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Optimizing Your Marketing Initiatives with Segmentation and Control Groups

I was shopping for shoes the other day at one of my favorite stores and getting ready to pay, when the Associate asked me for my contact information. That would have been fine of course; these days you would be hard-pressed to find a retailer who is not making an effort to capture your personal information. But this was a place I had shopped at several times and that already had my profile! What’s more, it wasn’t the first time this had happened. A small error perhaps, but it made me feel as though the retailer simply didn’t care enough to “remember” who I was or what I liked, and didn’t respect me enough to worry about wasting my time and marring my experience – which it did. In fact, it compromised my impressions just enough to make me think, right there at the POS, that next time I needed shoes I would first look somewhere else.
 
As a retailer, your takeaway message from this experience should be clear: If you want customer information to work for you and not against you, capture and confirm it efficiently, then retain it, respect it, learn from it, and apply it consistently in ways that make every customer feel like your chain is their very favorite local store. After all, the whole point of a CRM program is to understand your customers and personalize their experience – in store, online, and through all of your channels and marketing. Only then will you truly reap the rewards of increased loyalty and sales.

Toward this end, understanding your customer base is especially important, and lends itself to various segmentation opportunities.  Clearly identifying your good, better and best customers will let you communicate with each group differently and in turn enhance the effectiveness of your marketing initiatives. But your customer segmentation model needs to be methodically thought out and statistically proven to show predictable, repeated customer behaviors in each category, and predictable results.

After such a model is developed and applied to the whole customer base segmented groups can be used to amend each part of your marketing program – from promotional discounts to all tiers to soft benefits you may offer only to your top-tier customers, such as priority viewing of a new line, free shipping, special events, or perhaps even no charge alterations. Any offering that distinguishes deserving customers, based on their transactional behavior and brand devotion, can go a long way in ensuring they develop a stronger relationship with your brand.

Personalized marketing will help your customers feel you understand them and are speaking directly to them on a one-to-one basis, and it will enable you to realize stronger ROI from your marketing investments. 

How do you gauge that ROI; how do you put a hard dollar value on the benefits of segmentation? The answer is simple: through the use of control groups. By pulling control groups you are able to compare the performance of customers you actively engage with those you have not spoken to. Naturally, the control groups are comprised of customers who share similar customer profiles to those of the CRM group you are evaluating. By withholding a statically significant sample from each segment being mailed, you will effectively be able to report on incremental sales, incremental margin, and ROI. These numbers will provide the evidence you need to communicate the value of your marketing program, and affirm the validity of your initiatives.

By using some of these tips, you can help your bottom line and improve your customer’s experience when engaging with your brand.

Watch for our next blog, “Getting to Know Your Best Customers Using Our RFMX Tool”.

Stephanie Cunningham
CRM Services

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