Growing customer lifetime value with analytics

A consumer electronics distributor uses SAS® to analyze loyalty card data and drive more revenue

When SGM Distribution, an Italian consumer electronics distributor, launched its loyalty card program, 2.2 million customers signed up - bringing with them a wealth of data on their purchasing habits. With data growing on a daily basis, the distributor is using SAS Analytics to gather insights about customer behavior and propensity to buy, and to identify optimal customer segments for efficient and effective micromarketing campaigns.

SGM Distribution, which also operates nearly 70 Marco Polo and Marco Polo Expert retail outlets, has about 70 percent of its business driven through its loyalty card program. The company uses SAS to drive its marketing segmentation and grow the lifetime value of loyal customers, as well as optimize its direct marketing programs, which have generated response rates of up to 10 percent.

The campaigns were multichannel, comprising online and offline activities. The very first mailing we sent to residential customers generated a 10 percent redemption rate.

Marco Titi
Marketing Communications Manager

"Reconstructing buyer behavior at points of sale, or looking at the frequency of repurchases at a particular store, is a prerequisite for directing the right product offers to the most receptive clusters," explains Giancarlo Nicosanti Monterastelli, CEO of SGM Distribution. "As an example, if we identify a cluster of customers that has a particular interest in video games, we can establish a co-marketing plan with select vendors. Now that we are profiling and clustering our customer base, we can execute microtargeted campaigns to groups with the highest propensity to buy a product or technology."

"Profiling and clustering our customer database led to a number of promotional campaigns that targeted customers with specific buying behaviors," explains Marco Titi, Marketing Communications Manager at SGM Distribution. "The campaigns were multichannel, comprising online and offline activities. The very first mailing we sent to residential customers generated a 10 percent redemption rate."

Reengineered marketing

Before using SAS, SGM's marketing campaigns were sent indiscriminately to opt-in customers. With the help of SAS' retail consulting partner Value Lab, the distributor's marketing segmentation processes were reengineered to collect transactional data from various contact points, which is analyzed to create customer segments; identify homogenous clusters; build detailed behavior models; evaluate interest indicators; and optimize marketing initiatives.

Loyalty equals profit

"Targeted campaigns also translate into immediate savings on things like mailing costs," Titi continues. "Our current objective is to improve the value of the card by offering customers a wide range of personalized promotions to strengthen relationships. It's important to maximize a product's price, but it's even more important to aim for profitability related to the entire life cycle of a customer."

Challenge

  • Needed to analyze loyalty card data to generate insight on customer behaviors and their propensity to buy.
  • Wanted to identify optimal customer segments for efficient and effective micromarketing campaigns.

Solution

SAS® Business Analytics

Benefits

  • Generated a 10% response rate on the first mailing.
  • Optimize customer segmentation.
  • Iincrease profitability.
  • Improve customer lifetime value.
  • Reduced campaign costs.

Les résultats présentés dans cet article sont spécifiques à des situations, problématiques métiers et données particulières, et aux environnements informatiques décrits. L'expérience de chaque client SAS est unique et dépend de variables commerciales et techniques propres, de ce fait les déclarations ci-dessus doivent être considérées dans un contexte. Les gains, résultats et performances peuvent varier selon les configurations et conditions de chaque client. SAS ne garantit ni ne déclare que chaque client obtiendra des résultats similaires. Les seules garanties relatives aux produits et services de SAS sont celles qui sont expressément stipulées dans les garanties contractuelles figurant dans l’accord écrit conclu avec SAS pour ces produits et services. Aucune information contenue dans le présent document ne peut être interprétée comme constituant une garantie supplémentaire. Les clients ont partagé leurs succès avec SAS dans le cadre d’un accord contractuel ou à la suite de la mise en œuvre réussie du progiciel SAS. Les noms de marques et de produits sont des marques déposées de leurs sociétés respectives.

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