I. User value model

1. RFM model

RFM analysis is a simple and practical customer analysis method in customer relationship analysis. It makes the latest consumption, consumption frequency and consumption amount the best indicators of data analysis to measure customer value and customer profitability.

RFM analysis is to observe and classify customers through these three indicators and carry out corresponding marketing strategies for customers with different characteristics.

R — Recency F — Frequency M — Monetary

Under these three constraints, we regard customers with large M value, that is, the largest contribution amount, as “important customers”, and the rest as “general customers” and “lost customers”. Based on this, we generate 8 different types of customers:

• Important value customers: customers with high repurchase rate, high purchase frequency and large spending amount are the most valuable users.
• Important to maintain customers: buy more, buy expensive but not often buy customers, we should focus on maintaining;
• Important developing customers: customers who often buy, spend a lot but buy less frequently, we should develop them to buy more;
• Important retention customers: willing to spend money but not often buy, buy a few customers, we should focus on retention;
• General value customers: customers with high repurchase rate and high purchase frequency but low cost belong to general value;
• General retention customers: buy more but not often, not much money, belonging to the general retention customers;
• General development customers: often buy, but buy not much, spend not much, belong to the general development of customers;
• General retention customers: unwilling to spend money, buy infrequently, buy infrequently, the least valuable customers;

The following is the VISUAL dashboard of RFM model made by FineBI, which can make a reasonable estimate of customer lifetime value through RFM model, measure the customer value in reality based on an ideal customer characteristic, and locate the group most likely to become brand loyal customers through such analysis. Let’s focus on our most valuable users.

2. Boston Model

The Boston model was originally a time management model, which was divided into four quadrants according to the arrangement of urgent, non-urgent, important and unimportant, so as to facilitate the effective management of time.

In customer analysis, we divided our customers into four quadrants by the two important indicators of sales volume and profit. We divide these two dimensions into four quadrants as the horizontal and vertical axes, and divide products or services into the following four types:

• Star products: products with high growth rate and high market share, which represent very successful products and are the main star products;
• Taurus: products with low growth rate and high market share, which have occupied the market but have no room for development, belong to cash cattle products;
• Problems: high growth rate, low market share, indicating high user demand, but its own products have problems, need to improve and optimize;
• Thin dog: low growth rate, low market share, market does not recognize the failure of the product, need to remove as soon as possible;

The purpose of our classification is to eliminate some products with no development prospects and market potential as soon as possible according to the Boston matrix, ensure the share of star products and cash cow products, so as to match the overall market layout of products or businesses.

The Boston model made by FineBI is actually used:

As shown in the figure, each sales region and the distribution of customers in each sales year, we get the customer information we want by filtering the data. The Boston matrix is a very powerful tool, which can help us to organize the disorderly things into blocks. When using the matrix, we should try to select the longitudinal and horizontal unrelated elements for analysis, so as to play the role of matrix grouping.

3. CLV User life model

We know that not all customers are of equal value, and businesses can do better by focusing on those customers that provide the greatest future benefits. Therefore, enterprises must identify these customers. CLV is an effective forecast of customers’ future profits. It also has another name, LTV (Life Time Value).

It is important to note that CLV considers the full customer life cycle, including customer acquisition and customer churn, that is, it calculates not only the current value generated by customers, but also the future value.

There are many calculation formulas of CLV, some of which are very complicated, mainly in the link of loss rate and influencing factors, and some of which add input cost, value change rate and interest rate change, etc.

A more practical and simple one is this:

Note that this formula is effective for groups, but less accurate for individuals, because there are too many factors affecting the individual turnover rate, but the group turnover rate can be counted.

The application of CLV can be distinguished from the following two models:

4. Pareto Model (80-20 rule)

Pareto principle, also known as the 80/20 principle, is a judgment method about efficiency and distribution. Pareto’s law states that in any large system, about 80% of the results are produced by about 20% of the variables in that system. In business, 80% of profits come from 20% of projects or key customers.

Explanation of the model: When 80% profit of an enterprise comes from 20% of the total number of customers, this enterprise customer group is healthy and tends to be stable. When 80% of a company’s profit comes from more than 20% of the total number of customers, the company needs to increase the number of big customers. When 80% of the profits of an enterprise come from less than 20% of the customer base, the enterprise’s base customer base needs to be expanded and increased.

The actual use of the model: as shown in the figure below, I used FineBI to produce the sales of a brand in a shopping mall.

Out of 10 clients, five (50%) accounts for 80% of sales, which indicates the need to increase the number of big brand clients.

Customers who bring a large number of sales must be treated seriously and maintained. If the number of customers is large, it is especially necessary to list key customers and focus on follow-up, and put limited energy on creating profitable customers.

