How Predictive Marketing is Powered by Effective Segmentation
In an industry with an abundance of product options, stiff competition and seemingly unlimited shopping accessibility, basic email tactics aren't enough to set your brand apart from the rest. This means retailers must do more than simply include customers’ names in marketing emails. This point is evidenced by the fact that more than one in three (35 percent) consumers find this level of marketing ineffective.
Powered by machine learning and automation, predictive marketing allows for a deeper level of personalization by sending targeted messages and offerings to specific customer segments, adding value to their shopping journey.
Predictive marketing goes much further than product replenishment, however. Customer segmentation allows you to efficiently personalize the marketing communications each shopper receives. Below are some examples of how to segment your database to send emails that truly resonate.
Valuing the Repeat Customer and Converting the Non-Customer
For the highly engaged repeat customer, like the fashionista who adds new styles to her wardrobe every month, refrain from overcommunicating with them on special offers. Doing so may cannibalize their average order value unnecessarily. Instead, demonstrate appreciation for these customers by offering preliminary access to your latest products or by inviting them to exclusive in-store events (e.g., the launch of a new collection or free makeovers).
Analyze your highly engaged non-customers to understand the most effective approach to encourage them to make their first purchase. For these shoppers, who are continuously engaged on your site but are hesitant to make a purchase, coupons and special offers can be the type of incentive they need to finally convert.
Remind the Disengaged of Why They Loved Your Brand
Lapsed customers are another valuable customer segment, defined as customers who have made purchases from your brand in the past but haven’t done so in weeks, months or even years. The key here is to reactivate their interest in the products or services you're selling. A series of emails can let them know you value them, notice their absence and want them to see your latest offerings. This is a good way to remind them of why they frequented your brand in the first place and to entice them to purchase from you again.
Top-Shelf Shoppers and Coupon Lovers
One of the most vital techniques to an effective predictive marketing campaign is analyzing the customer’s purchase history. This allows you to place shoppers into segments based on average order value, differentiating between those who typically spend more than the average purchase and those who typically spend less.
When you know the price ranges of your customers’ purchase histories, you can effectively personalize your marketing communications based on these patterns — price is arguably one of the most deciding factors of a purchasing decision. For big spenders, place priority on your top-shelf products (often items with the highest profit margin) as these customers are more likely to splurge on new items. On the other hand, customers who have a history of spending less than average may be turned off by recommendations for higher-ticket items that might exceed their budget. Get their attention by highlighting products that recently dropped in price or just went on sale.
Predictive marketing is an effective strategy to offer consumers the most relevant products when they're most likely to convert. When done right, each individual customer will receive targeted marketing emails that will ultimately lead to more sales conversions. On par with all automated email marketing campaigns, the goal is to establish what benefits each individual customer. Constant testing and fine-tuning of your tactics is vital to improve your campaign results, as opposed to a "set it and forget it" mind-set.
Mike Austin is the co-founder and CEO at Fresh Relevance, a personalization platform designed to boost return on investment.
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