The following is from the March 2011 Drilling Down Newsletter. Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection? Just ask your question. Also, feel free to leave a comment and I’ll reply.
Q: We’ve been playing around with Recency / Frequency scoring in our customer email campaigns as described in your book. To start, we’re targeting best customers who have stopped interacting with us. I have just completed a piece of analysis that shows after one of these targeted emails:
1. Purchasers increased 22.9%
2. Transactions increased 69%
3. Revenue increased 71%
A: There you go!
Q: My concern is that what I am seeing is merely a seasonal effect – our revenue peaks in July and August. So what I should have done is use a control group as you described in the book – which is what I am doing for the October Email.
A: Yep, that’s exactly what control groups are for – to strain out the noise of seasonality, other promotions, etc. But don’t beat yourself up over it, nothing wrong with poking around and trying to figure out where the levers are first.
Q: Two questions:
1. What statistical test do I use to demonstrate that the observed changes are not down to chance
2. How big should my control group be – typically our cohort is 500-800 individuals
A: Good questions…