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How to Summarize Customer Level Transactions in Data Driven Marketing

Raw transaction data can be difficult to deal with in data driven marketing. It’s time consuming and complex to go back to lists of individual transactions every time you want to answer a question. What you really need is summarized transaction data.

Knowing how many widgets were sold at what price and when is central to running your business. These metrics are essentially summaries of transaction data. Your job involves understanding customer behavior. This requires a lower-level summary of your transaction data than is generally provided in accounting and financial reporting. You want to get a sense of what individual customers are doing.

One simple way of knowing what customers are doing is to keep a running tabulation on your customer record of how many transactions they performed in a given time period. If you’re summarizing purchase transactions, you may also want to keep track of how much they spent.

Your monthly bank statement is a classic example of such a summary. You can certainly flip through your statement and view every individual transaction. But the front page tells you your balance, the number and total value of your deposits, the number and total value of your withdrawals, and the interest you earned.

Or consider the grocery store. Perhaps you have one of those loyalty cards that earns you discounts on gas based on how much you spend each week on groceries. Every time the cashier hands you your receipt, she tells you how much of a discount you’ve earned. This is essentially a summary of your most recent grocery purchases.

Another approach to summarization is to restrict your focus to recent transactions. Consumer auto purchases don’t typically happen 200 times a year. A customer’s most recent transactions are often the most informative. What web pages did the customer view this week, for example? In these cases, it’s perfectly reasonable to store transaction details for a few recent transactions on your customer record.

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