Next Best Action and A/B Testing

How to use A/B Testing for Customer Analytics

Next Best Action is a learning based on the response of the previous action. Every action/offer is an test offer.

A/B split testing

A/B Tests work like this. Say Two different email messages (Message A / Message B) are sent to customer segments and the responses are measured by the following factors

Mail Open
Clicks on Links
Conversion (Purchase etc)

If say the more number of Message As are clicked than Message B, then A is said to be more effective.

Email Response analysis

The responses are then analysed - responders / non-responders are segmented and analysed. The model is then refreshed.

Once the model is refreshed the customers can be retargeted / left alone

Retargeting Customers

Retargeting is to try out the offer / promotion / message another time. They can send the same message / a different customized message


A/B Testing in Web Page Design / Website Traffic

A/B testing in websites use different web page content on version A and version B of a page. The pages are loaded randomly to the user. The responses / conversions are analyzed. Next Best Action is defined for each page and the conversion rate is nothing but the rate of action being taken for the total visits. Some of these might be different design for version A and B or different positioning of elements etc


Case Study - Victoria Secret A/B Testing

Victoria Secret - the leading eCommerce vendor is testing its

Email Subject lines
Offer and Image











using A/B testing (see Site Doublers for the complete case study)

Segmentation of American Teens Internet Usage

American Teens - Segmentation

Smartphone adoption among American teens has increased substantially and mobile access to the interTeens and Technology 2013 findings. +Teens of America are +Hyperconnected
net is pervasive  by Pew Research Center's

This also shows the predictions for 2020 by +Pew Research Center and +Internet Provider.org

Widely used Segmentation Products / Solutions

Free Segmentation Frameworks / Products

We had an indepth analysis of various segmentation frameworks for profiling customers in Segmentation Standards / Framework. Here we will look in more detail on some readily available Segmentation products that will accelerate segmentation/clustering.



Prizm's market segmentation comes-up with beautiful segments for a particular Zipcode. If you want to open a Store in the locality ZIP Code 65231, Auxvasse, MO. Here are the results from the search (http://www.claritas.com/MyBestSegments/Default.jsp?ID=20#)

PersonicX is a household-level segmentation system including 70 clusters and 21 life stages. The PersonicX suite helps to know and anticipate customers’ demographics and buying behaviors, conduct market analysis, plan customer acquisition strategies, and create cross-sell, up-sell and retention campaigns that are truly targeted, personalized and powerful.





Forrester's Social Technographics data classifies consumers into seven overlapping levels of social technology participation. Based on their proprietary Consumer Technographics survey data, they can
share with how social participation varies among your consumers globally and help plan a targeted social technology strategy.

+Monetate's LivePredict is an automated segment discovery product that automatically identifies valuable customer segments and the attributes that define them. This gives marketers the ability to
instantly take action by targeting offers and content specifically to those segments

+OfficeMax is using LivePredict to identify highest and lowest performing segments at both brand and campaign levels

Is RFM Model Outdated (Emergence of RFM+ Model)

Recency, Frequency and Monetary (RFM) is the standard model used by many retailers/banks and financial institutions to segment their customers. This model is a time-tested one and has never failed.

 

So

 

The RFM is slowly becoming outdated.

Emergence of Social media, Mobile devices has made the researchers to go with the RFM+ (RFMPlus Model). The RFMPlus includes social media information, Customer Lifetime Value (CLV), Last Visit / Latency / Frequency between visits.

Segmentation Standards / Framework

Nielsen is the market leader in Segmentation. It's framework/system - PRIZM has more than 66 distinct groups/segments (mostly for US Customers) based on their demographic, geographic and purchase behaviour. They have catchy nicknames, images and behavioral snapshots that     help the marketers better understand the customers

P$YCLE is a segmentation system that evaluates consumers using key demographic factors that have the greatest effect on their financial behaviors, such as income, age, presence of children, home ownership and Nielsen’ proprietary measure of IPA. This is mostly used in Finance and Insurance industry

The advantage it is to identify consumer segments who have the resources and propensity to purchase specific financial products and services

Advantages of Segmenting - A case study

Women control over 80% of purchases of most products and services. Many companies have yet to fully capitalize from marketing and selling effectively to women. Insights in Marketing is dedicated to help increase the effectiveness of your marketing efforts towards women!