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From data storehouse to profit powerhouse
Segment-based communications help convert your stockpiled customer data into real value.
It’s been something of a pie-eating contest for the past decade or so, with databases putting on the pounds as businesses gorge on customer knowledge. Now, like someone turning excess calories into brawny muscle, it’s time for businesses to convert their stored data into a profit powerhouses.
Proflowers, Payless ShoeSource, The Great Indoors and other major retailers have engaged CCG to help them turn customer data into bottom-line results. One effective strategy for doing that is augmenting traditional sales promotions with segment-based strategies.
Align segments with objectives
When a national home-decor retailer came to CCG for help in transforming its existing customer data into more actionable knowledge, the company already had an established segmentation plan for differentiating customers. Those segments were predominately based on historical purchase trends, such as store visits and cumulative expenditures.
“But the company needed its data to help manage the customer lifecycle,” notes Sallie Burnett, CCG VP/national sales. “They needed a CRM vision.” Think about the customer who already has a nice home and doesn’t need to do extensive remodeling,” Burnett explains. “They’re not in project mode. They just want to put on the finishing touches or do a little redecorating. The CRM plan for this retailer was about managing that customer relationship — keeping the customer engaged by knowing what she needs and wants.”
Appending demographics and lifestyle information to the customer database helped this retailer take the first step. With this data in place and a more insightful customer picture to work with, the company wanted to:
- Uncover hidden patterns of customer purchase behavior
- Quantify customer value and loyalty
- Enable more targeted customer acquisition initiatives
CCG designed a customized data analysis plan using innovative tools including Gap Analysis and New Customer Acquisition Modeling (see Specialized data tools, right) designed to enable more relevance in customer contact points.
“Take that customer who isn’t in project mode,” says Burnett. “Now you might send her a ‘Spring Colors Preview’ invitation rather than a cabinetry discount offer.” By using data to tailor communications to customer needs, preferences and interests, this retailer can now convey more perceived value to the customer.
Event-focus to customer-focus
What if you haven’t defined any customer segments yet? Consider another major retailer. This one, a designer-fashion outlet chain, came to CCG looking to (1) leverage its customer data to optimize holiday-promotions response and (2) increase spending from customers who shop outside traditional sale periods.
“This was a company looking to make the leap from event-focused marketing to a more customer-centric approach,” says Burnett. “They needed insights that would let them apply their customer data to their specific marketing goals.”
CCG recommended profiling key customer attributes and differentiators. In this case, that meant delineating “holiday shoppers” from “non-holiday shoppers.” Modeling based on those profiles would then be used to build a strategic marketing plan including more cost-effective communications initiatives. For instance, a customer who shops sales but avoids visits on holiday weekends might not get a Christmas postcard. Instead, they’d get — and be more likely to act on — a January clearance sale reminder.
The moral of this story? Building a huge database is only the beginning. Turning it into actionable information is the next step in your company’s success.
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Specialized data tools uncover hidden strategies
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Segmentation isn’t a new idea. But powerful tools such as CCG’s Gap Analysis and New Customer Acquisition Model let you use segmentation insights in unique and highly focused new ways — or achieve specific marketing goals where comprehensive segmentation isn’t possible.
Gap Analysis measures the relative time span (1) between customer transactions and (2) since a customer’s most recent transaction, revealing gaps in customer activity so you can synchronize the timing of your marketing messages.
New Customer Acquisition Model identifies customer characteristics that are most predictive of your best customers so you can target prospects who mirror those attributes. (Read more in Double Take.) “Businesses have so much untapped value in their databases,” says Lane Ware, CCG senior VP/strategic consulting. “Analysis tools like these let you look at that data in a new light and uncover new ways of using what you already know.” |
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Adding muscle to your message
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Your best customers may seem to fit neatly into one bucket — especially if most are in a single age category, such as seniors. But how alike are they, really?
One East Coast department store wanted to reward its highly loyal “seniors” group and discovered that it actually had four very different seniors segments to reward. |
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Name: |
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Elwood & Willamae |
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Background: |
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Ages 72 & 70, fixed income, like social events. |
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Reward: |
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A “coffee club” attended by the store manager. |
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Name: |
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Hazel |
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Background: |
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Age 73, sedentary, homebound. |
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Reward: |
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Discounted home delivery. |
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Name: |
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Burt & Marylyn |
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Background: |
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Ages 66 & 60, more disposable income, like special treatment. |
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Reward: |
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Recognition at register as a VIP customer. |
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Name: |
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Winnie |
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Background: |
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Age 73, widowed, conerned about safety. |
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Reward: |
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Reserved curbside parking. |
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