Take an “Outside-In” View When Utilizing Transactional Data
Let’s say a customer visits their favorite supermarket and frequently buys
fish, especially salmon. But they don’t buy much meat. That means they must
prefer surf over turf. Or does it? What their grocer doesn’t know is that this
same customer has a favorite butcher shop where they buy the majority of their red
meat, especially filet mignon. Now here’s the rub. The supermarket keeps sending
this customer special offers for seafood. That seems to make sense. From tracking
their purchase transactions, the store knows they buy a boatload of fish. But what
they really should be doing is luring the customer in with offers for fresh meat.
Simply put, there’s way more profit to be made by capturing a greater share
of the customer’s meat expenditures than there is in selling them more fish.
For many years now marketers have been relying on transactonal data for understanding
the purchase behaviors of their customers. The tried and true benefits of RFM marketing
have been with us for as long as marketers have collected and stored purchase data
inside of vast customer databases. This information gives marketers a window into
the past, present, and likely future purchase characteristics of a large segment of
But what is generally lacking is information regarding a customer’s external
expenditures. These are purchase behaviors that are hidden from view because they
occur at the store down the street or at some other competitor. For instance, a retailer
of women’s apparel might have a good idea of the total spend within the past
12 months for a large portion of its customers. But what does this cumulative purchase
amount represent as a share of the customer’s total wallet for women’s
apparel? And what is the customer’s upside potential for sales of women’s
Too many marketers use transactional data with an “inside-out” approach.
That means they study their own internal transactional information and then push out
offers based on inferences about the likely future behaviors of their customers. The
problem is that this approach only addresses one side of the transactional story.
In my supermarket example, the grocer is blind to my purchase behaviors outside the
walls of his store. By using an “outside-in” approach instead, the marketer
can begin to leverage knowledge regarding my external purchase behaviors (the other
side of the transactional story) and then pull me back in with offers designed to
capture a greater share of my category expenditures.
An “outside-in” strategy is now possible using new spending estimates
available on ConsumerView℠. Historical spending data gives marketers greater visibility
into customer behavior by appending spend indices based on actual transaction data.
The spend indices allow marketers to view customers’ likelihood to spend based
on age, gender and Zip+4 across more than 50 industry and lifestyle categories.
Analysis of internal transactions (looking from the “inside-out”) combined
with spending insights (looking from the “outside-in”) provides marketers
with a more complete and balanced view of how their customers are behaving. To put
improve your customer retention and acquisition marketing campaigns, and to learn
more about the benefits of spending data on ConsumerView, contact your local Experian
sales representative or call 1 800 918 8960.
Experian Marketing Suite
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