Great businesses understand who their customers are, and Customer Segmentation is one of the most important tools any business has at its disposal. Segmentation is at the heart of many business fundamentals, yet it can be quite complex to implement and so this vital technique can be overlooked.
Segmentation starts by grouping Customers into their common attributes. With this done you can look at these groups for common traits, measure how this impacts your business and then respond accordingly. For example, what does a high value customer look like compared to a low value customer? It often follows that if we had as many high-value customers as low value customers, would we be more profitable? So what do our high-value customers look like? What is their leading purchase, what marketing source do they come from? Are they from a geographically similar area and so on.
Using Customer Segments you can answer these questions. But of course Segmentation can do far more than just answer questions. It can also be used to personalise the experience for the Customer. Personalise marketing message to contain content that is relevant, but also personalise the flow of customer interaction – for example help move Customers through stages in the conversion process, from first interaction to a high-value and loyal advocate. And of course in doing this you start to touch on the design of your Customer Experience.
Segmentation really is a vital part of the process. In Distil, Segmentation is made very easy. Built in A.I. Segments get you started, and then you can use the Segmentation tool to create, monitor and activate your own Segments using attributes from any source of Customer data within your business.
Customer Segmentation Tuesday is designed to get you started down the road of understanding who your customers are by describing the key attributes of your most important Segments as well as monitoring how those segments are changing over time.
Customer Segmentation Tuesday presents you with five of your most important Segments:
- Active Customers: Customers who are currently engaged with your store. They have recently visited or bought something from you.
- At Risk Customers: Customers who are currently Active but are becoming less so and thus in danger of becoming Lost. It costs a lot to acquire a Customer and plugging the leaky bucket is often cheaper than filling it. So monitoring the size of this Segment is important – as is keeping these Customers engaged. A Customers in the At Risk Segment represents the last chance you may have to keep them. So don’t just monitor the Segment size, use Distil to push this Segment into your Marketing tools and get these people a special offer!
- High, Average and Low Value Customers. What is the difference between your High, Average and Low Value Customers? Are they being lured by a different Leading Purchase, are they visiting and interacting with your Content more, or coming via a different marketing channel? This card describes the most common points of difference between these critical segments and starts the work describing these Customers to you. The full Distil Analytics suite can help you dive deeper into this data, uncover those crucial differences, and then activate this knowledge by pushing the data out into your marketing tools.
Metrics in this Card
| Metric | Description |
| # Active Customers | This is the number of Customers who have been seen in the last 30 days, either by visiting your platform or making a purchase. |
| Active Customers Value in last 12 months | The total order value of all currently Active Customers in the last 12 months. |
| # At Risk Customers | The number of Customers who are At Risk of churning and becoming lost. This is calculated using a Recency Frequency Intensity and Monetary (RFI/M) algorithm that looks at a Customers interaction and detects when it starts to drop. |
| At Risk Customers Value in last 12 months | The total order value of all currently At Risk Customers in the last 12 months. |
| Customer Segments; Active High, Average and Low. | These Segments contain Customers who are currently Active and who have High, Average and Low spend respectively. These brackets are calculated automatically by Distil using your order history. The most common describing characteristics of each of these Segments is then presented below to give you an idea as to the type of Customer in each. Far more detailed attributes can be explored using Distil Analytics Portal – these common attributes are a great place to start. |
| Number | The number of Customers currently in this Segment. |
| Avg. LTV | Average Lifetime Value is calculated by first working out the Average Customer Value, which is the Average Order Value * Average Number of Orders for each Customer, and then multiplying by the Average Lifetime of a Customer. |
| % of Active Customers | The percentage of currently Active Customers who are in this Segment. |
| New Vs Repeat | The percentage of Customers in this Segment who are New vs Repeat Customers. A repeat Customer is one that has placed more than one order. |
| Number of Purchases | The average number of orders placed by Customers in this Segment. |
| Average Order Value | The average order value of Customers in this Segment. |
| Purchase Frequency | The average purchase frequency of Customers in the Segment. I.e. For repeat Customers, how many days apart do Customers on average place an order. |
| Visit Frequency | The average visit frequency of Customers in the Segment ie. for repeat visitors, the average time gap between sessions. |
| Top Marketing Channel | The Top Marketing Channel; i.e. Social, Paid, Search. This is the channel most frequently associated with sessions that can be attributed to Customers in this Segment. |
| Leading Purchase | The most common first purchase of Customers in this Segment. |
| Top 5 Products | Diving deeper into the purchases of Customers in this Segment, the top 5 products that are purchased by Customers in the Segment. |
