Question

Suppose you work for an online sporting goods retailer. You’ve been hired as a business analyst with the task of increasing sales. Describe how you could use RFM and market-basket analysis to increase the sales of sporting goods. If used effectively, how could RFM and market-basket analysis affect customer satisfaction? I need at least 250 words. Thank you!

Answer 1

The RFM model helps us in studying the customer behavior based on the recency, frequency, and monetary factors. It groups the customer bases their transaction history and gives an insight into the sales. It basically tells the company how recently they bought from them, what is the frequency and how much did they buy from them. Segmenting the customers based on just one parameter will not work all the time and that is why RFM model can work better for the company. The method gives the company an opportunity to segment the customers as champions, loyal customers, potential loyalist, recent customers, promising customers, risky customers, etc. The market-basket analysis will help the company is predicting the user behavior and also in serving them better. The company can segment the customers based on their purchase history and predict what they can buy with the things they buy normally. The company can make use of this method to keep the inventory ready so that they can meet the demands of the customer better. The customer satisfaction will automatically go up when the business is able to predict what the customers want and provide the same without any hassles. The customers like it when the company customizes the service for them and give them multiple options to choose from. The company can make use of this data in their marketing campaigns to attract more customers. The campaigns become customer-centric and deliver a very personalized message. The company can end up increasing the sales as well as the customer satisfaction.