This is the second installment of a two-part series about the integrated use of consumer package goods (CPG), transactional and retail store competitive, growth, multichannel and customer segmentation strategies. This post will focus on multichannel and customer segmentation strategies. (Part one focused on competitive and growth strategies.)
Though the examples are B-to-C, many of the following strategies are applicable to B-to-B too.
Multichannel Marketing and Sales
Not to be confused with "omnichannel" strategies, this section is about the integrated use of multiple marketing and sales channels. In terms of marketing channels, looking to enter new direct-to-consumer (DTC) markets for vitamins, nutritional supplements and meal replacements, we tested our meal replacement brand. Competing with other DTC marketers relying on search engine optimization, paid search and "traditional" e-commerce channels, we looked for marketing channels fewer competitors used to integrate with our e-commerce marketing channels.
Using syndicated research on where to locate meal replacement consumers, we identified offline advertising channels competitors weren't using aggressively (specifically radio) that were more cost efficient. This strategy allowed us to reach more consumers more quickly and were more effective for differentiating product.
We drove more traffic to search engines, more visitors sought us out by brand name, and we generated more traffic from lower-cost, higher-converting branded searches.
Specific to sales channels, working on a brand relaunch, we conducted research with past and prospective customers to better understand, rank and quantify purchase motivations, needs, feature preferences, price sensitivity and sales channel preferences. We then fed our findings into a statistical model, modeling most often used by CPG companies.
Modeling the research, we identified important differences between e-commerce and retail store buyers, allowing us to optimize and differentiate our SKU-mix, pricing and merchandise by sales channel, different product offers, pricing and product positioning in retail stores and e-commerce sites.
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.