral Metrics: Included additional behavior indicators such as average items per order, average revenue per order, offer usage, and product category preferences. Defining Segments: • Recency Analysis: Segmented customers based on the mean number of days since the last purchase, identifying those with the most recent interactions. • Retention Evaluation: Assessed mean retention scores to gauge the likelihood of future engagement and loyalty. • Revenue Contribution: Analyzed segments for their share of total revenue, highlighting their financial impact. Strategic Grouping: • Observation Count: Ensured segments met a minimum threshold of 5% customer representation to warrant dedicated marketing efforts. • Segment Merging: Combined segments 111 and 010, and 100 and 110 justified by their collective revenue share and to maintain the minimum segment size criterion. 3 Outline of key steps performed in SAS Studio for Data-Driven Insight for streamlined Customer Segmentation • Rank Data Task: Used the "Course.Champion_Sample" dataset in SAS Studio, ranking customers on recency, frequency, and monetary variables into two N-Tile groups, with new variables prefixed by 'rank_', output stored as "Work.Rank".​ • Creation of Combined RFM Variable: Entered SAS code in a new editor window to create a "combined_RFM" variable, merging recency, frequency, and monetary data for detailed segmentation, visible in "Output Data" post-execution.​ • Summary Statistics Task: Ran with the previously created "Work.Rank" SAS table, analyzing recency, frequency, monetary, and other behavioral variables across 8 sub-groups. Utilized to guide the consolidation of these groups into 6 final RFM segments, ensuring comprehensive engagement strategies align with CRM objectives.​ • Segment_Assignment Variable Creation: Opened a second empty SAS program editor window to paste SAS code for generating a "Segment_Assignment" variable, aiming to refine the 8 sub-groups into 6 actionable segments based on detailed instructions and iterative analysis, ensuring the code's adaptation for final segmentation is documented in the report appendix. • Final Segment Behavior Analysis: Conducted a second Summary Statistics task, applying the "segment_assignment" variable to dissect behaviors within the newly defined segments. This task paralleled the initial analysis in terms of variables and statistical metrics, aimed at deriving actionable insights for strategic decision-making.​ 4 6 customer segments identified, ranging from High Value Champions with high revenue and frequency to Silent Spectators with the least revenue and longest time since last purchase 30.54% High Value Champions (011) On average, customers in this segment have the highest total revenue with the most frequent orders and the least elapsed time since their most recent purchase. 20.81 % Frequent Loyalists (111,-% Champion Customer Segments 111 Future Champions (001) On average, customers in this segment have the third highest total revenue and the third shortest elapsed time since their most recent purchase, but with lowest frequency of orders placed. Occasional Super Spenders (101) On average, customers in this segment have the third least total revenue but have the longest elapsed time since their most recent purchase. They have highest per order value. 16.30 % Casual Clickers (100, 110) 8.06% Silent Spectators (000) 7.88% % of Customers On average, customers in this segment have the second highest total 010 revenue and placed orders most frequently irrespective of their elapsed time since their most recent purchase. % of Revenue On average, customers in this segment have the second least total revenue and have the longest elapsed time since their most recent purchase irrespective of the recurrent orders placed. On average, customers this segment have the least total revenue and least elapsed time since their most recent purchase. Customer Segment Description 5 High Value Champions, with an impressive $258.43 average monetary value, also lead in promotional engagement with 93%, showcasing both substantial spending & active participation in promotional offers, while Casual Clickers exhibit lower recency and frequency but engage with promotions more often. High Value Champions The Frequent Loyalists Future Champions Occasional Super Spenders Casual Clickers Silent Spectators Recency (in days) 69.64 250.83 