In many organizations, marketers are charged with increasing customer engagement – in stores, via email, on e-commerce platforms and on social media – to increase awareness and loyalty. When it comes to communications strategies, this means delivering the right individual message to each customer. This leads to a higher level of communications, relevance and therefore higher clicks, likes, shares and purchases. Big data analytics can deliver on the insights that drive relevance for communications in many ways.
“The more you know about an individual customer, the more relevant your communications can be.”
But first, it’s all about the data. The more you know about an individual customer, the more relevant your communications can be. This typically includes purchase data from POS or e-commerce systems and registration or account information, which can include names, mail and email addresses and profile information, either from sign-on questions or third-party overlay data. Additional data could include how people visit your site, also known as browsing detail, usage data, geo-location data and social media data.
Your analytics team can begin analyzing the data to identify different types of customers, based on tenure (Who is a new customer?), value (Who are your platinum customers?), demographics (Are they baby boomers or millennials?) and any number of behaviors.
There are three levels of segmentation that companies should consider to increase relevance of communications that will drive customer engagement:
1. Micro-targeting segments: The most detailed type of segmentation is a specific categorization of customers based on a specific part of their relationship with a company. For example, a travel company may wish to know who journeys only to Europe, who is a globe trotter and who only travels domestically. A restaurant may wish to know who orders rib-eye versus filet, which customers prefer chocolate, vanilla or rocky road and who only dines on holidays. Whatever it is that drives a consumer choice, this level of detail allows you to focus on the few things that are very specific, like who travels to Europe exclusively, and avoid talking about things that are not relevant.
These types of segments are numerous and critical. They may take on different names such as flavor profile, travel profile or order time profile. This level of versioning can be extremely effective. However, often times people may not only have one action, like traveling to Europe, but rather have not yet expanded their relationship by traveling to South America, for example.
2. CRM and lifecycle segments: This type of segmentation is meant to summarize the relationship you have with a customer. Is she a long-time customer? Is he an occasional shopper? What value does she represent? What is the overall product relationship? What demographic group is he in? Each of these characteristics is a “dimension” of the customer relationship. The statistical techniques (cluster and latent class, for example) will categorize customers into one of six to 10 segments, each with similar attributes on the dimensions. This provides relevance beyond a specific behavior. Segment types such as Gen X consumers who buy casual clothes and emerging millennials who shop occasionally are great for a higher level of relevance in communications.
3. Strategic planning segments: Sometimes called market segments, this type of segmentation includes information about competitors, wallet size and attitude. This may expand beyond customers and into the general market. Big data can help you understand these segments, but typically, primary research allows you to delve into information that a database may not be able to provide, such as attitudes toward your company and/or your industry.
Companies typically look for five or six segments here and plan investments, product strategies and marketing around a few key segments. If a customer is in one of the key segments, the company’s message should resonate more with them.
Businesses should not think of their various flavors of segmentation as competing. They each play an integral role in building a customer-centric culture of strategy, relationship engagement and tactical execution. These different levels can be integrated to create a truly relevant and personalized communication strategy, leading to higher customer engagement and sales.