What Customer Segmentation Analysis Means

Customer Segmentation involves grouping customers who share similar traits. By differentiating customers into segments, you can take appropriate actions based on their traits and more easily predict their tendencies.

The basis for dividing groups into segments includes age, gender, population statistics, purchasing patterns, purchasing history, and many more factors. This basis also varies depending on the goal behind creating a segment or the type of data being utilized. For example, segmenting based on operating system (OS) can significantly alter marketing methods. Android (AOS) users, for instance, tend to make purchases on a mobile app more frequently than iOS users. Leveraging this trait, you can tailor marketing strategies to encourage mobile app purchases among AOS users.

If we know how a customer feels, and what kind of traits they have, we can take the proper action.

How Datarize helps Customer Segmentation Analysis?

Datarize offers a Visit·Purchase Segment feature to categorize members based on their visit and purchase behaviors. There's a reason why we include visit and purchase segments among our many features.

Most customers follow a cycle of "perception → interest → experience (purchase) → familiarity (re-purchase) → loyalty." For CRM, it's crucial to target the Customer Segments that churn out from this lifecycle. Typically, the visit period is shorter than the purchase period. Customers who churn out from visiting are also likely to leave before making a purchase and may ultimately disengage from the shopping experience. Achieving a comprehensive CRM strategy requires effectively addressing customer needs throughout this churn cycle.

Datarize's Visit·Purchase Segment operates within a personalized cycle and identifies customers at risk of churning. Consider two members: Member A makes a purchase once every two months, while Member B makes one every two weeks. If neither member makes a purchase for 40 days, Member A isn't likely to churn, but Member B is at risk, requiring active care. Datarize segments members based on their personalized likelihood of churning out, rather than bulk segmenting at a set period.

Utilizing Visit-purchase segment

Datarize’s Visit·Purchase Segment analyzes the current status of the segment, enabling you to instantly assess whether your positive and negative segments are performing above or below market averages. We provide guidance on sorting through segments and suggest actionable steps you can take with them.

The Non-purchasers segment is a group that hasn’t yet experienced our product. It’s important to guide this segment towards making purchases on our site. If the user is a Non-purchaser who hasn’t churned out from visiting (Explorers), they're likely aware of our site and may start showing interest. 

However, if the user is inactive with no purchase history and hasn’t visited in a long time (Shadow Members), they may have churned out during the interest phase. In this case, it's important to recommend products the customer may find interesting, and to send them coupons or messages highlighting the benefits of making a purchase.

Customer Segment 2. First time purchase members - Novices and One-timers

This segment comprises customers who have made a purchase once. Consistent management at the right time is crucial for encouraging repeat purchases. Inquire about their satisfaction with their previous purchase, or their experience using the product (in case of a category that requires continuous maintenance - such as electronics, mattresses, etc.).

Then, continue recommending products to Novices who have shown recent activity and engagement, to prompt them to make a purchase.

For Thinking Novices who haven’t made additional purchases despite nearing their purchase period, emphasize the benefits of repeat purchases. You can guide customers by allowing them to use the points they earned from their first purchase or by offering them coupons for repeat purchases.

For At Risk Novices who rarely visit after their initial purchase, try recommending items that complement their previous purchase. Enabling Datarize’s ‘Recommend products related to the purchased product’ campaign can automatically suggest products. For products with frequent repeat purchases, such as those in the beauty or household categories, sending reminders can increase repeat purchase rates.

One-timers, who haven’t visited or made a purchase since their first one in a long time, are challenging to re-engage. Therefore, conducting CRM activities to stay in touch is essential. If they are already one-time members, consider recommending the most popular products to remind them of your brand.

Customer Segment 3. Repeat Purchase Members - The Loyals

This segment comprises customers who have already purchased products from the site at least twice. They're in the 'familiarity' phase. However, if not vigilant, they may churn out at any point. Provide these members with more attention, such as offering them a Membership Tier to maintain their loyalty.

The more members in the Active Loyals segment, the better. They're the least likely to churn out. This segment makes periodic visits and purchases. To encourage continued purchases on our site, refer to them as our 'Special clients' when sending the same message.

Can't Lose Loyals might hesitate to make a purchase if they're past their purchase period. Lower the purchase barrier by offering coupons based on their membership tier.

Try triggering At Risk Loyals who don’t visit frequently to return. When the repeat purchase period is approaching, send a product recommendation or a reminder to purchase a specific product. You can also use the 'Churn Probability' audience, which predicts the churn rate of customers based on their purchase period.

Finally, for Dormant Loyals segments that haven’t visited or made a purchase in a long while, provide an incentive for them to return. There’s a high likelihood they might become Hibernating Segments who might not even log in. Therefore, we recommend offering bold sales or benefits to bring them back. If the patrons return and become loyal, then the cost of a coupon isn’t too high in terms of CLV.

While increasing new members through marketing is beneficial, maintaining active users who make actual purchases will help in sustaining revenue. If all the new members end up being dormant or patrons churn out, it will result in endless investments in advertisements to acquire new members and encourage them to make purchases. This costs much more than maintaining the existing members.

Closing words

Today, we delved into Datarize’s Visit·Purchase Segment in detail and explored the actions we can take. Before implementing specific actions for each segment, it's crucial to examine which segments each group transitioned from. For instance, a customer who moved out from the Active Loyals or one who transitioned from an Explorer to One-timers. Additionally, assessing the status of these transitions allows us to categorize them into positive and negative segments. This information can then be utilized to design actions aimed at preventing movements within these segments. Most importantly, understanding our customer's patterns enables us to implement numerous strategies to mitigate churn. We trust that this customer segment analysis of Visit·Purchase patterns will become an essential method to enhance your business.