New research by Wharton’s Eric Bradlow shows how marketers can track binge-buying behavior to effectively target profitable customers.
One of the most established practices in the field of marketing and customer valuation is to summarize a customer using what’s called RFM segmentation — recency, frequency, monetary value. You have to add one more letter to RFM, and I call that “C,” which [stands for] clumpiness, which means some customers do buy in a regular pattern, kind of equally spaced arrivals or equally spaced purchases. Clumpiness refers to the fact that people buy in bursts.
What this dispels is [the notion] that the arrival pattern of people is uninformative. It’s very informative. People [who] come in bursts, then go away and then come back in bursts and then go away … those people are fundamentally different. There are clumpy-type people and non-clumpy-type people.