An ABC Introduction to Data Mining for Dollars: Slicing and Dicing Your In-House List for Profit (Part 1 of 2)
One of the best ways to build your online business is to build your list; that is, your "database" of potential subscribers, customers or prospects. This may not be as sexy as social marketing, as robust as mobile marketing or as challenging as search engine marketing … but it is a viable way to harness the power within your own "house file" to maximize your marketing ROI.
Today, I'll show you how you can segment your database of names to boost sales, increase bonding and shorten conversion time. Data mining, list segmentation or strategic database marketing is basically the art of slicing and dicing your own in-house list of names for optimal performance. You do this to help increase the response of your promotional and conversion efforts.
You see, once you divide your list of names into smaller groups (known as segmentation), you can target your product offers and promotional messages to each of those groups. By customizing your marketing messages based on specific customer needs, you'll be promoting products to people who are more likely to buy them. You increase your customers' satisfaction rate as well as your potential conversion rates. And higher conversion rates mean more money for your company.
One data-mining model is the RFM method. It's practiced by direct response marketers all over the world. "R" stands for Recency—how recently a customer has made a purchase. "F" stands for Frequency—how often the customer makes a purchase. And "M" stands for Monetary—how much the customer spends. Here's how you can use the RFM method to help lift your sales.
Whether your house list is made up of people who signed up to receive your free e-zine or people who paid for a subscription, you can segment your database according to how long your subscribers have been with you. For instance, you can create categories such as: 0-6 months, 6-12 months, and 12-plus months. You would look at these groups as your hot subs (newest subscribers 0-3 months), warm subs (mid-point subscribers) and cool subs (those who have been subscribing to your e-zine the longest, 12-plus months).