Increase Sales from Existing Customers
We have had a number of business owners/operators over the past two years ask us to help them answer two questions “who is my customer?” and “how can I increase sales from my existing customers?” While most businesses have a general idea of who has purchased from them in the past they have realized that as the economy has changed over the past 4 years so has their customer, not only in make-up but in financial situation resulting in the need to re-evaluate their customer base.
The Customer Intelligence Report by Catalyst Analytics analyzes your customer database, identifying the economic and demographic make-up of your customers and uses our proprietary algorithms to measure your customer’s ability and willingness to spend money today. The results of this report will give you real time intelligence on your customer, giving you the ability to segment your marketing and sales efforts and align them with the individual make-up and spending mentality of your customer.
Catalyst Analytics created a tool that helps you become an expert in customer assessment and profiling, the “3L Score”. The 3L Score allows you to evaluate any U.S. based customer who has purchased from you in the past. We will work with you to tell you not only who your customer is but how willing and able they are to spend money today based upon the current economic, demographic and housing situations in their neighborhood.
What is it?
The Customer Intelligence Report is a detailed analysis of every customer in your database using our proprietary 3L Score system which measures and identifies the economic and demographic profiles of the neighborhoods (1/2 mile radius around your customer’s address) where your customers live. We can measure any residential address in the United States.
How does it work?
The process is simple for you. Deliver to Catalyst Analytics an excel or CSV file of all your U.S. based customer addresses and unique ID code for each (so you can match up the results) and we’ll get to work. The time to process an individual report depends on the size of your customer list. Typically, our algorithms generate results for each individual address in about 20 seconds per address or less.
Once our fulfillment teams are finished, a CSV file is delivered to our in-house analysts who then clean up the data in excel, generate the charts included in this sample and create a final PDF of the entire report that can be delivered to you in addition to the raw data excel file. (This process can take anywhere from 1 to 5 business days depending on the workload of our analysts.)
What information do I need at my disposal in order to properly analyze my customers?
We will deliver to you an excel file containing the most relevant data output for each individual address that you sent to Catalyst Analytics. For each address your will receive the following .5 mile radius neighborhood information with filter fields for easy sorting: 3L Score, Stability Strength Score, Stability Strength Score Definition, Willingness to Spend Score, 3L Score Percentile Rank, Average Household Income, Income Quintile, Residential Population, Daytime Employment, Digital Generation Population, Echo Boomer Population, Gen X Population, Baby Boomer Population, Bob Hope Population, Residential Occupation (white collar), Residential Occupation (blue collar).
What does the information tell me about my customer?
The information included in the excel file will give you a clear picture of the make-up and economic situation of the neighborhoods where your customers live. Have an grasp of the make-up of where your customers live will give you insight into who they are and how they spend money. Neighborhoods composed of households made up of people baby boomers with white collar jobs and high incomes spend money differently than echo boomer dominated, blue collar, lower income households. Also, neighborhoods that are still suffering through the adverse effects of unemployment and the housing crisis have a different ability and willingness to spend money which is addressed in our 3L Score algorithms (read the definitions here.)
In addition to the raw data excel file you will receive three information reports/charts that are generated by Catalyst Analytics. There are particular correlations of our proprietary scores to select data fields that we believe are of utmost importance in terms of analyzing your customer base. As an analytic and technology company we felt that it was in the best interest of our customers to make sure that these correlations are seen and understood by every person who uses our service.
Measure your Customers by Income, Age Group & 3L Score
Notice immediately that there is a correlation between income and strength of the 3L Score (max score is 200). On average, the higher the 3L Score (combined Stability Strength and Willingness to Spend Scores, see definitions at the end of this document) the more affluent (Avg. Household Income) the corresponding neighborhoods.
On average, there is a significant difference in the neighborhood make-up for each income quintile. Typically, in a more affluent high 3L Score neighborhood will find a dominance of Baby Boomers (ages 46-65) as compared to average income neighborhoods that will not only have a more diverse generational make-up, but will typically have more dense populations (# of people).
Below this chart there is a numerical breakdown including the number of customers in each income quintile. Once you understand where the majority of your customer stand in terms of employment/economic stability, income and generational make-up you can begin to market specifically to their needs. The 3L Scores will tell you who is more willing and able to spend money today, the income will guide you in terms of which products/services to market to them and the generational breakdown will give you insight into what they and their neighbors (referrals?) look like in terms of age.
Sort your Customers by Income & Neighborhood Employment Make-up
In this chart immediately notice that there is a correlation between income quintile and occupation make-up (white collar & blue collar.) Customers who are located in higher income quintile neighborhoods on average will be populated by people with white collar jobs. Compared to average and lower income neighborhoods where the mix of people with white collar and blue collar jobs will be close in number and in many cases, as household income decreases there will be a corresponding increase in the number of blue collar workers.
It is important to understand the occupational make-up of your customer base as the spending habits of consumers not only corresponds to income but to social standing. As you analyze your sales trends by product type and price against information that you learn from this chart you will definitely see trends as to the buying habits of each customer group.
As you re-market your services to each group of customers you will be able to target your messaging, pricing and product mix to the social standings of your customer base. White collar affluent customers spend their money differently than blue collar average income customers.
Understand your Customer 3L Score Breakdown –The 80/20 Rule
Pareto’s Principle – In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are trivial.
This chart breaks down your customer list by 3L Score Percentile (Top 25%, Top 50%, Bottom 50%, Bottom 25%). Which of your customers spend the most money and which percentile group represents them? Which products do they purchase from you? How can you drive more revenue from your top 20% of customers?
The importance of this chart is to understand where the majority of your current customers stand in terms of willingness and ability to spend money. Compare the individual customer results of each percentile group to their historical spend, you will see a trend. Once you know where your 80/20 lies then re-read the Stability Strength and Willingness to Spend definitions at the end of this document to gain a more clear understanding of your customers’ economic and financial situations. As you look to re-market your services to past customers you’ll be able to use this breakdown as a starting point. The customers in the Top 25% are more willing and able to spend money today than those in the Bottom 50%, thus giving you an opportunity to market more aggressively to this group.