IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v16y2009i1p10-18.html
   My bibliography  Save this article

From spending to understanding: Analyzing customers by their spending behavior

Author

Listed:
  • Otto, Philipp E.
  • Davies, Greg B.
  • Chater, Nick
  • Stott, Henry

Abstract

In customer segmentation, a common strategy is to use individual differences as a predictor of future behavior. Recent advances in data management in large financial institutions give an unprecedented and potentially powerful source of data for identifying such differences. We show that spending data can substantially help target the direct marketing of financial products, and constitutes new information, not captured by demographics. In particular, a systematic combination of this independent source and more traditional measures can enhance the predictive power of marketing research and improve the relationship with customers as illustrated in a direct mailing selection method which substantially raises response rates.

Suggested Citation

  • Otto, Philipp E. & Davies, Greg B. & Chater, Nick & Stott, Henry, 2009. "From spending to understanding: Analyzing customers by their spending behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 16(1), pages 10-18.
    • Handle: RePEc:eee:joreco:v:16:y:2009:i:1:p:10-18
    DOI: 10.1016/j.jretconser.2008.04.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698908000180
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2008.04.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Philip Stern & Kathy Hammond, 2004. "The Relationship Between Customer Loyalty and Purchase Incidence," Marketing Letters, Springer, vol. 15(1), pages 5-19, February.
    2. Andrew Ainslie & Peter E. Rossi, 1998. "Similarities in Choice Behavior Across Product Categories," Marketing Science, INFORMS, vol. 17(2), pages 91-106.
    3. H. Landahl, 1938. "Centroid orthogonal transformations," Psychometrika, Springer;The Psychometric Society, vol. 3(4), pages 219-223, December.
    4. Henry Kaiser, 1970. "A second generation little jiffy," Psychometrika, Springer;The Psychometric Society, vol. 35(4), pages 401-415, December.
    5. Peter E. Rossi & Robert E. McCulloch & Greg M. Allenby, 1996. "The Value of Purchase History Data in Target Marketing," Marketing Science, INFORMS, vol. 15(4), pages 321-340.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martins, Maria Cristina M.S.G. & Cardoso, Margarida G.M.S., 2012. "Cross-validation of segments of credit card holders," Journal of Retailing and Consumer Services, Elsevier, vol. 19(6), pages 629-636.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kwangpil Chang & S. Siddarth & Charles B. Weinberg, 1999. "The Impact of Heterogeneity in Purchase Timing and Price Responsiveness on Estimates of Sticker Shock Effects," Marketing Science, INFORMS, vol. 18(2), pages 178-192.
    2. Boztug, Yasemin & Reutterer, Thomas, 2008. "A combined approach for segment-specific market basket analysis," European Journal of Operational Research, Elsevier, vol. 187(1), pages 294-312, May.
    3. Greg M. Allenby & Thomas S. Shively & Sha Yang & Mark J. Garratt, 2004. "A Choice Model for Packaged Goods: Dealing with Discrete Quantities and Quantity Discounts," Marketing Science, INFORMS, vol. 23(1), pages 95-108, June.
    4. Pradeep K. Chintagunta, 2021. "Comments on “Counterfactual Inference for Consumer Choice Across Many Product Categories”," Quantitative Marketing and Economics (QME), Springer, vol. 19(3), pages 411-415, December.
    5. Joseph Pancras, 2010. "A Framework to Determine the Value of Consumer Consideration Set Information for Firm Pricing Strategies," Computational Economics, Springer;Society for Computational Economics, vol. 35(3), pages 269-300, March.
    6. repec:hum:wpaper:sfb649dp2006-006 is not listed on IDEAS
    7. Boztuğ, Yasemin & Reutterer, Thomas, 2006. "A combined approach for segment-specific analysis of market basket data," SFB 649 Discussion Papers 2006-006, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    8. Grewal, Dhruv & Ailawadi, Kusum L. & Gauri, Dinesh & Hall, Kevin & Kopalle, Praveen & Robertson, Jane R., 2011. "Innovations in Retail Pricing and Promotions," Journal of Retailing, Elsevier, vol. 87(S1), pages 43-52.
    9. Peter E. Rossi & Greg M. Allenby, 2003. "Bayesian Statistics and Marketing," Marketing Science, INFORMS, vol. 22(3), pages 304-328, July.
    10. Puneet Manchanda & Asim Ansari & Sunil Gupta, 1999. "The “Shopping Basket”: A Model for Multicategory Purchase Incidence Decisions," Marketing Science, INFORMS, vol. 18(2), pages 95-114.
    11. Adam N. Smith & Stephan Seiler & Ishant Aggarwal, 2023. "Optimal Price Targeting," Marketing Science, INFORMS, vol. 42(3), pages 476-499, May.
    12. Natter, Martin & Feurstein, Markus, 2002. "Real world performance of choice-based conjoint models," European Journal of Operational Research, Elsevier, vol. 137(2), pages 448-458, March.
    13. Adam N. Smith & Stephan Seiler & Ishant Aggarwal, 2021. "Optimal Price Targeting," CESifo Working Paper Series 9439, CESifo.
    14. David R. Bell & Jeongwen Chiang & V. Padmanabhan, 1999. "The Decomposition of Promotional Response: An Empirical Generalization," Marketing Science, INFORMS, vol. 18(4), pages 504-526.
    15. Siwarit Pongsakornrungsilp & Pimlapas Pongsakornrungsilp & Theeranuch Pusaksrikit & Pimmada Wichasin & Vikas Kumar, 2021. "Co-Creating a Sustainable Regional Brand from Multiple Sub-Brands: The Andaman Tourism Cluster of Thailand," Sustainability, MDPI, vol. 13(16), pages 1-23, August.
    16. Leenheer, J. & Bijmolt, T.H.A. & van Heerde, H.J. & Smidts, A., 2002. "Do Loyalty Programs Enhance Behavioral Loyalty : An Empirical Analysis Accounting for Program Design and Competitive Effects," Discussion Paper 2002-65, Tilburg University, Center for Economic Research.
    17. Chetan Doddamani & M. Manoj, 2023. "Analysis of the influences of built environment measures on household car and motorcycle ownership decisions in Hubli-Dharwad cities," Transportation, Springer, vol. 50(1), pages 205-243, February.
    18. Kopalle, Praveen K. & Pauwels, Koen & Akella, Laxminarayana Yashaswy & Gangwar, Manish, 2023. "Dynamic pricing: Definition, implications for managers, and future research directions," Journal of Retailing, Elsevier, vol. 99(4), pages 580-593.
    19. Dan Horsky & Sanjog Misra & Paul Nelson, 2006. "Observed and Unobserved Preference Heterogeneity in Brand-Choice Models," Marketing Science, INFORMS, vol. 25(4), pages 322-335, 07-08.
    20. Ting Li & Robert J. Kauffman & Eric van Heck & Peter Vervest & Benedict G. C. Dellaert, 2014. "Consumer Informedness and Firm Information Strategy," Information Systems Research, INFORMS, vol. 25(2), pages 345-363, June.
    21. Ben-Shahar, Danny & Golan, Roni, 2014. "Real estate and personality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 111-119.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:16:y:2009:i:1:p:10-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.