While customer segmentation lays the foundation for personalization, “simpler” segmentation of your customers according to lifecycle stages, RFM, and product preference doesn’t necessarily provide the insight needed to truly understand your customer’s needs and affinities – a crucial aspect of true, effective personalization.
Simpler segmentation is like taking a snapshot of a specific type of customer behavior without understanding other aspects of your customer behavior and the relationship between them.
The data you have on your customers, however, is located at different sources, making cross-referencing them a challenge. This post walks through a multi-dimensional approach that allows you to observe these different sources of data from a single point of observation, giving you a more complete understanding of your customer.
Observe Customers Through Multiple Dimensions of Segmentation
A more holistic approach offers you the perspective of observing your customers through multiple dimensions of segmentation. Let’s examine, for example, customers who purchased in the last week, who also demonstrated a preference for buying from the women’s department, and are top-shoppers. Not only is this customer group showing a product preference, it may even be a significant purchase.
It’s also a crucial point of intervention during this customer’s lifecycle and an opportunity to generate huge value. You’ve captured the customer behavior with your camera and you’re understanding it in the greater context of related behaviors.
Finding these points of intervention, however, can be tricky, and that’s where cross-segmentation comes in – the application of multiple angles of observation to each customer. This approach highlights and reveals these distinct customer personas to unleash their tremendous potential. Once you discover them, the next step is to increase their time (and money) spent with your brand by providing them with the most relevant marketing actions.
Example 1: Re-Engage Customers with Specific Product Campaigns
Let’s start our first example with customers from the “churned” lifecycle stage. Digging deeper, we’ll want to cross-segment these churned customers with:
Customers who made their last order in the not-too-distant past and
Customers who browsed the latest collection of running shoes, yet didn’t purchase and
Customers who have logged on to the site in the past week and
Customers who have had a significant portion of past transactions from the footwear department
You’ll end up with something like the above. Voilà!
The intersection of these five groups of customers is your window of opportunity. You know these customers have genuine purchasing intentions, and you also know that they have purchased shoes in the past. Churned customers in this situation are especially valuable because once these customers are re-engaged, they are more likely to remain active customers.
Now could be your chance to make it happen.
One option is to send them a “We Miss You” campaign, with an incentive based on their product preference – shoes. You may also want to create a sense of urgency by limiting the time they are able to redeem this offer. Whatever you decide, you’ll need to combine a highly personalized campaign for this distinct persona at the right time to ensure the most successful campaign.
Example #2: Discover Your Gift-Giver Profiles
Let’s take another example, this time from the “active customer” lifecycle stage. We’re going to cross-segment these customers with:
Customers who are women and
Mid-level shoppers and
Those with a high portion of past transactions spent on items from the Men’s department and
Those who responded to “Buy Your Loved Ones” campaigns and
Customers with a majority of their past purchases being discounted items
The intersection of these five dimensions of customer segments identifies a unique opportunity to engage these Gift-Givers. Since they have demonstrated gift-purchasing behavior in the past, they strongly associate your brand with gifts. Once you understand multi-dimensional aspects of their behavior that includes a tendency to buy gifts, you can make sure you don’t miss out on any future opportunities. You’ll want to make sure to reach out to them on gift-buying days such as Father’s Day or Valentine’s Day.
One suggestion of how to reach out to them on these days might be to create a campaign that shows them that you recognize their affinity for gift-giving. How? You might offer a “Gift-Giver” campaign with a discount on a group of bundled items, including special perks such as complementary gift wrapping, a greeting card, and chocolate (yes, even men like chocolate). Another option is to set the scene for the next “gift day” by offering a future discount with this customer groups’ current gift purchase.
Not only have you targeted a very specific group of customers and shown you’ve been paying attention to their needs and affinities, you’re also providing relevant incentives to increase their purchasing in the future.
Example #3: Create Brand Advocates from Early-Adopter Customers
Our last example will take customers from the “active” lifecycle stage again, but this time pinpoint early-adopters to encourage brand advocacy. We’ll identify them by cross-segmenting the following customer groups:
Customers who are top-shoppers and
Customers who tend to purchase new arrivals and
Customers who buy from multiple departments and
Those who recently browsed your brand’s latest collection
Early adopters are always important for a brand, since not only are their purchases valuable, but they often refer friends who also tend to make frequent or high-level purchases. On the downside, if they have a bad experience, they can tell their friends and negatively impact your brand. You want not only to enhance their loyalty to your brand, but to cause them to influence others to buy from your brand as well.
One idea to encourage them to become brand advocates would be to send them an exclusive campaign in exchange for spreading the word about your brand. For example, they might only be able to take advantage of the offer by sharing information about your brand on one of the various social media channels. You’ll need to put some thought into finding the right way to take advantage of this distinct customer persona that is excited about your brand and willing to amplify your message to their relevant circles.
Personalization Leads to Success
Examining only one type of customer behavior doesn’t allow you to recognize and seize the same opportunities that you can by threading together multiple dimensions of segmentation. We’ve walked you through three different examples above that illustrate how to recognize and seize these opportunities. By using this approach to gain a holistic understanding of your customer behavior, you’ll thrill them with highly personalized offers and increase the success of your customer engagement efforts.
Moshe Demri leads Optimove's UK office as VP Revenue. Moshe has vast experience consulting clients as a data scientist, analyzing their customer data and revealing actionable, data-driven marketing insights. Prior to his role as VP Revenue, Moshe headed Optimove's professional services department. Moshe holds a BSc in Industrial Engineering and Management, specializing in Information Systems.
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