91.64 263.4 262.16 79.5 Frequency (last 12 months) 4.36 3.91 1.76 1.72 1.23 1.19 Monetary (last 12 months) $258.43 $235.54 $136.24 $131.85 $34.53 $38.71 2.08 2.03 2.64 2.54 1.25 1.31 $59.59 $59.69 $81.21 $81.66 $29.60 $33.67 % Customers that Used a Promotional Offer 93% 89% 50% 47% 27% 21% Estimated Annual Retention Rate 82% 66% 65% 49% 35% 56% Profile Element (mean) Avg. Items per Order Avg. Revenue per Order 6 High Value Champions exhibit a significant affinity for women's products (45%), while Casual Clickers surprisingly show a preference for men's products (61%). Notably, there is a consistently low affinity for kids products across all segments. High Value Champions The Frequent Loyalists Future Champions Occasional Super Spenders Casual Clickers Silent Spectators % Customers that only purchased women’s products 45% 38% 48% 42% 35% 48% % Customers that only purchased men’s products 33% 41% 43% 50% 61% 49% % Customers that purchased women’s and men’s products 20% 15.5% 6% 6% 1.50% 0% % Customers whose purchases included kids products 2% 5% 3% 1% 1% 3% Profile Element (mean) 7 HVC FL FC OSS SS CC High Value Champions The Frequent Loyalists Future Champions Occasional Super Spenders Silent Spectators ​ Casual Clickers ​ Avg CLV 406.88 232.86 131.63 92.86 31.05 20.11 Expected years of life​ 5.56​ 2.94​ 2.86​ 1.95​ 2.27​ 1.56​ % of Customers 13.32% 9.95% 13.58% 13.93% 22.93% 26.29% Focus Area​ Retention​ Retention​ Retention​ Revenue​ Revenue​ Revenue​ Assumptions: discount rate = 9%, average margin = 39% and acquisition cost = 0​ 8 The "Customer Segment Strategy Grid" maps six customer segments in a matrix based on monetary value and recency of interaction, with bubble size indicating the relative number of customers in each segment. Customer Segment Strategy Grid Recognize and Defend High Monitor and Retain The frequent Loyalist s Observed Revenue High Value Champions Selectively Engage and CrossSell Low Occasional Super Spenders Inactive Cross-Sell and Upgrade Future Champions Casual Clickers Months since most recent purchase Silent Spectators Active 9 Strengthening our core customer base, we're set to maximize retention among High Value Champions and increase order value for The Frequent Loyalists, while nurturing the growth potential of Future Champions. SEGMENT NAME HIGH VALUE CHAMPIONS THE FREQUENT LOYALISTS FUTURE CHAMPIONS STRATEGIC MARKETING PRIORITY Maximize retention by 5% and increase lifetime value Increase retention by 5% and Avg revenue per order Increase retention by 5% over the next year SPECIFIC MARKETING RECOMMENDATIONS • Create VIP customer experiences, such as early access to new products like NIKE, exclusive events, or personalized services, to recognize and reward their loyalty. • Implement a regular feedback mechanism tailored for this segment to gather insights into their preferences and expectations, ensuring the brand continues to meet and exceed their needs. • Use data analytics to gain insights into the purchasing patterns and create targeted cross-selling initiatives. Combination of Mens, Women’s and Kids products for offer. • Given high offer indicator mean, balance the use of offers to avoid eroding profitability and to maintain perceived value. Personalized offers, rather than continuous generic promotions can lead to better purchases. • Implement retention-focused strategies like targeted communication in social media, exclusive previews or loyalty rewards. • Launch Campaigns with offers of Men’s & Women’s product bundles or discounts on different product categories to make them buy frequently 10 Focused on stimulating activity, we aim to transform Occasional Super Spenders into regular customers, encourage Casual Clickers to engage more deeply, and re-engage Silent Spectators with compelling offers. SEGMENT NAME STRATEGIC MARKETING PRIORITY SPECIFIC MARKETING RECOMMENDATIONS Increase revenue by 5% over the next year with higher purchase frequency • Flash sales to increase their purchase frequency and average order value. • Offer tiered loyalty programs with benefits like exclusive discounts, members only products, or personalized recommendations to incentivize higher spending and longer customer lifespans. CASUAL CLICKERS Increase revenue by 5% over the next year with higher customer engagement • Free shipping without minimum order • With a focus on men's apparel in promotional