Executing Effective Cross Sell Campaigns through Association Analysis – A Tactic for Improving Marketing ROI

Executing Effective Cross Sell Campaigns through Association Analysis – A Tactic for Improving Marketing ROI

Association Analysis is a widely used technique in Marketing Analytics to formulate rules and identify patterns using a data set as the base. This analysis plays a critical role in identifying cross selling opportunities, optimizing marketing campaigns and ensuring the right product placement.

Today, the cost of acquiring a new customer is far greater than the cost of cross selling or up selling to an existing customer. Consequently, marketing functions are making concerted efforts to execute effective cross sell and up sell campaigns. This requires an in-depth understanding of how different products in the portfolio are associated with each other and how the presence of a set of products, influences the product purchasing patterns of the customers.

The objective of this white paper is to provide insights on how Cluster Analysis and Decision Tree techniques were used to identify product association patterns and associate product purchase probabilities to each product. The results enabled the marketers to convey the product association message to the field sales team and also provide the field sales team with customer wise product selling priority lists. The field deployment resulted in a two fold increase in Average Opportunity and 62 percent increase in Average Opportunity Size.

Key Words:

Association Analysis, Cluster Analysis, Decision Tree and Marketing Analytics

Introduction

Data, Data everywhere, not a byte to use is a common notion among database marketers. With increasing emphasis on precepts such as, it is not what you want, but what your customers want, organizations have begun investing heavily on collating and storing information on every aspect related to the customer. Information on prospects, customer interactions, and customer transactions are all stored in CRM databases. For companies in the High Technology industry, where success or failure is driven by the slogan of speed, it is very critical to analyze the available data and derive meaningful insights from it in the shortest possible time. Marketing analytics is an area, which has proven its ability as an effective tool to analyze this data, comprehend it and produce valuable insights with respect to customer behavior without compromising on time.

The recent economic crisis has resulted in companies focusing on reducing marketing budgets and anticipating significant improvements in marketing ROI. In this scenario, marketers must ensure that they are able to prioritize their activities and focus only on those activities that yield better returns. According to estimates, the cost of acquiring a customer is a lot higher than selling to an existing customer, which makes cross selling a high priority activity.

Cross selling requires the marketer to answer the following questions:

o What is the purchasing behavior of my customers?
o What is the relationship between various products in my portfolio?

Association analysis is a technique in marketing analytics that is used to answer these questions and it plays a critical role in identifying cross-selling opportunities, optimizing marketing campaigns and ensuring the right product placement.

This white paper provides an overview of Association Analysis. It also provides insights into the business environment in which the client operates, the business challenges faced by the client and the Association Analysis approach followed to address these business challenges.

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