Get started with customer segmentation

Every customer interaction leaves a footprint for the merchant to collect and analyse. A tiny bit of information that hint to that particular customers preferences and characteristics.

As customer interactions accumulate, hints are forming sets of information that describe and distinguish a group of customers. Customer groups with distinguished characteristics are often referred to as customer segments. And these segments can be of great value when running marketing campaigns.

Using customer segmentation to convey a more relevant message to customers can significantly improve key metrics such as customer retention, conversion rates and revenue. - But you probably already know all this and this blog post will instead focus on how to practically get started with customer segments and target audiences in marketing.


While it may sound complex to segment customers properly it can really make a difference to just start with a few simple segments. Consider how a campaign might differ when targeting the most loyal customers compared to when targeting the customers that are about to leave. Or returning customers versus first time buyers.

Engage provides segmentation tools to enable merchants to create their own segments, or merchants may use segments automatically derived from our RFM analysis. Specifically the RFM analysis provides segments such as the most loyal customers, new customers or customers that are about to leave, right out of the box. Head into your account and check out the RFM segments available for you.

Out of the box RFM segmentation

Out of the box RFM segmentation


Browse the available segments and pick one of interest to you. Then consider how you would form a message to this group of customers. What would you promote? How would you promote it? And what would be the goal or objective of such campaign? You may utilize segment characteristics such as the average order value or the ratio of returning customers to better formulate the message.


USE CUSTOMER SEGMENTS

Facebook Ads

You may target your custom segment with ads using Facebook Ads. To get started, head over to your Facebook Ads account and upload your segment into a custom audience. Facebook will also let you expand your audience based on similar profiles to increase the reach of your campaign. Whether or not to expand the audience is up to you, and possibly dependant on the target audience. Some audiences may not be suitable to expand. Read more about Facebook custom audiences here.

Google ads

Like Facebook Ads, Google Ads also let you upload custom customer lists to use as audiences in campaigns. You may use expanded, or similar, audiences based on the uploaded customers to further the reach. These audiences are available for Search, YouTube, Gmail, and Display. And will be automatically created for you. Google recommends you to continuously refresh your customers lists and will send an email to you when a list has been left without refresh for a long time. Read more about Google Ads customer lists here.

Email marketing

From Engage, you may export a custom segment and use it in any email marketing tool you like. Just create a send list in the particular tool, setup tracking, design your email and launch the campaign. Many of the email marketing tools provide means to A/B test campaigns, use it to compare results from a general email and a tailored email sent to the same customer segment. Then take your email marketing to the next level with personalized product recommendations from Engage. Seamlessly integrated to the email.


RFM TELLS YOU A LOT ABOUT YOUR BUSINESS

An RFM Analysis is often packed with insights. It can all seem obvious and not always that sophisticated, but in truth it is a well established method of customer analysis, and the insights are often relevant and well grounded. Examples of insights that can be instantly derived from the RFM analysis are:

  • The ratio of customers coming in vs leaving - This says a lot about the growth / decline of the business and may indicate a need to focus on customer retention to reduce churn.
  • Whether or not the business entertain loyal returning customers or mostly profit from one time visits. Which in turn may hint at the nature of the business, or at the customer acquisition strategy.
  • What customer segment is making up for mot of the revenue? Champion customers that buy a lot and return often are great, but they seldom make up for most of the revenue. Money can be spent to attract these, and a business can aim to grow this segment, but it should not neglect other segments in its pursuit to attract champions.


CLOSING NOTES

If you're not already using segments, start with your next campaign and evaluate the improvements they may have for your business. Using segments from Engage you get automatically updated segments to ensure the target audiences stay relevant and up-to-date. And if you re looking for something specific or have special requirements, don't hesitate to reach out to us.