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How direct marketers can best segment their data

How direct marketers can best segment their data

Steve Georgiadis, head of customer intelligence, SAS UK, explains how analytics can liberate customer segmentation from predefined demographics for deeper customer insight.

Marketers routinely segment customers to target campaigns and promotions effectively. Ensuring the right offer is in front of the right customer at the right time not only increases campaign success rates, but also improves brand loyalty and customer retention. Nothing annoys a previously satisfied customer more than being spammed with irrelevant promotions.

The trap most marketers often fall into when it comes to customer segmentation is locking customers into predefined groups based on demographics such as age, sex and occupation. This approach ignores customer behaviour and purchasing patterns and does not take into consideration the right strategy for the type of organisation and its products and services.

Large companies with complex, ever-growing sets of customer data naturally find it challenging to create a single customer view that takes all of this into account. Smart marketers are first looking at past purchasing behaviours to discover customer segment groups using business analytics.

Capturing every website interaction, transforming those interactions into knowledge and integrating them with other channel views is allowing marketers to sort customers into groups accurately based on real information, not just common characteristics. This approach allows organisations to more effectively understand, segment and, ultimately, market to customer groups.

One industry that is already benefitting from this approach is travel.  Online travel is an already oversaturated market compounded by the current sentiment of austerity which threatens to sideline travel as an unnecessary luxury. Travel providers need to find innovative ways to maximise revenue share, and better targeted campaigns are a key part of this.

Travel giant Expedia is using analytics to segment customer groups based entirely on past purchasing behaviours. One surprising find was the large number of travellers who turned out to be business travellers. This group’s frequency of travel and the days and time they travelled better matched the established ‘business traveller group’, but demographic information had bracketed them elsewhere.

Further analysis showed this new customer segment to be much more sensitive than leisure travellers to seeing a full range of options specific to their time needs. Expedia was able to use this information to create display and marketing specifically tailored to appeal to its newly discovered customer profile.

The UK’s biggest privately owned holiday company, Haven Holidays, also uses analytics for deeper customer insight. To help define what type of holidaymaker went on to buy a holiday home, the company created an analytical model covering a holidaymaker's propensity to buy based on individual behaviours.

This model is used to score every customer, informing its marketing team on which holidaymakers to target, proving very successful.

Analytics provides a clearer view of the millions of customers who come to a web site every day. Personalised, behaviourally-triggered service is critical, particularly in online travel, as providers can pass great deals on to customers much faster and more easily.

There is always more value to be gleaned from proprietary data – information on spending habits, preferences and unaddressed needs. An organisation’s data and the knowledge it holds provides a competitive weapon.  It’s time more marketers unleashed it.

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