Focusing retail marketing efforts on the most promising customers

Mar 01, 2021
  • sales, marketing and service
  • retail

Not all customers are created equal. Some will purchase from your business once and then move on. Others will return again and again, stay loyal to your brand for years – and instill this loyalty in their friends and families. As a result, it only makes sense to target the most profitable – and not necessarily the largest – segments. But how do you pinpoint those segments and determine their needs and preferences? We helped a mid-sized Belgium-based fashion retailer achieve this through the power of customer intelligence.

Managing shops in suburban zones in two countries, our customer offers clothing for all members of the family. “And thanks to their loyalty card system, they have a rich source of data covering their existing – and typically very stable – customer base,” explains Laurence Vandelanotte, senior digital strategist at delaware.

Forging a link between personalization and profit

The company approached delaware with two specific challenges already in mind. “They wanted to extend their reach to new customer groups and boost sales for existing customers. On top of that, they already had an idea of customer lifecycle trouble areas, such as when children in a family begin making their own clothing choices.”

In addition, while this retail company wasn’t new to personalized sales and marketing campaigns, they were unable to make a firm link between their efforts and sales figure increases.

Zeroing in on segments to nurture

The delaware analytics team took an in-depth look at customer behavior across 70 data points.

“This included demographic information as well as purchasing behavior,” continues Laurence. “We examined the types of products customers bought, who they bought for, how often they bought, the region where they live, the distance from home to store, their family composition, etc. When they purchased products – during the week or weekends, during promotions or not – was also vital in our analysis.”

The team identified seven distinct segments of different levels of importance that weren’t necessarily linked to their size. “For instance, the biggest segment might not generate the most revenue, because those customers only buy products on sale,” Laurence explains. “We were mainly interested in the most profitable customer segments, such as the family segment: the customer buys for the entire family, buys many products at once and visits several times a year.”

When detailed data insights become key profit drivers

Thanks to this analysis, this retail company can use the characteristics of this highly profitable segment to attract similar people that aren’t customers yet, and to increase the shopping cart value of existing customers.

Laurence: “Another goal is to migrate existing customers from less to more profitable segments by creating personalized recommendations and ads. For example, the company can now target the ‘couples’ segment by sharing advertisements for men’s and women’s clothing without including irrelevant ads, such as those for promos on children’s clothing.”

In addition, the team identified a significant dropoff in family segment customer value when children in families become teenagers. “But those teens – particularly the girls – can be won back when they become parents,” continues Laurence. “It’s important for the company to target young moms because once they successfully attract them at this stage of the customer journey, they kick off a lifecycle that will last until their children themselves are teenagers. The marketing team can potentially achieve this by using information about previous relationships. If the retailer could somehow maintain that relationship, it could lead to a key boost in customer lifetime value.”