Segmentation Strategies in Use
You wouldn’t learn to drive a car or fly a plane while blindfolded, right? Why would you do this with a direct-mail campaign or catalog mailing when thousands of dollars (and your reputation) are at stake? In a recent blog post, we discussed the importance of segmentation and an example of its use (Data Drives Direct Mail Sales). Next, we will share some more strategy and tips on how to make segmentation work for your company.
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Once you have taken the steps of analyzing and segmenting your customer file, the next step often is to review key group or segment behavior and discover how it influences website use, performance and sales. For example, one client wanted to launch a new kids title, so we mined the database for customers who buy child sizes of products. With high-quality, low-cost webpage analytics (thank you, Google Analytics), we used browser behavior to learn more. For the same new children’s title, we learned which customers aren’t buying child sizes currently but have browsed children’s pages in the campaign. This identified an important new buyer to share offers with that proved very profitable.
Data from a hold-out test or experiment can help you determine the best contact frequency by customer segment. High frequency, high spend buyers might be eligible to receive all of your offers while one-time, low-dollar purchasers who have opted-in for email might qualify for just one offer per season. This segmentation and further analysis is really meaningful for catalog distribution – especially given rising catalog costs. Read more on hold-out tests (see Use Holdout Tests to Measure Incremental Catalog Sales) in our Catalog Consulting blog.
Segmentation in Use – It’s in the Tea Leaves
To illustrate how segmentation is used in direct mail we share another example. A beverages firm wanted an analysis of the purchasing behavior and profile of customers in their database. Looking at both demographic and transactional data, we learned that gender was a key consideration in predicting which customers would purchase teabags over loose leaf tea. The insights helped guide catalog pagination, cross-file prospecting segmentation, and will be used to segment the inactive buyer file to maximize campaign ROI. Even digital acquisition campaigns can benefit by leveraging the data insights to customize the ads based on the cohort group.
Clients often rely on us to serve as their resident data expert. We support the digital marketing and merchant teams with data analysis, allowing your IT department to focus on other priorities. Data analytics consulting services are available on either a project basis or monthly retainer. Contact us today for support getting started!
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