Leading Apparel Retailer Boosted Revenue Through Effective Customer Segmentation And Promotional Affinity Analysis

A large apparel retailer, focused on the tween consumer market, wanted to understand the behavioral traits of the target group to make informed promotional pricing decisions for each segment. Majority of the customers churned out quickly or had limited data points which posed a challenge in segmenting the customer base.

TheMathCompany teamed up with the retailer to cluster the customers into different segments based on their purchase behavior and spending capacities, to conduct an effective promotional affinity analysis of different customer segments.

In order to understand the nature and behavior of the customers, the following steps were followed by TheMathCompany, to identify the key segments, form clusters and then plan promotions in accordance with the findings:

• Clustering into segments: Households were clustered into segments like bargain hunters, frequent buyers etc. based on purchase behavior metrics such as visits, spending, discounted items purchased etc.
• Implementation: Promotion recommendations were implemented for customers in various segments, in addition to testing promising promotions that were not offered historically
• Defining effectiveness for segments: The affinity for 76 offers was analyzed from 5 direct mailer campaigns; the effectiveness for each customer segment was determined based on the response rate and revenue lift using a test and control approach