London Jets Case Study Solution , RFM Analysis

Presented By:Abhinav Arya

abhinavarya224@gmail.com

London Jets Hockey franchise facing low sales.

Management planning to sell off.

Mediocre results from high budget ad Campaign

Chris Harris, Marketing Manager, facing the challenge to revive the sales.

Improper customer segmentation

Inadequacy of customer data

Customer retention decreasing Y-o-Y

R – Recency, F – Frequency, M - Monetary

The basic premise of RFM is that customers who have purchased more recently, more frequently and have spent more with your

company are your best prospects for future direct marketing campaigns.

RFM analysis is commonly performed using the Arthur Hughes method

helps marketers visualize and quickly identify important customer segments

explore the RFM segments in relation to other customer attributes

It is based on three simple customer attributes: Recency of purchase, Frequency of purchase, and Monetary value of purchase

This approach involves scoring customers based on each RFM factor separately. It begins with sorting your customers based on Recency, i.e., the number of days or months since their last purchase. Once sorted in ascending order (most recent purchasers at the top), the customers are then split into quintiles, or five equal groups.

20% of the Top customers through Basic RFM ranking

Avg Age - 37 yearsAvg Sales - $312Avg Income - $44272

This approach is advocated by Arthur Middleton Hughes – one of the biggest proponents of RFM analysis. It begins like the one above, i.e., all customer are initially grouped into 5 cells based on Recency. The next step takes customers in a given Recency cell – say cell number 5, and then ranks those customers based on Frequency. Then customers in the 55 (RF) cell are ranked by monetary value.

Recency Frequency Monetary RFM5 5 4 5545 5 3 5535 4 5 5455 3 3 5335 3 3 5335 3 3 533

Similarly, we code the other quintiles and combine the scores to obtain RFM values.

“555” is the best score.

Sum of Total Sales RFM

Income 445 453 533 545 553 554 Grand Total

15762-35761 0.00% 83.33% 16.67% 0.00% 0.00% 0.00% 100.00%

35762-55761 0.00% 0.00% 41.42% 0.00% 14.20% 44.38% 100.00%

55762-75761 48.84% 0.00% 0.00% 51.16% 0.00% 0.00% 100.00%

Grand Total 25.87% 10.27% 16.43% 27.10% 4.93% 15.40% 100.00%

As pre RFM, The highlighted income group should be the segment where more concentration is to be done.

Our most recent customers are 90% vehicle owners

Count of Trans Per Year RFMVehicleOwnership 445 453 533 545 553 554 Grand TotalNo 1 1Yes 1 1 2 1 1 1 7Grand Total 1 1 3 1 1 1 8

Count of Cust ID   Recency          

Sex Marital Status 1 2 3 4 5Grand Total

B (blank) 0.00% 50.00% 50.00% 0.00% 0.00% 100.00%

B Total   0.00% 50.00% 50.00% 0.00% 0.00% 100.00%

F Married 50.00% 0.00% 0.00% 0.00% 50.00% 100.00%

  Single 42.86% 14.29% 14.29% 0.00% 28.57% 100.00%

F Total   44.44% 11.11% 11.11% 0.00% 33.33% 100.00%

M Married 0.00% 37.50% 12.50% 25.00% 25.00% 100.00%

  Single 18.18% 9.09% 27.27% 36.36% 9.09% 100.00%

M Total   10.53% 21.05% 21.05% 31.58% 15.79% 100.00%

Grand Total   20.00% 20.00% 20.00% 20.00% 20.00% 100.00%

Married customers are high. More concentration should be on add-ons.

Issue discounts for the club memberships

Sum of Total Sales RFMJets Fanx Club Member 445 453 533 545 553 554 Grand TotalNo 25.87% 10.27% 16.43% 27.10% 4.93% 15.40% 100.00%Grand Total 25.87% 10.27% 16.43% 27.10% 4.93% 15.40% 100.00%

Die HardTouristMiserFlirter

For Married customers, couple passes, and play area for there kids. Happy meal are other good options.

Promotional giveaways by sponsoring companies that are announced at the game

To waive the membership fee to the fan club after so many games are attended.

Cross-sell merchandise

True fans of the London Jets

On arrival to the game VIPs could receive free valet parking and a coat check.

VIP section of the arena created specifically for higher paying customers

Complementary food and drinks be offered to the VIPs by a wait staff so that the fans would not have to leave their seats

We believe that the above strategies will help to get this potentially profitable segment to attend more games, and from there we can hopefully build some long-term loyalty.

THANK YOU