Hi,
Earlier this month I attended the CRMC conference in Chicago, where many brands shared their path to personalization. I realized personalization means different things to different people, so I thought to share our approach to personalization, and why I think true personalization starts with audience segmentation.
Audience segmentation means leveraging the breadth and depth of your customer data to generate the most relevant message to your customers. A simple way to think about this would be to look at the common way your competitors are communicating with their customers: they all have birthday campaigns in place, they will automate bonus emails, and offer 20% off for Father's Day.
What will set you apart from the rest?
I will argue that smart, creative, and granular audience segmentation is where you can get the competitive edge.
In this month’s magazine, we will dive into the different levels of personalization: audience segmentation, channel personalization, and message personalization (“the last mile”).
Cheers,
Shai Frank, VP of Product
Where Do Your Personalization Efforts Start
For many brands, personalization means customizing the message to their customers. They will use their customers’ names in the email (Hey Nikolay), they will surface products from the recent category they browse (Yoga mattress), and will send a promo code for their birthday (10% just for you!).
But the truth is that this 1:1 communication is just the last piece of the puzzle. The tip of the iceberg.
Here's why – let’s say we have two people in our customer base with similar behavior: Rachelle and Allen. They are both women, have a birthday this month, and stopped their browsing session without making a purchase. They will probably get the same message, right?
But what about all the other data we have about them? We know for example that Rachelle is new to our website, while Allen has already been with us for quite some time. We also know that Rachelle has a high likelihood of spending more money with us, rather than Allen, who has a low average order value.
Shouldn't this make a difference in the way we communicate with Rachelle and Allen? Of course, it should.
How to Achieve True Personalization
You see, true personalization requires you to factor all available data into your messaging. Therefore, it starts with building granular segments based on similar historical, behavioral, and predictive attributes.
Here are some of the segmentation criteria you can use with Optimove:
1. Lifecycle Stages: The most fundamental customer segmentation in Optimove is the classification of customers into distinct lifecycle stages. Examples include New, Active, VIP, Churn, and Reactivated.
2. Behavioral: Browsing behavior, campaign engagement, purchase history, or an RFM model (recency, frequency, and monetary value) all fall under behavioral attributes. By using behavioral segmentation, you can later tailor your messages based on how a customer interacts with your brand. You wouldn’t want to send them a holiday coupon when they just purchased something on your site, would you?
3. Value-Based: Value segmentation is the grouping of customers according to their predicted future value based on past behavior patterns. This is where you maximize your ROI: with customers who usually account for most of your revenues. So, if you have a promotion coming up, you may want to consider the budget allocation according to your customers’ past and future spending.
4. Predictive: Optimove provides many predictive attributes. For example, the recently revamped risk of churn attribute is an enabler to take proactive measures to combat churn in real time. When you segment your audience based on the risk of churn, you are not just taking a proactive measure to fight churn, you are also allocating promotional budgets most optimally. So instead of offering 10% off for everyone, you might send stronger promotions to your highest risk of churn customers.
The Where and The How
Personalization doesn't end with segmentation. The second level of effective
personalization is choosing the right channel to deliver your message. Brands tend to choose communication channels based on a combination of considerations such as reach, responsiveness, and cost. This is why email marketing would usually be the default choice.
You should consider channels that fit your message and your customer preferences. For example, for an immediate and brief message, such as a time-sensitive offer (last hours of sales) or informative (your credit limit is about to be reached), you will want to use push notifications.
If you have long-length content to communicate, that does not require an immediate response, you may consider using emails.
The other consideration relates to leveraging historical data to learn about your customer preferences.
You already know which customers respond better to emails rather than other channels. If a customer did not open four emails in a row, what is her likelihood of opening the next one? Use this historical data to customize the right channel for the right customer.
The “Last Mile” of 1:1 Personalization
Once you identify the specific audience and select the most appropriate channel, it’s time to nail down the content of the message itself.
This is the last piece of the puzzle that ensures your customers feel you understand them. This is where you should go beyond simple “Hi ”, and lean into dynamic, conditional content and individual recommendations (more on this in our next magazine).
You should customize the content of the message based on any customer attribute/activity. Should a specific customer segment receive a promotion, a product highlight, or some other educational content? and if promotional, should it be a discount (and if so, how deep?), a bonus, a cashback, or a different benefit?
With Optimail for example, you can use conditional clauses to personalize content within a template, per individual recipient. You can read more about this here.
You see, true personalization requires factors in three levels of personalization: segmentation, channel personalization, and, finally, content personalization. Only when you leverage this three-stage pyramid, will you unlock true personalization that your customers respond to, consistently.
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