Retention Automation Using Market Basket Analysis

Example of Market Basket Analysis

What You Can Learn From Tostitos and Ping Pong Balls

I was shopping with my son this weekend, and in between attempts to keep him from putting every sugary item in the store into our cart, I came across a great example of Market Basket Analysis.

Market Basket Analysis is a powerful, but simple concept.  A marketer analyzes what shoppers are putting in their carts to see what items go together based on consumer behavior.  They then use this analysis to optimize merchandizing and marketing decisions. 

Here's a quick example from this weekend's shopping trip showing Market Basket Analysis and cross-merchandizing in full effect.  Note the ping pong balls in this picture.  Not in the sports section...  not in the toys section....   but in the chips and dips aisle.

For those of you who have enjoyed a nice game of Beer Pong on occasion (Beirut, anyone?), this correlation makes absolute sense.... especially given the proximity of this store in Durham, NC to Duke University, which likely has several thousand eager Beirut players on any given weekend!  It turns out that people who are up for a fun party often buy chips and dips, and, in a college town, often play beer pong as well.

Online retailers who are serious about keeping their customers should use this form of retention analysis and retention automation to drive customers back to their sites.  When someone on your site buys a top seller, what are the 3 most correlated things that they are likely to buy next?  Have you set up an automated message to make sure they see those great cross merchandizing messages?

We have a customer that had done this for an entire series of product categories and has seen their email ROI jump from $20 ROI on batch and blasts to $65 on product specific emails, triggered at the right time.  This stuff works, and it helps drive repeat buying behavior, so that you can keep your customers.

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