A quick overview on a technique to analyze a customer portfolio, track attrition and migration and align an organization around the customer.

1. Customer Portfolio Analysis Attrition-Migration Tracking

2. Attrition-Migration Analysis Enterprise-level success should be mapped to depict value creation and value loss Overlay marketing campaign results onto the analysis marketing to visually describe impact of marketing programs August 17, 2011 2

3. Key Definitions Attrition: How is a defected customer defined? Typical defector is 12 contiguous months with no revenue generating activity Align to your Strategic Profit Model Value Clusters: What are the natural breaks in performance that enable focus on top customers vs. others? Don’t over-work your portfolio at a macro level, it will be too difficult to grasp August 17, 2011 3

4. Plan Ahead It’s not enough to know that there is value creation and value loss What are the drivers of loss? The drivers of creation? How do customers enter your brand? Who is price sensitive? Who is not? Macro clusters can drive segmentation to identify customers for brand penetration Migrate customers to new categories, services to increase relationship August 17, 2011 4

5. Assembling the Data Attrition-Migration reporting looks at movement in the customer file Understand the value of New Customers against Lost Customers Understand the value of Improving Customers against Declining Customers A quarterly look suffices Customer shift can occur with as little as a single transaction Year over Year behavior on a periodic basis e.g. Prior Year v. Current Year through the end of a fiscal quarter August 17, 2011 5

6. Framework August 17, 2011 6

7. How it Works Blue Cells – Consistent Base – customers retained their value tier Green Cells – Nurture & Grow – customers improved their value tier Purple Cells – New to File – customers entering the brand Orange Cells – Downward Migrators – customers losing their value tier Red Cells – Defectors – customers exiting the brand August 17, 2011 7

8. How to Read it 15 Customers Enter the Brand Tier 1 $6.8MM Brand Value CY $0 Brand Value PY 5 Tier 1 Customers Defected $0 Brand Value CY $2.2MM Brand Value PY 140 Customers Retained Tier 1 PY to CY Increased Sales: $80MM to $85MM Increased Orders: 1.4MM to 1.5MM 30 Customers Move to Tier 1 CY:PY $9.5MM Brand Value CY $5.6MM Brand Value PY Total attrition rate is 4680 customers out of 19545 ~ 24% by count but 5% by sales volume. The danger is in the orange – how many are already gone? August 17, 2011 8

9. The Basics Lead to Insights Attrition-Migration visualizes value patterns New Customers, Lost Customers, Growing Customers, Declining Customers Segment the portfolio into manageable clusters of customers The data is perfect for drill-down analysis Compare Tier 1 CY to Tier 1 PY Analyze Category Performance Analyze Discount Propensity Look at actual attrition vs. expected attrition August 17, 2011 9

10. Portfolio Analysis Even a basic approach to portfolio analysis will help produce customer metrics for the organization to focus on Common understanding of marketing Common understanding of customers Common understanding of goals Portfolio analysis will yield a customer focused organizational alignment August 17, 2011 10

11. The Bryden Group, LLCCustomer Portfolio Analysis Chris Daly Founder, CEO chris@thebrydengroup.com www.thebrydengroup.com August 17, 2011 11