If you used the decision tree in the beginning of this chapter (Exhibit 5.1), you have been directed to this section because you have knowledge about what your customer purchases over time and you want to promote a replacement offer to an existing customer base. The aim of a replacement campaign is to offer customers an upgrade of an existing product. This means that if customers respond positively to your campaign, they are expected to swap their existing service or product for another one. An example could be mobile or fixed phone replacement programs in the telecom industry, upgrades on seats in an airplane, a newer car for a family, an updated software version, and new types of loans in a bank.

Identifying Replacement Offers Using Your Base Table

If you are in an industry where replacement offers are essential, this fact will be reflected in the analytical base table that you have produced, as shown in Exhibit 5.10. Here the current and historical products purchased are presented per customer. If the data is presented in this way, all you have to do is to combine the fields “Current product” and “Previous product” into a third field. A simple frequency table would in this case reveal that customers that currently use product A typically were users of product M before. The next thing you would like to do as an analyst is to identify those customers that still use product M and promote product A to them. You could also use the same techniques as ...

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