Choosing the Right Metrics
There are two important metrics to focus on during the early part of the customer lifecycle: Early Repeat Rate (or ERR) and Predictive Customer Lifetime Value (or (P)CLV).
ERR captures the up-to-date one-time buyer conversion rate; it’s the percentage of new buyers who make their second purchase within 2 months of their first.
(P)CLV focuses on the value of those customers; it’s a forecast of the total amount of profit a single customer will spend throughout the brand relationship.
Segmentation Strategies for the Holidays
The CLV of holiday shoppers (that is, shoppers who make a first purchase during the holiday season) is also 15 percent lower than customers acquired during the rest of the year, as these customers are often buying gifts and don’t become repeat customers.
The competition can be difficult during the holidays so it’s important to focus on ERR and P(CLV). Here are three segmentation strategies to help you engage the right way with new customers this holiday season.
1. The Correct Product
How do we deliver relevant product stories to our customers? Which customers should get our snow boots email and which should get our cashmere sweaters email? Customers receive a barrage of retailer emails during the holiday season, so one way to cut through the noise is to show customers the products that are most relevant to them.
Different algorithms can help you sift through lots of data to reveal patterns — for example, customers who have similar interests or purchase similar products. These analytic approaches can even help sort new customers into known clusters based on leading indicators of purchase behavior.
2. The Right Price Point
Price point segmentation is also vital during the holidays. By showing customers products in the right price range, you can not only grow profits by effectively displaying the more expensive items, but you can also increase conversions.
3. The Right Channel
Forty-five percent of paid search budget is spent in Q4 alone. Anything we can do to make more intelligent choices about how to use this paid ad budget is beneficial. For example, retailers can look at customers with low email engagement and high CLV, target them on Facebook and Google and optimize return on ad spend.
Looking at a customer’s email engagement rates, retailers can make decisions about whether they should increase or decrease the amount of emails to send. Marketers can utilize this technique to determine which paid channels to invest in.
Read more here: Consumer Marketing Executive Search