Benefiting From Multiple Marketing Models, Part 2
Customer Segmentation-Based Acquisition and Remarketing
Not to be confused with market segmentation, I'm referring to segmentation and modeling of a company or brand's active and past customers for customer acquisition and for remarketing.
The most effective customer segmentation I've used include purchase motivations, customer lifetime value (CLTV), lifecycle stages and trigger events.
CLTV identifies the best sources and products to acquire customers (if you capture channels/products of first-time customer purchases), and identifies for retention the 20 percent of customers who generate about 80 percent of your profits (the "80-20 rule").
Online retailers are good at managing customer acquisition budgets — e.g., managing paid search bids. However, I haven't seen much use of CLTV that's budgeted based on the profit differential new customer segments will produce over time.
Lifecycle stage strategies target first-time buyers to cultivate them into repeat customers (reducing churn is often a big short-term opportunity to increase sales) and for targeting customers who are lapsing before you lose them, particularly high-value customers producing 80 percent of your sales.
Results from my work include the following:
- by optimizing customer acquisition/remarketing with modeling, we funded new growth strategies;
- 10 percent annual customer growth while also reducing the cost to acquire customers 25 percent;
- 15 percent increase in annual household purchases; and
- profitably increasing the allowable cost of acquisition, and therefore acquiring more customers by using CLTV.
In conclusion, based on my experience, integrating marketing strategies from multiple business models can help you increase efficiencies, volumes, product differentiation, brand-building and competitiveness.
As mentioned in part one, it's important that before you optimize, develop and/or execute these strategies, you should conduct the up-front work of market analysis, competitive analysis and SWOT analysis.
Paul Becker's professional experience includes senior marketing and e-commerce positions with Ancestry.com, Hasbro, the United States Mint and einvite.com. Paul can be reached at pbecker123@gmail.com.
