Customer segmentation, also referred to as market segmentation, is defined as the process of finding highly similar sub-groups within a heterogeneous larger market. This approach was originally used in direct marketing to target and focus on well-defined market subsets.
Why Customer Lifetime Value (CLV) Segmentation?
Acquiring and retaining profitable customers is more challenging than ever in today’s competitive environment. Digital innovations and technology advancements are reducing time to market, thereby making it more difficult to differentiate products and services as well as maintain customer loyalty.
We understand customer base, and design targeted marketing campaigns to reach specific customer segments with offers that are tailored to their needs and preferences. The process of segmentation begins with observing customer actions and continues with learning about the demographic and psychographic characteristics of these customers. Segmentation analysis has as inputs customer transactional, demographic and psychographic data.
In an era of increasing personalization, businesses must learn how to microscopically target their prospects and customers. People have very little time and appetite for generic messages and unless businesses learn how to customize or personalize their messages for each and every prospect, they will have a hard time competing. Customer segmentation takes on a whole new meaning in this context. Inbound marketing experts call this process as creating a "segment of one".
Customer Lifetime Value (CLV) is one of the core foundations of modern Customer Relationship Management (CRM). It is used for supporting both strategic and tactical decisions. For example, the calculation of the CLV in the automotive industry, characterized by long purchase cycles is totally different from that of retail or what are termed fast moving consumer goods.
Benefits of Advanced Analytics Customer Lifetime Value(CLV) Segmentation
- Better identification of profitable customers
- Expanding wallet share by identifying cross-sell and upsell opportunities
- Better campaign response rates by predicting the next best product offer in an effective way
- Acquiring new profitable customers by targeted marketing campaigns
- Increased customer loyalty by providing business insight on how to offer right products to right customers at the right time
- Increased revenue with better alignment to meet the needs of high value customers
- Maximised ROI by prioritising investments on marketing activities, improvement initiatives and the development of products
- To reduce costs by delivering marketing messages executing campaigns with precision rather than spreading them like peanut butter.