Andy Wood, MD, GI Insight You Asked What are the problems that arise when analysing customer spend levels?

We often encounter classic cases where snapshots or periodic analysis can be at best misleading, at worst disastrous. Imagine the situation where your analyst is looking at spending patterns over the space of a year, and is dividing the year into two six-month tranches. You divide people into a number of revenue ranges and build strategies accordingly. Only the performance of these campaigns is rather disappointing. The reason for this is that some of your customers’ spending patterns fall into extremes of seasonality.

Say you are a DIY store. Customer A only buys from you at Christmas, and in the January sales. Customer B spends with you every month. And Customer C only spends with you in the Spring. Customer A is a panic pre-Christmas buyer and also a bargain hunter. Customer B is your steady, rock-solid core customer who is a genuine DIY enthusiast. Customer C is only interested in your garden products. But the first six months of your financial year are November-April, and they all appear in your analysis as generating the same revenue.

Evidently, they are all valuable customers — but their very particular spending patterns, if analysed month by month, mean that a very different marketing strategy has to be adopted for each group.

The point of analysis is to decide how influence their spend patterns so that they either

· Spend more

· Spend more often

· Or you stop them declining

How you spot these trends will be key to achieving this.

GI Insight