2.

Identify opportunity to acquire unknown customers in to the loyalty

program based on their transaction behavior:
To address this Problem, we tried analyzing the consumer’s transaction behavior across
different stores, brands over the year. On the basis of the analysis we were able to identify 4
different approaches to provide recommendation to acquire unknown customers.

2.1 Store wise approach

In this approach we tried identifying stores which has most numbers of high value or most loyal
customers. Our basic assumption in this scenario is that stores which has the greatest number of loyal
customers has higher probability to convert unidentified customers to loyal customers. The RFM model
made in first question was extended to make this model i.e. based on frequency and monetary value of
stores. Here frequency represents footfall from high value segment customers for the store and
monetary value represents revenue generated by those customers for that specific store.

To identify the stores, we used original transaction data sheet and RFM data sheet that we generated
for 1st question. We were able to map the segments identified for customers in transaction data sheet
using RFM data sheet. After mapping of segments, we created pivot of transaction data and deducted
the whole data in store level. High value customer segment was used as a filter and on the basis of that
we got the frequency and monetary data for all the stores. We used FM model further to assign scores
to all the stores on the basis of their FM score.

Percentile F value M value Percentile FM

25% 464 135095.9
40% 5
50% 480 141896.5
75% 489 144607.1 80% 6
100% 521 155895 100% 8

As range for FM score was between 3 to 8, we used percentile division of 40, 80 and 100 and identified
stores having scores between more than 6 but less than 8. On the basis of analysis, we were able to find
3 stores with highest FM score and those are:

1. STR07
2. STR08
3. STR14

If we focus on these 3 stores to impose the loyalty program probability of getting unacquired customers
enrolled to loyalty program would be high.
2.2 Month wise approach

To identify the months in which loyalty program should be pushed extensively we deduced the data on
month level. We were able to find total footfall of the customers in different months along with total
revenue generated in different months using pivot function. After getting the data we further used FM
model i.e. based on frequency (footfall) and monetary (revenue) values. On the basis of percentile
division, we were able to assign FM score to all the months and finally able to identify top 25% of
months in which loyalty program should be pushed.

Percentile Revenue Frequency Percentile FM

25% 1273219.238 4138.25
33% 3
50% 1292534.445 4174.5
75% 1337236.22 4213.5 66% 6
100% 1380181.57 4328 100% 8

Months with highest FM score are:

1. September
2. June
3. March
4. Julys

2.3 Brand wise approach

To identify the brands which highest monetary value or revenue generation which should be discounted
in loyalty programs. We identified the brands with highest contribution to total revenue and found top
20% brands.
2.4 Brands promotion month specific

To identify the consumers’ buying pattern over the months i.e. which brand is selling most in which
months so we can customize the loyalty program according to brands which should be discounted in
particular month. To work out this we identified month wise revenue of each brand and then sorted the
data from largest to smallest and found top 5 performing brands for each month which should be
promoted with loyalty program to acquire unidentified customers.

Above sheet shows the brands that should be promoted in particular month in which they had most
sales.

2.6 Store wise approach – considering all customers

In this approach we tried identifying the stores which should be targeted for imposing the loyalty
program extensively. Here we are considering footfalls of the customers and revenue generated by
specific stores and then identifying the stores which has highest consolidated score for both the
parameters. It is another version of RFM model where recency part is eliminated and frequency is
replaced by footfalls of consumers. To work out this we deduced the data in terms of stores and using
pivot function we found total footfalls and revenue generated by particular store. On the basis of
analysis, we were able to come up with top 5 stores which should be extensively targeted for loyalty
program. The stores that are identified are:

1. STR02
2. STR04
3. STR06
4. STR10
5. STR16
 Percentile F value M value percentile FM
25% 3334.5 1029734 25% 3.75
50% 3345.5 1044248 50% 5
75% 3383.5 1060258 75% 6.75
100% 3441 1078125 100% 8

On the basis of percentile division, we found top 25% stores which has FM score higher than 6.75.

Above charts represents footfalls and revenue generated from stores that has highest FM scores.
Interesting fact is footfall for STR02 has highest footfall but not the highest revenue and probable reason
could be basket of customer is having less products or low value products. STR10 on the other hand has
highest revenue even after lowest footfall again the prime reason could be it has consumers who
probably are involved in buying high value products.