How to Tell What Your Customers Want

Past Behaviors: Misleading Facts

When we make guesses about the future, we usually go off past behaviors. But people change their minds frequently. So even if you know what your customers bought in the past, you cannot necessarily predict what they will buy in the future ― from their past behavior alone.

To illustrate that point, let’s look at Bob, Carol, Ted and Alice. We want to know if we should be marketing SUV’s to these people. From our customer records, we know they bought an SUV in the past.

As you can see from the chart, the traditional SQL (Structured Query Language) answer correlates their past behavior with a recommendation to market to these people. But this approach falls short compared to the deeper statistical answer, because it only evaluates a limited set of the available data.

• For Bob, both the SQL and statistical answers are in agreement, telling us that he is worth marketing to because he is an SUV buyer.
• For Carol, the two answers lead to opposite conclusions. Perhaps she no longer needs one because her kids are grown. Maybe it’s something else that changed?
• Both Ted and Alice have some chance of buying an SUV having never done so previously.
• But Alice has a much higher probability of buying one. Perhaps she is starting a family or taken up a new sport that an SUV would be good for. Without statistical analysis, we would not know that Alice is worth marketing to.

Predicting the Future

The better way to make predictions about future behavior is to use a statistical model. A statistical model can take many complex inputs and produce outputs, like the probability of someone buying an SUV in the future.

The important difference here is that statistical models can respond to all the details within your data.  This is superior compared to using generalities or segments of your data, like the “previously purchased” example shown above. By using statistical models rather than a traditional SQL approach, your will gain a better view of your customers and better refine your marketing efforts with increased accuracy and profitability.

This is one of the reasons why Stics statistical models improve marketing performance above other methods.   Stics can provide customized statistical insight about your customers – and use less time than traditional segmentation models take to make. Plus, Stics has years of experience and the technological tools to quickly and reliably give you the information you need.