29 Aug Smart Ways to Segment Your Customer Data
Segmenting your customer data into groups according to their interests, preferences, and behavior is a more precise way to send targeted and engaging communications that convert. According to theDMA’s National Client Email Survey 2014, a 760% increase in email revenue came from segmented emails in 2013, up from 55% in 2012.
When it comes to applying segmentation to your customer information, you are only as smart as your data. If you only have limited customer data or are not able to effectively analyze the data points you do have, then your segmentation will be limited. Becoming smart with your customer segments requires accessing and analyzing all your data points, including transactional, behavioral, demographic and social. In order to most effectively target customers, drive up-sell and cross-sell, and improve retention, leveraging the most impactful data sources will help maximize profits and build customer loyalty.
Knowing where to access and store your data is also very important. In our digital community, we can find data in our eCommerce Platform, email service provider (ESP), customer relationship management tool (CRM), Google Analytics and tracking software, and many different 3rd-party systems. The structure of your data has to be managed as well to ensure your segmentation is as precise as possible. More likely than not, you’ll find mismatched fields in each system where one stores country codes as “US” and others as “USA.” We previously spoke about how to keep your data clean.
When it comes to deciding which data sources to focus on first, carefully plan your short and long term strategies. Don’t try to tackle every piece of data all at once. Think about the data segments you currently warehouse and can utilize immediately versus the points that require higher volume aggregation. Set checkpoints and smaller goals to achieve a larger one will help create a smoother process.
Now that we have a high-level overview of the benefits, opportunities, and sources of customer data segmentation, let’s examine specific points that provide the most insights.
1. Transactional Data
Number of orders
Analyzing purchase history is the key to customer retention. When building customer segments, treat buyers with 2 purchases differently than those with 4 purchases. Improving the number of orders per customer will return a higher customer lifetime value (CLV) over time.
Last order date
Knowing your customer’s last purchase will help build a consumer lifecycle. Targeting users who you know need replenishment is a perfect segment. Timing your messaging is a huge factor in engaging your customers.
Collecting the initial registration source of your customer orders is an effective and longer term strategy. What better way to analyze your acquisition traffic value than having this tagged in your data set? Don’t simply compare 2,000 customers from one source to another with 50,000. Be patient and understand it takes time.
Product and category
Targeting campaigns based on product and category purchase history can have a profound effect on your numbers. For example, customers who repeatedly purchase “blue shirts” have an affinity for and interest in them. Give your customers what they want to see.
2. Behavioral Data
Number of sessions
If customers are coming to your website 15 times before they make a purchase, understand the trends behind it. By collecting the number of sessions a customer interacts with your website, you can build general profile sets to find your high- and low-value customers. As your data progresses, you may find high-value customers purchase at 10 sessions versus low-value customers at 5 sessions.
Open and click
Evaluating a user who opens an email or page is very different than one who clicks an email or a page. There is more customer intent in “clicks” and this can help drive your marketing campaigns further for additional touches or shorter to reduce spam complaints.
Understanding when your customers interact with your store optimizes their experience. Send communications when they’re most engaged and likely to perform an action. Supply customers with the optimal chance to reach your business goals.
In today’s digital world, data can easily be overwhelming for marketers. With the tools available, it is a good strategy to build simple campaigns that will get the wheels rolling and then apply advanced segmentation. As you continue to aggregate data, look at your opportunities and plan for execution. By applying best practices, due diligence in execution, and continuous efforts of testing, you can build successful marketing campaigns by leveraging your data in a smart way.
Learn about retention marketing strategies, download our free Scientific Marketer’s Guide: Retention Marketing & Predictive Analytics