The recent updates we from tech giants Apple and Google, where providing users the choice on whether they are targeted by advertising, supports the need for brands to invest more time in growing and developing the information they know about a customer. In a previous blog post we talked about the importance of your first party data and the challenges that brands face in creating personalised customer experiences. 
Today, we are going to focus on the data that you hold in your database or Customer Relationship Management (CRM) solution. This can either be people who have purchased your product or service previously or shown interest e.g. by requesting a sample of your product or by signing up to your newsletter. 

What questions should you ask of your data? 

Understanding the volume of customer records you hold within the database, their status and what triggers a purchase is at the heart of defining your specific customer groups. Before creating segments, it is essential to understand the data that you hold. For example start-up brands or established brands with low levels of monthly or annual sales are less likely to benefit from segmenting their customer information due to the maturity of their data. Conversely, a common challenge are that brands can create too many segments, with little value realised. So, the key is to start simple and grow from there. 
Agnostic of what product or service you are selling, you should start by understanding what your average customer looks like and then looking at the factors which drives sales and repeat purchases or usage of your service. The questions you should pose will subtly differ by sector 
If you are selling a product where repeat purchasing is important e.g. retailer or travel company, you should look to answer the following first: 
What is the average purchase frequency of the customer? 
How many purchases does it take to make the customer a loyal customer? 
Who would be classed as a VIP customer, based on frequency and value? 
At what point does a customer become dormant? 
For technology and publishing brands, where subscription models are more prevalent, the questions being posed will change slightly, such as: 
Which prospects have carried out a free trial and what is the typical lag time for trial to subscription (assuming you do not auto opt customers in for subscription)? 
At what point is a customer at the highest risk of cancelling their subscription? 
Which customers are subscribed to your solution but are not actively using it? 
What types of customers are accessing the highest subscription value e.g. add-ons? 

Identifying your primary customer groups 

Irrespective of the sector, the questions you have answered should help you identify at least five customer groups: 
Browsing shopper or lead - prospects wh have shown an interest in your brand, however have a need to research alternative options, before committing to your product or service. Your objective is to capture their contact details and retarget via paid media, email and SMS. 
Active customers – those customers who have recently either purchased once from yourself or have just started to use your solution. Your objective is to retain these customers and move them to loyal or a high value segment. 
High value customers – they repeat purchase, buying higher average order value or margin products or have upgraded their solution over the lifecycle of the. Your objective would be to retain these as high value customers 
Loyal customers – agnostic of value, those customers who continue to purchase from yourselves or have stayed with your solution past an initial trial period. Your objective would be to retain these as loyal customers or migrate them to high value. 
Dormant or lapsed customers – the customers who have stopped buying after a set time period or have stopped using your solution (either post a trial period or not using and still paying). You would be looking to reactivate these customers 
The below demonstrates a simplified version of how customer status’ can change over time, which require different messaging and tactics to be deployed across your digital marketing and website. Further customers groups would also be developed, specific to your how your customers behave and your product / service offering e..g. the lag time from conversion to repeat purchase and the ability to up-sell and cross sell your offering. 

Understanding the DNA of these customers 

Once these segments are created and you have proven the value in personalising your customer experience, you can then further segment, based on what triggers them to make a purchase from your brand. These triggers include understanding whether they: 
Only buy or upgrade when you are in a promotional period? 
Purchase at specific times of the year e.g. based on internal or external events? 
Have a preference to a certain product or service? 
The list of possibilities are endless, however once again the secret to success is understanding whether you have enough data to make a difference to your performance. 
In summary, starting with the basic four segments should be the starting point for any brand who has enough customer history. You also do not need technology in place to answer these questions in the short term, as long as the data is accessible and in a consistent format. You will however need marketing technology to support when you are using the data to personalise your customer experience, due to the fact that their status’ will change. 

Looking to personalise your customer experience?  To understand the best approach to personalising your customers experience, contact us today for a free consultation.  

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