Case study of a phone company

Customer Stats

Demographic Analysis and Customer Profile

Wireless communications provider Kudzu Communications is considering a new marketing plan to renew previous growth rates in the company, which had started strong but which has been stagnating in recent years. In order to more effectively design and implement this marketing plan, the company has obtained abundant demographic data on their current clients, in an attempt to determine the most lucrative type of consumer to offer and sell services to and also to form a more general description of current clients, thus leading to a reasonable guess at future demographics to focus marketing efforts on. The raw data does not provide very useful information, of course, so some preliminary statistical analysis has been carried out to provide a more accurate appraisal of customer and market potentials.

The following pages contain a description of the statistical analysis and a brief justification of the statistics analyzed in relation to the marketing efforts of the firm. As a result of this analysis and a basic overview of current demographics of Kudzu Communications' customers, a preliminary customer profile is conducted in order to assist the marketing team developing new programs for the company in selecting and focusing on the most profitable market segments. Volatility of contract value within certain demographics is also ascertained, as the company has expressed concern about this volatility and its potential impact on the value of marketing towards certain population segments. All of this analysis results in a final recommendation to the firm regarding market and customer focus.

Basic Customer Profile

Though the raw data collected by the company is not extremely useful without further analysis, some very broad and general conclusions can be drawn from an examination of this data and certain trends within it. For example, this basic overview reveals that Kudzu Communications' customers are predominantly male (although there is a significant portion of female customers and also a fair number of customers who declined to state a gender), only slightly over ten percent of customers are divorced, and slightly less than two-thirds of customers are homeowners. About one-fifth of customer are in their twenties, wit one-and-a-half times as many customers in their 30s, and the majority of customers' estimated annual incomes fall in the $50,000 - $70,000 range. Already, a basic picture of the typical Kudzu Communications customer as a home-owning male in young to middle adulthood and towards the upper end of the middle class, either married or single and never previously married. Such a description leaves out many of Kudzu's valued customers, however, making more careful and controlled analysis quite beneficial.

Revenue and Volatility

In order to determine what customer demographics tended to provide the greatest revenue streams to Kudzu in terms of invoice amounts, averages (means) were taken of the contract values within certain demographic groups. Standard deviation was taken as a measure of volatility. From this information, meaningful assessments of advantageous marketing assessments can be made.

Appendix 1 contains a table of the basic statistical analyses performed on certain demographic groups within Kudzu Communications' larger customer population, with mean invoice/contract value and the standard deviation of this value for each demographic group presented. Those with unlimited rate plans have the highest invoice value, and rate plans were the strongest predictors of contract value -- that is, the individual sub-groups examined within these rate plans yielded both higher and lower means than any other subgroup, meaning segregation occurred more along value lines -- and had relatively low volatility, as well. As the rate plans are by and large direct determiners of value, however, this does not yield especially useful information regarding marketing efforts for the company other than suggesting that unlimited plans should be sold to as many consumers as possible. The type of card consumers carried, measured as preferred or not preferred, did not appear to have a very significant impact on value, and with standard deviations close to the means this particular piece of data is a poor predictor of potential customer value.

Income is also a demographic area that had some surprising trends in regards to customer value. Although the highest earning bracket recorded does yield more valuable contract than lower income brackets on average, the difference is not extreme and the trend is not consistent across all income brackets. Volatility in this area is also quite high, meaning income is not a stable or reliable predictor of contract value for Kudzu. Surprisingly, renters seem to spend significantly more on contracts than homeowners, to a fairly consistent degree.

The strongest predictors of spending habits appear to be gender and ages, with females spending more on contracts than males (as can be observed in both the "Gender" and "Marital Status" categories), and increases in age inversely correlated with contract value -- the older a customer is, the less valuable their contract with Kudzu Communications is likely to be. At the same time, both females (again, in both the "Gender" and "Marital Status" categories) and younger individuals have higher rates of volatility in terms of their contracts than do males and older individuals. This is seen in discrete and direct comparisons between females and males, and can be observed as a basic trend in the age range category, with volatility (standard deviation) decreasing as age increases (with one slight exception). This has significant implications that Kudzu Communications should take into account when designing and implementing its new marketing program.