A successful customer experience (CX) strategy starts by placing customers at the top of the priority list. It focuses on solving customers' problems first before satisfying the needs of shareholders.
Brands investing in customer experience are seeing financial gains and winning the hearts of their customers. In fact, a 2019 Forrester study shows that brands delivering superior customer experience bring in 5.7 times in revenue than their competitors.
So how do these brands deliver customer experiences that meet and even sometimes exceed customer expectations?
They focus on their best customers and their current needs through segmentation and personalisation.
Segmentation and personalisation are often used interchangeably. Both are valuable in customising an individual’s experience with a brand. Yet, they differ in approach and the capabilities they offer brands implementing them.
To maximise their potential, we first need to understand the different roles they play in your customer experience strategy.
Let's dive deep into each one of them.
Segmentation lets you group your customers into smaller clusters based on their behaviour or shared attributes. Through segmentation, you can:
Common Customer Segmentation Approaches
There’s no single correct way to segment your customers. Depending on your objectives, you can perform a variety of segmentation methods to give you deeper insights that will allow you to respond to your customer’s needs in a more relevant manner.
Here are some common examples of customer segmentation approaches you can implement today:
Behavioural
Group your customers according to common behaviours they share. This segmentation allows you to study your customers’ knowledge of and attitude towards your brand, their likes and dislikes, and how they use your products or services. Some behavioural bases for this type of segmentation include:
This segmentation helps you understand the distinct occasions or specific sets of times when your customers purchase or interact with your brand. Occasions could include holidays, seasonal events or life occasions like birthdays and anniversaries.
This allows you to identify the trends and behaviour patterns your customers have when deciding to purchase. For example, how many interactions with your brand does your customer need before transacting with you?
This groups your customers according to where they are in their relationship with your brand. It lets you discover the stages where your customers are not progressing so you can better optimise their experience. At Omneo, we break down the customer lifecycle into four broad stages:
Click here to learn more about the customer lifecycle framework.
It’s important to know who your loyal customers are, as they generate the bulk of your revenue. By segmenting them, you’ll be able to understand their needs and better nurture your relationship with them. Omneo has 20 specific loyalty dimensions covering Recency Frequency, Monetary Value, Tenure and Channel, which you can use to group your customers.
Customer loyalty segmentation may also shed light on important questions like:
Geographic
Knowing where the customer joined, their default delivery address and which stores they regularly shop at can provide a very useful segment of customers that belong to a store or region. This can be used to power Local Area Marketing initiatives or inform plans for expanding (or contracting) your brand’s physical footprint.
Location-based sales data, including metrics like ‘sales per square metre’, are measured to death already, but this information is not often combined with customer attributes which can present a great opportunity for localised CX optimisations.
Demographic
You can also group your customers into smaller categories based on their statistical data, such as age, gender, and occupation.
This is the most commonly used customer segmentation, as there are specific products that cater to obvious individual needs related to a particular demographic element. It’s also easier to acquire, especially when you have known customers who willingly share their information with you.
In some cases, however, these standard demographic measures aren’t as relevant within your active customer base as they have a common interest in your brand’s product which in many cases transcends age, gender and occupation.
Remember to always consider your overall strategy and goals when deciding which type of customer segmentation to use. Not all customers are the same, but you can divide them into smaller segments and then cater to their needs individually - in other words, personalisation.
While segmentation allows you to target a group of people with common characteristics, personalisation enables you to deliver unique messaging to an individual user. Its goal is to arm those who operate on behalf of your customers (or systems) with everything they need to serve them better and enable customers to pick up wherever they may have left off.
Through personalisation, you can:
All these capabilities will then translate to:
But how can you effectively implement personalisation in your customer experience strategy? We list some tips for you below.
Leverage data to create one-to-one personalisation
The key to successful personalisation and segmentation is having robust customer data. The richer your data is, the better you can understand your customer’s needs on an ongoing basis - allowing you to create deeper engagement and serve your best customers more effectively. It’s important that this data is captured with the customer’s consent so that using it for personalisation and segmentation is seen as convenient, not creepy.
Want to learn more about how you can acquire information that actively delivers value to your customers? Read our article about zero-party data here.
Make customer data available across departments
A seamless and unified customer experience is easier to achieve when customer data is visible and accessible across all your departments.
Integrate your data, so there’s a centralised and real-time view of every customer profile. When you eliminate data silos, your marketing, product, retail, service and financial teams will be able to have better-informed strategies and tactics to achieve their goals. By bringing this utility to your staff, you’ll achieve higher staff engagement which flows onto the customers they serve.
Offer consistent experience across all devices and channels
Today’s active and informed customers expect a seamless and personalised omnichannel experience at every turn. This means the more cohesive and meaningful the customer experience is, the more customers are connected and engaged with your brand over time.
Leverage your customer data and get deeper insights to understand how your customers navigate the sales process across your digital and physical channels.
Further, when assessing your current personalisation strategy, ask yourself this:
Understand, react to, and optimise customer journeys in real-time
Constantly create new value for your customers by adapting to your customer’s changing realities in real time. Remember, the relationship your customer has with your brand is continuously evolving.
Use the data you gather throughout the customer journey to optimise the experience at every touchpoint, and even anticipate what your customers want before they have the chance to look at your competitors. The promise of artificial intelligence/machine learning prediction engines also relies on a solid foundation of your own customer interaction and transaction data - you don’t want to be playing catch up.
Segmentation and personalisation are key to delivering meaningful customer experiences. Let’s look at two examples of how you can do this for your brand.
Personalised recommendations
Based on your customer data, you can create a segment of users who have browsed a certain product category or added products to their carts but did not buy. Once you have identified who these customers are, you can send a dynamic, personalised email offering meaningful incentives and showcasing items based on their previous behaviour to encourage them to take action.
Personalised incentives
Reduce one-time purchases for recently onboarded customers by building a personalised incentive program. For instance, you can identify who among your new customers has recently made their first purchase. Once you have segmented them, you can then offer an “after first shop” incentive to encourage a quick “next” shop.
You might further incentivise customers who have only shopped in one channel to try other channels so they can experience everything your brand has to offer digitally and in the real world.
SmarterHQ’s 2020 Privacy and Personalisation Report shows that 72% of consumers say they now only engage with marketing messages tailored to their interests. Through effective segmentation and personalisation, you will be able to turn one-time transactions into lifetime customers.
Want to learn more about how you can create a winning customer experience strategy? Get in touch with us today.
