Customer lifecycle segmentation
At Ometria, we’re big fans of what we call ‘customer lifecycle marketing’ – an approach that focuses on tailoring the messaging of marketing to where a customer is at in their journey with your brand. Lifecycle marketing hinges on the interplay between a number of factors:
Recency refers to the last time somebody shopped with you. Though the boundaries you set will depend on what type of business you’re running, you’d typically want to segment your customers into the following:
- Active – those who have shopped recently, say in the last 6 months
- At risk – those who have previously purchased from you, but have not returned to make a purchase in the timeframe you’d usually expect (e.g. between 6 and 12 months)
- Lapsed – those that have purchased previously but have gone way beyond the point you’d usually expect them to return to make another purchase (e.g. 12 months +)
Frequency refers to how often somebody has shopped with you.
- Prospect/lead – someone who hasn’t shopped with you at all
- One-off customer – somebody who has made a single purchase from you
- Repeat customer – somebody who has made more than one purchase from you
- Loyal customer – someone who has a sufficient number of times to be considered ‘loyal’ (usually 3 or 4)
c) Lifetime value
It’s also important to look at the amount that customers spend with you – after all, there’s a huge difference in revenue gained from a regular shopper who only buys discounted products and one who consistently buys high-value items.
Usually a VIP/top/medium/low scale might suffice, ranked either by average order value (AoV), historic customer lifetime value (CLV) (i.e. the total amount that a customer has spent with you), or even predictive CLV (a projected view of how valuable a customer will be to you).
d) Marketing engagement
While purchases are all-important, marketing engagement is one micro-conversion that should also affect how you segment your customer base. For instance, you may want to take a different line with an ‘at risk’ customer who is still active on-site and browsing to one that you haven’t seen at all and hasn’t clicked on any marketing messages.
When we talk about ‘marketing engagement’, we refer to factors such as:
- Whether someone has opened/clicked through from an email
- Whether someone has clicked through from a retargeting/social media ad
- Whether someone has been active on-site.
For example, you might segment into two groups:
- ‘Warm’ – those who are engaging with your marketing/have been active on site
- ‘Cold’ – those who are not engaging with your marketing and haven’t browsed on-site