Customer Segmentation Models for Increased Conversion
As a marketer, you are well aware of the power of customer segmentation analysis. However, segmentation is not an end in itself. Its impact grows exponentially with customer segmentation models. These models can increase personalization and engagement.
Importance of Customer Segmentation Models
Personalization is going to be a major theme in marketing. Tailoring the experience to your customer’s interests makes your message resonate. Robust customer segmentation analysis is the foundation for personalization.
In a diverse marketplace, organizations need deeper insight into demographics, lifestyle, and interests. To this end, customer segmentation models help you understand the nuances of the market.
Once you create main segments, you can analyze them further to improve personalization.
For instance, let’s say you’re a luxury car dealership based in suburban Chicago. You are looking for customers with the capacity to spend over $50,000 on their next car. There are more indicators than a prospect’s wealth score.
You can identify prospects who live in zip codes within a certain radius of the dealership. The next step is to filter for prospects who already own a luxury vehicle. You can refine this segment further by identifying who owns your brand. This helps you determine if they are due for an upgrade or if they are looking at other luxury automakers.
You can then personalize your message in a way that speaks to each micro-segment. You can have one message for those who are loyalists to your brand. For those who own other luxury cars, your messaging could focus on comparative statistics. Focusing your marketing budget on targeted micro-segments reduces costs. Further, it also increases the likelihood of conversion.
Customer Segmentation Analysis
Segmentation models reveal patterns that help you increase engagement within these micro-segments. They also enable you to personalize marketing at scale.
WE Analyze, our analysis and modeling solution can create such models from your data. In the previous instance, you found your micro-segment. Chicago area millionaires who have a net worth of at least $5 million. You narrowed your list down further to those who own luxury cars. You then divided them into a group that owns your brand and a group that doesn’t.
Customer segmentation models can identify patterns of traits within this group. You can then apply these patterns to your database to find more prospects like your chosen segment. A customer segmentation analysis can also help to drive predictive prospecting. This includes finding lookalike prospects that match the profile of your best customers.
Customer Segmentation Models and Personalization
Customer segmentation analysis helps to drill down into smaller sub-segment to fine-tune messaging. A personalized message that reflects customer interests is more likely to resonate. If your customer relates to the message then he is more likely to engage with the brand or cause.
For example in your micro-segment, you can create smaller groups of prospects based on age and type of pet.
This will help you personalize your pitch to them. Further, it can guide you when selecting a medium that is most effective for each subgroup.
Segmentation Analysis and Lifetime Value (LTV)
Customer segmentation models increase engagement over time. This results in improved customer LTV. Which means that the customer stays connected to the organization. LTV is a great metric for you to rank your prospects.
Prioritization means your budget and message focus on the most responsive segments. Thus, your efforts will see increased conversion at reduced costs.
Segmentation Analysis and Models are Cyclical
The more you use customer segmentation analysis and modeling the better it is for conversion. We have already established that micro-segmenting helps personalize your message and increases engagement.
Therefore, increased engagement results in higher conversions and lower costs. The other important attribute of these models is that they learn to get better over time. Every customer segmentation model helps WE Analyze learn from it. Your models become more refined, thus creating better segments for your next campaign.
Increase Conversion Rates
Learn more about how WealthEngine’s data science team can help you increase conversion rates through customer segmentation models. Get insights now.