5. Funnel model

The essence of funnel model is decomposition and quantification. In order to facilitate everyone’s understanding, I take marketing funnel model as an example:

In other words, the marketing link refers to a sub-link in the whole process from acquiring users to finally converting to purchase, while the conversion rate of adjacent links refers to quantifying the performance of each step with data indicators.

So the whole funnel model is a complete purchase process first broken down into small steps, and then use the conversion to measure the performance of each step, finally, there is something wrong with the abnormal data indicators to find the link, and then solve the problem of the link, ultimately achieve the goal of overall purchase conversion, so the core of the funnel model can be classified as decomposition and quantization.

For example, to analyze the transformation of e-commerce, what we need to do is to monitor the transformation of users at each level and find the optimization points at each level. For users who do not follow the process, draw their transformation model to shorten the path and improve user experience.

Second, marketing model

1. PEST analysis

PEST, also known as Politics, Economy, Society and Technology, can grasp the status quo and changing trend of the macro environment from all aspects and analyze the industry of main users.

The macro environment, also known as the general environment, refers to the various macro forces that affect all industries and enterprises.

When analyzing macro environmental factors, different industries and enterprises have their own characteristics and business needs, so the specific content of analysis will be different. However, in general, four major external environmental factors affecting enterprises, namely political, economic, technological and social, should be analyzed.

Political environment: political system, economic system, fiscal policy, tax policy, industrial policy, investment policy, etc.

Social environment: population size, sex ratio, age structure, lifestyle, buying habits, urban characteristics, etc.

Technology environment: depreciation and scrap rate, technology update rate, technology dissemination rate, technology commercialization rate, etc.

Economic environment: GDP and growth rate, total import and export volume and growth rate, interest rate, exchange rate, inflation rate, consumer price index, household disposable income, unemployment rate, labor productivity, etc.

2. 5W2H analysis

5W2H, namely Why, What, Who, When, Where, How and How much, is mainly used for user behavior analysis, business problem thematic analysis, marketing activities and so on.

This analysis method, also known as seven-he analysis method, is a very simple, convenient and practical tool. Take user purchasing behavior as an example:

• Why: Why do users buy? What is the attraction of the product?
• What: What features does the product offer?
• Who: What is the audience? What are the characteristics of this group?
• When: What is the frequency of purchases?
• Where is the product most popular? Where to sell it?
• How: How do users buy? How to buy it?
• How much: How much does it cost users to buy? What is the time cost?

3. SWOT analysis

SWOT analysis is also called situation analysis, S (strengths), W (weaknesses), O (opportunities) and T (threats) are threats or risks.

SWOT analysis is used to determine the internal strengths and weaknesses of an enterprise as well as external opportunities and threats, list them through investigation and arrange them in a matrix form, and then use the idea of system analysis to match various factors for analysis.

Using this method, we can conduct a comprehensive, systematic and accurate research on the situation of the research object, so as to organically combine the company’s strategy with the company’s internal resources and external environment.

4. 4P marketing theory

4Ps are Product, Price, Place and Promotion. In the field of marketing, this market-oriented marketing mix theory is most widely applied by enterprises.

It can be said that all marketing actions of enterprises are carried out around the 4P theory, that is, product, price, channel and promotion. Through the combination of the four, coordinated development, so as to improve the market share of the enterprise, to achieve the ultimate goal of profit.

• Product: From a marketing perspective, a product is anything, including tangible products, services, people, organizations, ideas, or combinations of them, that can be offered to the market, used and consumed by people, and meet certain needs of people.
• Price: refers to the price at which the customer buys the product, including basic price, discount price, payment term, etc. There are three main factors that affect pricing: demand, cost and competition.
• Channel: refers to the process of product transfer from the manufacturer to the user.
• Promotion: enterprises stimulate users’ consumption by changing their sales behaviors, and promote consumption growth by short-term behaviors (such as discount, buy one, get one free, marketing atmosphere, etc.), and attract users of other brands or lead to advance consumption to promote sales growth. Advertising, publicity and promotion, personal promotion and sales promotion are the four elements of an organization’s promotion mix.

5. Logical tree method

Logic tree is also called problem tree, deductive tree or decomposition tree. It involves taking a known problem as the “backbone” and starting to think about how that problem relates to related problems, called branches. The logical tree ensures the integrity of the problem-solving process by dividing work into manageable tasks, prioritizing parts, and clearly placing responsibility on individuals.

The use of logical trees must follow the following three principles:

Elements: To summarize the same problem into elements.

Framing: Organizing elements into a framework. Follow the principle of no weight, no leakage.

Relevance: The elements within the framework maintain the necessary interrelation, simple but not independent.

6. AARRR model

AARRR model is a data model that all operators need to understand, starting from the whole user life cycle, including Acquisition, activation, Retention, Revenue and communication.

Each stage corresponds to five important processes in the lifecycle, from user acquisition, to activity, retention, and revenue, to virality.

PS: The above analysis was produced by FineBI