How Data Driven Segmentation Supports Personalized Marketing

In the previous article we saw how combining the 3 dimensions of the RFM analysis will result in clearly defined customer segments. Now that we have a full picture of what our customer base is made of and we understand that each segment has different needs, it’s time to move forward and put in place a marketing strategy that would maximize the engagement and customer experience of each segment.

Introducing Customer Journeys

Customer journeys are a tool for marketers to show how and when they want to interact with their customers in order to increase opportunities to engage with them and also bring value to the business. Customer journeys map in advance all the customer touchpoints and choose ahead of time the right marketing message for them.

As part of the plan, you should decide what channel to use to communicate with the customers (email, direct call, SMS, virtual call recording, push notifications, social media, google display) and how automated this process should be. If you don’t know which communication channel would be the most appropriate you can start doing some A/B testing to see which channel performs better for each segment; or, more advanced you can aim for an omnichannel approach to reinforce the message.

Based on the segments we defined in the previous article, let us further understand how a dedicated customer journey would look like for each of them

• High-Spending Active Loyal Customers -> VIPs Nurturing Journey

Besides asking for customer feedback, when targeting this segment, you can propose an up-sell (presenting products with slightly higher value than their average purchase) or a cross-sell (proposing a complementary product). If your business is subscription based, you should have one of your best sales/account managers proactively reach out to your best customers to propose a subscription renewal and maybe a more premium plan (up-sell) to avoid the risk of losing them to your competition.

• High-Spending Inactive Loyal Customers -> VIPs Reactivation Journey

In this case, the recommended approach is to have an account manager or a salesperson calling them to understand why they stopped using your products and what you can do to improve their experience. Unfortunately, only 40% of companies and 30% of agencies have an equal focus on both customer acquisition an retention, basically ignoring one of the straightforward methods to increase profits.

The above mentioned 2 customer segments are crucial for every business. Chances are that the top 5 – 10% of your customers (which would be the VIPs) bring more than 80% of your revenue so it makes perfect sense to concentrate your efforts and resources on these segments.

• Low-Spending Active Loyal Customers -> Core Active Journey

Since these customers are already loyal, you need to motivate them to become higher spenders. Thus, you need to pay special attention to what they have been viewing, what they are already using, to their favourite products, abandoned carts and notify them at the right time about price drops. Moreover, you can target this segment using personalized discounts in their preferred category or for complementary products.

• Churned Regular Customers -> Core Reactivation Journey

The more time passes since they made the last acquisition, the harder it gets to bring them back so you can put in place a reactivation campaign with multiple steps. For example, if you haven’t seen them for 2 months, propose a 5% discount. If they ignore your message, retarget them 2 weeks later with a higher discount or attractive bundle (or maybe a product they enjoyed that must have been consumed by now).

• High-Spending New Customers -> Potential VIPs Journey

Since these are new customers who spent a high amount, they can potentially become VIP customers. In order to win customer loyalty, you need to promptly put in place a VIP program/club and present it to them to persuade them to get a premium subscription.

• Regular New Customers -> New Customers Journey

For this journey, you should define a funnel through which new customers would become loyal customers. This can depend on the industry but usually a new customer would become a loyal customer after her 3rd purchase. For this, maybe you could prepare a welcome offer which will offer a discount for the 2nd purchase and a complementary bundle for their 3rd purchase.

Use Analytics to Execute Your Marketing Strategy

Every business needs a robust, data driven, automated process that defines customer segments and pushes them on a predefined, tested marketing campaign.

As soon as a customer reaches a key threshold, he should automatically be offered a premium subscription. As soon as it has been more than 2 months since the last acquisition, an email needs to go out with a personalised discount code. As soon as a subscription expiration date comes up, the VIP customer needs to pop up on top of your sales agent ‘s today calls list.

The key question you need to ask by now – am I recurrently, consistently, automatically determining the segment of each customer and then pushing him on the ideal journey to optimize your marketing efforts? If the answer is no, it is high time you did it, or your competition will!

In the next article we are going to show you a simple, step by step guide on how we automate this targeting process.