Optimizing Holiday Messaging with Advanced Segmentation Techniques

161031_blog-post-image-for-narFor the retail industry, the holiday season can be a blessing and a curse. Generally, the season is seen as critical for a business – upwards of 630 billion dollars are spent during the holidays, and the two month span we refer to as “the holiday season” brings in 43% of a retailer’s new customers for the year on average. However, with this onslaught of new customers comes a challenge: the Customer Lifetime Value (CLV) of shoppers acquired during the holidays is 15% lower than other times of the year.

With so many customers new to your brand and increased spend from existing customers, the holiday season is a crucial time to solidify relationships with your customers to turn them into repeat shoppers.

In our recent webinar, we discussed three advanced segmentation techniques you can use to improve your messaging this holiday season. You can watch the full video below.

1. Right product

It’s a question that plagues every retailer: how can you deliver relevant product stories to your customers? Especially during the holidays, when customers are receiving a barrage of retailers emails, showing customers the products that are most relevant to them is a great way to cut through the noise.

Algorithms like k-means clustering can help sift through large volumes of data to uncover uncover hidden patterns — for example, customers who have similar interests or tend to purchase similar types of products. Using this type of analysis, retailers can uncover predicted affinities for certain products.

So when the merchandising team tells you to push snow boots this holiday season, you can find the customers most likely to be interested in buying them and send the product feature email to them. The rest of your customer base can receive that brand-story email featuring cashmere sweaters as planned.

2. Perfect price point

Customers tend to have an idea of how much they’re willing to spend on an item, and whether that’s 30 dollars for a scarf, or a thousand dollars for gold plated dumbbells, you should highlight items in the right price range for each customer. Certain customers will be happier (and spend more) receiving the luxury self-gifting email instead of your regular gift guide.

Advanced analysis of your customer transaction history can uncover meaningful segments based on price sensitivity. Using this kind of segmentation, you can serve more relevant product recommendations to your customers. This will not only increase conversions, but also allow you to showcase your higher-priced items, driving up your holiday average order value (AOV).

3. Right channel

Year round, it’s important to reach customers on the right channels, but during the holidays, when costs skyrocket, it’s especially important to know which shoppers are most likely to respond to paid channels. 45% of paid search budget is spent in Q4 alone, and in order to maximize the return on investment during the holidays, it’s key to make more intelligent choices about how to use this paid ad budget.

For example, retailers can find groups of customers who have low email engagement and target them on paid channels, while using email for customers who are happy to engage with email. Marketers can get even more bang for their buck by layering on predicted CLV, and reserving the more expensive channels, like Facebook and Paid Search, for customers with low email engagement but high CLV.

You can learn more about these segmentation techniques and how top retailers are applying them by watching the full webinar. Fill out the form below to watch the recording.

Leave a Reply

Your email address will not be published. Required fields are marked *