AboutJim Novo Expertise Questions about using customer data to inmprove online profitability, particularly in retailing. Topics include profiling customers using weblogs, figuring out which ads generate the highest value customers, how to reduce the numnber of 1x buyers, how to generate higher sales from current customers, customer analysis, ROI calculation, reducing discounts while increasing resaponse rates. Do you collect customer data (purchases, page views, surveys) and not really use it for anything? Want to find out how? Just ask.
Experience
Past/Present clients Cellular One, MBNA, SteelTorch Software, Retek Direct, CBS Sportsline, Kobie Marketing, Aerial, Tupperware, Barnes and Noble, Comcast Corporation, Home Shopping Network
Question Hi Jim
I have an online store and I do a lot of mailing. I was reading the RFM model and i found it very interesting. I wonder myself.....If my mailing costs are fixed no matter if I send one or thousands of mails, ¿How can the RFM approach can be useful to my online store? Obviously a physical retailer has to control the catalogue spending and a great way would be the RFM approach....but for e-tailing that would be different right?
Thank you
Answer It's a bit different, yes, because e-mail is cheaper than a paper catalog. But there is one issue that is the same: subsidy costs - the cost of giving discounts to people who would have bought anyway at full price. And there is a new issue with e-mail: reducing future profit by alienating customers. You can use RFM or even a simple Recency model to help you reduce the costs of both issues.
