Pattern Analysis and Understanding Big Data in Marketing

Picture of Contrarian Marketing

The excerpt below on Pattern Analysis and Understanding Big Data in Marketing is from Chapter 2 of Contrarian Marketing, and is instructive to building skills to understand how contrarian marketing is ‘not magic’, but rather ‘just math‘.

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What Is Pattern Analysis in Marketing and How Can It Help You Understand Big Data?

Simply put, pattern analysis is a form of data analysis that allows you to segment your market rather than attempt mass marketing.  With respect to Big Data, this technique can be applied to an unlimited number of customer segmentations.  In turn, once you know your segmented group or groups, you can allocate your resources accordingly. Let’s say you have 1500 or 100,000 customers. Do you have to market to all of them? Should you? Not if only 10 percent of those customers do 70 percent of your business. Performing a pattern analysis will help you pinpoint that segment of the market that brings the greatest return.

I often find that marketing decision makers gravitate between the two extremes of either (1) over-simplifying why customers do business with their company or (2) getting into the heart of why each individual does business with their company.

Pattern analysis is a happy medium between these extremes, and will help to clarify where you are succeeding.

How does Pattern Analysis in Marketing work?

It is a relatively simple process if you’re familiar with Microsoft Excel, Microsoft Access, or either the Apple version or Goggle Apps version of Excel. If you’re not proficient with either, there are affordable outsourcing options to help you (See Resources).

Basically, pattern analysis should focus on the following:

1. What percent of your revenue is generated by the top five percent and 10 percent of your customer base?

2.  Using gross margins, what percent of profit is generated by the top five percent and 10 percent of your customer base?

3.  How many of these customers transacted with you in the last 30 days?

4.  How often do they transact over a 30-day period?

5.  What is their average transaction value?

6.  What are they buying from you?

7. How much does each one of these customers spend with you annually?

8. What do they look like?

a. What profession or industry are they in?
b. How much revenue do their companies generate?

c. How many employees do they have?
d. What is their corporate buying process like?  Is it local, multi-unit or headquarters?

e. How do they use your products and services?

9. Why do you think they transact with you? Goodstein suggests that here you need to employ laddering techniques that move from simple evaluation of the functional benefits derived from your products and services to the emotional and personal benefits your offerings provide the buyer.

a. What functional, emotional, or self-defining benefits are they trying to elicit?

i. Flexibility
ii. Empathy
iii. Status
iv. Exclusivity
v. Competitive Advantage

vi. Other reasons?

The image below shows an example.

Example of Pattern Analysis and Understanding Big Data in Marketing

Don’t be intimated by the process. You can do this for your business in just a few minutes. If you don’t immediately know the answer, go with your best estimate.

What came to mind in the last 60 seconds? Your conclusions will help you on the path forward. Now that you’ve grouped your customers into patterns, ask yourself whether you like what you see. The answer should be yes.

Often times, we are blinded by our successes and over-magnify our failures. Your data will likely tell you that five percent or ten percent of your customers generate 70 percent or more of your revenue and profits—and if this group of customers represents your “raving fans.”

In the construction equipment rental business, as an example, five percent of customers account for 73 percent of revenue and spend about $35,000 each annually. The next five percent of customers account for 10 percent of revenue and spend $8,000 each annually. The top tier clients spend more than four times greater the amount as the next best customers.

In the next marketing news and insights update, we will discuss duplicating the success you enjoy with your B-of-B clients. In repeating that success, you will gain confidence in your marketing strategy.

Source:  Excerpt from the Contrarian Marketing Book  Chapter 2

By Nick Mavrick

You can find Nick Mavrick on Google+

Intelligent Response specializes in managing and securing Strategic Marketing and Web Development projects from start to finish in Washington DC.

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