I've got a buddy named Chris who really likes to give gifts and as it turns out, he also really likes his girlfriend. Combined together, Chris has been known to go all out at holidays. Last year for Valentine's Day, Chris bought his girlfriend a $150 Valentine's Day gift package from an online florist that included: flowers, chocolates, rose petals...the whole deal. If you're a woman, you would have been jealous. If you're a guy, you would have given him the stink eye for setting the bar so high for everyone else.
Obviously, Chris is a good customer to the florist. Here he is, spending $150 on flowers, meanwhile the florist is running around trying to marketing 24 roses for $24 to guys everywhere. If you were the florist, what kind of offer would you send Chris this year? Something big, to show how much you appreciate his ongoing business, right? Giving a coupon for "$25 off a purchase of $200+," or a special promotion such as "Spend $100 on your loved one, we'll send a dozen to Mom, too!" would be a great way to thank Chris and drive more business.
But sadly, this online florist sends Chris the same email offer they sent everyone else in their subscriber base: "Get 18 Roses for $29.99 - Guaranteed Delivery." The florist missed a big opportunity that would have driven more sales this Valentine's Day had they utilized customer purchase data to send segmented emails to customers like Chris.
Using quick assumptions, suppose you have four customer segments of different average order value:
Now, let's suppose your email subscriber list is 10,000 and you average a 3% conversion rate. Without segmentation, you'd make $7,500. With segmentation, you are projected to generate $18,000 in online sales. That's a difference of $10,500 created through good customer segmentation.
But how does that add up? Chris already has an average order value (AOV) of $150 based on his purchase history. The average amount menas that he has purchased gifts from this florist for amounts that are more than $150 and less than $150. If this retailer had been able to access and see this important metric within their customer data and offered Chris along with the other 10% of customers with the same AOV a targeted Best Customer incentive such asL "$25 off his purchase of $200+", instead of a blanket promotion the florist could have driven a $25 increase in spend among just that one group of customers.
Check out our FREE 2015 Valentine's Day e-Book for more strategies & examples.
Using our customer retention software it would easy to rinse and repeat different customer segmentation strategies across this florists 10,000 subscribers. We help minimize the time and effort segmentation requires by syncing customer purchase data into your existing email service provider and powering data-driven automated email campaigns.