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Increasing Lifetime Customer Value with Data Segmentation

In recent years, data segmentation has become increasingly useful when optimising customer value for brands. Customers are becoming smarter and more knowledgeable about their purchases, therefore they expect targeted communications relevant to them. In this article, we dive deep into the purpose of segmentation and how it can help nurture the customer journey in an effective way.

What is data segmentation?

Data segmentation allows a brand to drive purpose and value to its audience by dividing a customer database into specific groups. By segmenting data, customers can gain value through personalised and relevant targeted messages. This demonstrates to customers that a brand actually cares about their specific needs, therefore increasing customer lifetime value. Customer segmentation is also used to nurture the customer journey and increase sales as stated by our Email Consultant, George Cassimatis, “Customers expect more personalised experiences from the brands they choose to engage with. Through email flows, meta ads, and targeted content, we can more thoughtfully nurture customers. Customers are very receptive to these more personalised touchpoints which can lead them to make choices that are more profitable for brands.”

What are the benefits of a segmented network?

1. Producing relevant content

Identifying the values and objectives of a specific market segment allows a brand to educate customers on why a product or service matters. Therefore, understanding the desires of each data segment makes it easier to plan and create relevant content for your business. 

Reload Content Product Lead, Jade Horrobin, elaborates, “Leveraging insights from each segment gives you a head start about what messaging they will be most responsive to and allows you to create content that really speaks to them. The goal is for your audience to be able to see the questions they’re asking, the problems they are grappling with and the solutions they’re searching for reflected in the content they are served on your site. Utilising your audience segments in the content you’re creating is a great way to do this as it means you won’t be wasting time and effort on generalised content that doesn’t resonate.” 

2. Maintaining quality statistics 

Keeping performance metrics high is a great internal benefit of data segmentation. This especially applies to email marketing, where a segmented email list can produce up to 760% of extra revenue per campaign. Relevance of email content, timings and behaviours make this possible. Data segmentation can benefit email quality statistics, like open rates and click-through rates, for the same reason. 

3. Reaching eCommerce goals  

Data segmentation allows eCommerce brands to reach specific goals. Senior Paid Marketing Consultant Maddie Howe explains, “For a Reload skincare client we segmented the brand’s CRM data by skin interest and concern. Then, we grouped products together for that segment so that our paid ads content was relevant. This maximised value for the customer as we used the audiences to create targeted ads that included multiple products of interest.” 

If you are an eCommerce brand, segmenting by category and interest can help you reach curious customers and drive initial sales. Alternatively, if you are an established eCommerce giant with a profitability goal, segmenting data to maximise customer touchpoints could be a great strategy. 

4. It’s a time saver

Performing customer segmentation allows a brand to know where to place time and effort. It shows who your highest converters are, and who needs a little more nurturing to become a profitable part of your brand’s customer network. Once data segments are set up, creating a marketing strategy surrounding the segments is easier and more efficient as you know which type of customers to focus on. This efficiency can help you achieve a range of marketing goals faster and more effectively.

When to start segmenting data

It can be hard to know when to begin customer segmentation with a database. There are a couple of guidelines Reload follows to predict if data segmentation timing is right for a brand. 

The first is to understand why a brand needs data segmentation. Begin by establishing goals attached to the data segments, which could be profitability or content relevancy depending on the audience. Customer value can be easier to harness if strict goals are set out for a segmented network. 

It is also great to know the brand’s database size. If the customer network is too small, data segmentation will be inefficient. In this case, producing targeted content for a small segment is a waste of time. Data segmentation works best with a large customer base. 

As the digital landscape changes, keeping up with data news is vital. Website cookies will be disabled from next year, meaning brands will need to rely on their own CRM database to target customers for all marketing campaigns. Therefore, segmenting data before this change will help alleviate the pressure of a shrinking web audience, and allow brands to maximise the use of an internal CRM database. 

The best ways to segment data for customer value

Customer value can be harnessed when collecting relevant data for strategic segmentation. There are many creative ways to collect segmentation data. 

Zero-party data is when the customer actively hands over information to a brand. A simple way to capture this is in a website pop-up form. We know that 2% of all website traffic is utilising pop-up forms to learn more about a brand’s product or service. Multi-step forms are even better! These can include information like phone numbers, reason for visiting a website, or the individual’s favourite brand product category. Most brands will already have some form of zero-party data. Therefore, collecting and reviewing zero-party data is the best way to begin data segmentation. 

Creative ways to collect further customer data include:

  • Conducting feedback and interest surveys through email campaigns. 
  • Creating an interactive website quiz to begin the customer journey or enhance customer lifetime value for brand VIPs.
  • Competitions through organic social and email marketing campaigns, allowing an excited audience to input more information to enter.

What if my data segmentation strategy hasn't worked in the past?

Some brands segment for segment’s sake. Email Consultant, George Cassimatis voices that “while many businesses understand the importance of segmentation, they are underutilising the rich customer data they have at their fingertips by leaving those segments stagnant. Segments shouldn’t be made for the sake of having them but used strategically to enrich cross-channel marketing strategies. Creating synergy among segments and personalising campaigns across brand touchpoints is the best way to do it.” 

Building segments out for worthwhile customer targeting is crucial, and might be the reason your segmented network hasn’t created customer value in the past. Have a plan on when and where you will use the data segments to create customer value and make sure these align with your marketing goals.

Enhance your brand's customer value with data segmentation

Partnering with a data-driven marketing agency can help you align your brand goals with data segmentation. Get in touch to find out how our product lead experts can use data segmentation to create an omnichannel marketing strategy for your business.

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