As a rule, marketers apply their CRM segmentation to make marketing campaigns. Different metrics are employed for segmentations. It might be RFM (recency, frequency, monetary) of customer purchase activity, average spend on certain groups of products, digital behavior relevant to business nature, etc. Modern marketing tools also help with their specific segmentation criteria. ROI can be improved by improving the segmentation process.
To employ segmentation in full try to avoid some segmentation oversights:
Clean data is ignored
Nobody wants to get the same promotion twice. No marketer wants to pay for the same campaign double price. This situation is a result of the campaign where nobody pays attention if the data is clean. Clean data is data that is free of duplicated and bogus records, timely updated, standardized and thoroughly verified. Always ensure that the data quality is as high as possible. Rely on clean data to have a success.
Segmentation is based on instinct
Every campaign starts with setting up goals and defining the success criteria. Then you need to select the target audience. Never guess. Analyze the data. Check previous similar campaigns and thoroughly examine all KPIs. Actual numbers are your best friend. If the campaign is brand new, run a small pilot by sending an Email campaign and study the numbers. Instincts might be wrong and not the best helper in segments creation. Backing up your instincts with real numbers will help improve segmentation quality.
Data analysis controverses the set up goal
The goal should define data analysis and not vice versa. For example, the campaign aim is to retain customers buying certain products and bring back lapsed customers. To create the right segment former purchasers of the defined items should be analyzed. To send these customers promotions of a new product in the market would be irrelevant to the goal. When the renewal campaign is over and lapsed customers successfully returned you may create a new segment to continue working with this group with other marketing initiatives.
Segmentation needs are under evaluated
Perfect segmentation comes from evaluation of your ideal customer profile and business goal. For example, the campaign is aiming at reducing ladies perfume inventory. The data set is missing gender field on some customers. Sending the info to known ladies customers only may significantly reduce the response rate. Always try to find ideal customer based on the needs for segmentation. Ensure that you collect as much data as possible by appending missing data.
Shopping channels are not considered
Some customers like to receive direct marketing piece or catalogue while others prefer emails. When doing segmentation it is important to check what shopping channel works best. You can notice that millenials open your company emails more frequently compared to older generations. It may save money to reduce direct marketing to millenials and work on Emails instead.
Timing is ignored
It is crucial to look at the time factor meaning recency and frequency of customer engagement. This is a valuable segment that allows to understand customer behavior. Knowing timing helps increase sales.
Comparative analysis mistake
The famous saying: “Compare apples to apples” should not be forgotten when performing a comparative analysis. Comparing segment 1 to segment 2 is not always right. Try to compare the same segment performance over various campaigns over time periods to find a perfect campaign match to each segment. Analyzing ups and downs of a segment performance may allow you to see what exactly works and what does not. It may help not only refine the segment but make the upcoming campaigns more effective.
Right segmentation is a powerful tool in driving sales and increasing of ROI. Once segmentation is done don’t neglect it. Analyze every campaign and tune in the segmentation process. Don’t be afraid to make changes based on failures and successes. Efforts regarding refining of your segmentations help improve your company overall performance and increase sales.
Don’t forget that you can always save time and money by hiring a segmentation professionals to clean the data and improve segmentation process.