To Affinity Analysis and Beyond

To Affinity Analysis and Beyond

In my experience, helping businesses design marketing campaigns for existing customers can be one of the toughest analyses to accomplish. You have access to a list of all your customers' email addresses and all their purchases, but how do you create a targeted email list and send meaningful content that will trigger repeat purchases and expand a customer’s lifetime value? How can you accurately target customers the way larger companies with in-house data science teams, such as Amazon and Netflix, do?

After collaborating with some of our Professional Data Services clients, I’m excited to announce a new offering from our Professional Services team:  affinity analysis. Commonly referred to as  market basket analysis  in retail application, this analysis allows you to divide your customers into groups, cross-sell products, and guide your website and loyalty program designs. To get us started, here’s a quick introductory video on affinity analyses.

If these types of insights would be valuable for you and your organization,  contact our support team  for further information and pricing. If you’re not using Magento Business Intelligence and want to learn more  reach out!

The Basics of an Affinity Analysis

At its core, an affinity analysis is a data mining technique that uses  association rule learning  to identify the relationships between customers and the attributes related to them. With stronger and more common relationships, you can then group your customers into segments to analyze further. To get started, all you need is access to your customer and order data.

Let's consider the example of a typical grocery store. There are a variety of products we assume people will often purchase together at a grocery store: ice cream and waffle cones, peanut butter and jelly, turkey and cream cheese (a personal favorite of mine!). By performing an affinity analysis on the grocery store’s data set, we can not only confirm our suspicions about which products are frequently purchased together, but also discover new relationships between products and customers that  we never would have guessed.

These relationships between products and customers are also known as  association rules. After running an affinity analysis, rules are produced in the following form:

{item or group of items}  {a different item}

For our fictional grocery store, here are some examples of rules that our affinity analysis may produce:

{waffle cones}  {ice cream}
{flour, sugar}  {eggs}

Each rule also comes with two important statistics that allow us to determine their significance:  support  and c onfidence.

With these insights, there are a variety of marketing campaigns, website optimizations, and product changes a business can make, such as:

For Magento Business Intelligence clients, we’re able to seamlessly extract customer and order data from your data warehouse, run the analysis, and have the rules sent back into your data warehouse for further analysis and email list generation.

That’s a Wrap

Affinity analyses are used by some of the largest companies on a daily basis to inform their business’s decisions. Here at Magento Business Intelligence our Professional Services team can help you perform an affinity analysis on your customer base to drive how you market and design your products. If you’re interested in exploring affinity analyses further with me,  contact our support team  for more information and pricing. If you’re not yet using Magento Business Intelligence and want to learn more  reach out!

About Andres

Andres is passionate about two things: biking and data science. When he's not busy biking across the country, he can be found bouncing a pink exercise ball at his standing desk in center-city Philadelphia conjuring up a new client analysis. He also exclusively wears sandals 365 days a year, occasionally with plastic bags for warmth in the dead of winter.