In our previous article we explained the need to “invest in tools to help you capture, store and use customer information. This article focuses on how you can use customer data to help increase repeat purchases using Personalization.
In our discussions with SMBs, we observed that most of them run campaigns and promotions , in an unplanned manner and follow a “one size fits all” approach. These SMBs often complain of brand dilution and customers not shopping with them, unless they receive deals or offers. This fact has been validated in various customer research.
59% of consumers believe that too frequent & intense promotions indicate weak brand value, as per one such research paper on “Impact of sales promotion on brand equity”
Now that your business started actively investing in customer data, we recommend that you reduce blanket offers and move towards a personalized campaign & promotion strategy.
Consumers prefer brands / businesses who understand them better and connect with them at a more personalized level. The stats are quite impressive, if you consider the results of survey conducted by Segment.
Nearly 49% of shoppers have purchased a product that they did not initially intend to buy after receiving a personalized recommendation from a brand. Similarly, nearly 40% of shoppers ended up buying more expensive products than originally planned due to personalization.
There are three ways to offer a personalization experience to your customers
- Recommendation based – Campaign or Offer based on historical purchase behavior
- Event based – Communications or offers triggered after specific customer action or event
- Segmentation based – Campaign or Offer launched to specific segment of customer profiles
Approach 1: Recommendation or offers based on historical buying behaviour
Your customers expect that you understand their likes and dislikes and they. So giving them recommendations and offers that match their interest, is considered a bare minimum to keep customers happy.
91% of consumers are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations, as per an Accenture study
Ensuring that your business has tools and process to analyze & recommend, would help you stand out among competition.
Approach 2: Event Based Marketing
We recommend planning your customer analysis based on “customer events”. If you feel an event is relevant for your industry, ensure that you are capturing data, when the event has occurred.
For example – If you are a restaurant chain owner or owner of entertainment business, “Birthday or Anniversary” would be a very relevant customer event on which you should reach out to your customer.
The important data points that need to be captured to succeed include Date of birth, gender profiles, Geo-position, customer activity on apps & digital platforms, customer language, key dates. You could also be innovative and use local and world events like sporting and musical festivals.
Approach 3: Customer Segmentation & Targeted Campaigns
A more traditional yet powerful way of personalization is through accurate customer segmentation. The most common method to segment your customers is using Recency, Frequency, Monetary classification
(R)Recency – How often the customer is transacting with your business?
Customer visited my store within last 7 days
(F)Frequency – How many time is the customer transacting with your business?
Customer visits my store once every week
(M)Monetary – How much is the customer transaction value?
Customer spends $100 every month with my brand
Once you have R,F,M scores, for your customer the next question is what kind of personalized campaign you can do. Let us discuss some examples
- Churn based customer activities: Based on (R) recency of purchase you can track customer churn for your company. We have seen that every industry has its own definition of churn. For a Travel booking company 1 year but for an ecommerce online company it will be 30 days.
Once you can figure out the customers who are churning, you can reach out to them with personalized campaign to engage with your business again.
- High Frequency (F) based customer activities: There are always some set of customers which are regulars. Once you have figured them out you can pamper them with some discounts. Moreover they are your best candidates for word of mouth, referrals kind of program which you want to run. These are also the right segment of people to try a new concept.
- High Monetary (M) based customer activities: We are sure you would already be in love with this customer segment. A common rule of thumb is 20% of your customers bring in 80% of your revenues. Ensure that this segment receives only the best offers, and are not bombarded with campaigns that are irrelevant
The best way to improve their loyalty is to improve your customer service for them – free delivery, free returns, returns possible for 6 months, one on one attention at the store and much more.
Bringing it all together
So in this article, we skimmed the surface on how businesses can use the power of personalization, to differentiate their marketing approach from others. Personalization will help in making the relationship between you and your customer feel more real. Once your business has the capability to deliver personalization through the 3 approaches mentioned, you can easily mix and match them. This can create extremely powerful customer engagements, and build the customer loyalty that most businesses dream off.
We at CarrotBox we are building a CRM product, that provides all the three personalization approaches. Our product’s AI engine will analyze your customer data and make recommendations to you, so that your personalized campaigns see the best Return on Investment. To know more about our product and service offerings, do visit us by clicking here write to us at firstname.lastname@example.org