• Which of my current customers are most likely to increase their purchases from me, if I focus more effort on them?

• Which of my current customers are most likely to purchase this new product or service?

• Which of my products or services should be bundled together as a package to achieve higher overall sales?

• How can I identify the best prospects in this group of leads for more effective follow-up by (field sales, telemarketing, etc.)?

Many other questions can be answered, since a database can be modeled in different ways. Customer database modeling is simply a technique that allows you to identify with statistical validity the best prospects in your database for a given offer, product, or service. It is also used to predict or track the impact of a given direct marketing action on sales.  In general, as long as your customer database includes customer-specific transactional and response data with dates (e.g., product purchases, information requests, leads), it can be modeled.

Until recently, customer database modeling was done only by very large direct retailers who depend on mass mailings or other high volume advertising where it is essential to maximize sales and minimize the cost-per-sale. But these goals are equally essential for any size business, in any market. Instead of having to invest heavily to set up an in-house capability, customer database modeling can now be contracted out at a quite reasonable cost, even for a small business. Most importantly, the return from customer database modeling can be critical to both business growth and business success in a highly competitive marketplace.