materials, website banners, and email campaigns. Also implement A/B testing on various aspects of your website call-to-action buttons. SILENT SPECTATORS Increase revenue by 10% over the next year with higher customer engagement • Launch campaigns, offering special incentives to re-purchases (for example, give 10% re-purchase coupon that can be used on the next purchases of worth >=$100 spent in next 2-4 months) • Offer upsell or cross-sell recommendations to increase the average order value. OCCASIONAL SUPER SPENDERS 11 Allocate 30% to "High Value Champions" for enhanced engagement, 20% to "Frequent Loyalists" for cross-selling, 20% to "Future Champions" for growth, and distribute 10% each to "Occasional Super Spenders" for promotions, "Casual Clickers" for experiments, and "Silent Spectators" for analysis and loyalty points. 12 Allocate 30% budget for enhanced engagement This segment has the highest average CLV and retention rate, indicating they are already highly engaged and valuable. Allocating a significant portion of the budget here can help maintain this engagement, potentially increasing their CLV even further. Investments can include exclusive offers, loyalty programs, and personalized communication to appreciate their loyalty and encourage continued patronage 13 Allocate 20% budget for cross-selling With a strong retention rate and substantial total revenue, this segment shows loyalty and consistent spending. Since they purchase across multiple categories, cross-selling is a suitable strategy. Investment could be used for targeted marketing campaigns aimed at introducing them to new product lines or bundled offers. 14 Allocate 20% budget for growth Representing potential high-value customers, investing in this segment can increase their frequency and monetary contributions. They have growth potential, indicated by their retention rate and average items per order. Marketing actions can include targeted promotions, product recommendations, and engagement campaigns designed to elevate their spending and retention rates. 15 Allocate 12% budget for tailored promotions Despite their lower retention rate and lower frequency but high spend, they spend significant amount when they do purchase. Implement re-engagement campaigns that highlight high-value items or categories they’ve shown interest in, coupled with incentives to shop more frequently. 16 Allocate 8% budget for experiments This segment have the lowest retention rates and CLV, indicating they are less engaged and at risk of churning. A smaller budget allocation can be justified by the potential for re-engagement through specialized campaigns designed to awaken their interest in the brand again, efforts might focus on feedback surveys and experiments. 17 Allocate 10% budget for Analysis & Loyalty point Have moderate retention rate so allocate budget to perform customer analysis to uncover the reasons behind their low frequency and spending. Offer loyalty points for engagement that can be redeemed. This strategy aims to convert their silent loyalty into active participation and increased spending.​ 18 1. SAS code to create segment Variable in 8 Segments data work.RFM1; /*output dataset name for Champion assignment*/ set work.rank; /*input dataset name*/ length combined_RFM $3.; /*new variable containing the combined values of the 3 ranked variables*/ /*code to combine the R, F and M ranked values*/ combined_RFM = compress(rank_recency || rank_frequency || rank_monetary); run; 19 2. SAS Code to create Segment Assignment Variable by segments name data work.RFM2; /*output dataset name for Champion assignment*/ set work.RFM1; /*input dataset name*/ /*new variable containing the final RFM segment assignments*/ length segment_assignment $30.; /*The code below is used to assign each unique combined_RFM value into a final segment assignment*/ /*The code below is an example of 6 segment solution*/ if combined_RFM in ('011') then segment_assignment = 'High Value Champion'; if combined_RFM in ('111','010') then segment_assignment = 'The Frequent Loyalist'; if combined_RFM in ('000') then segment_assignment = 'Silent Spectators'; if combined_RFM in ('001') then segment_assignment = 'Future Champion'; if combined_RFM in ('101') then segment_assignment = 'Occasional Super Spenders'; if combined_RFM in ('100','110') then segment_assignment = 'Casual Clickers'; run; 20 3. STATISTICS 21