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analyse value using a real example from retailer group Otto presented by Chris Poad their Ecommerce Director at an EconsultAs visitors use online services they can potentially pass through several stages, often known as the online loyalty ladder. For many e-retailers, encouraging customers to move from the first purchase to the second purchase and then onto the third purchase is a key challenge. Specific promotions can be used to encourage further purchases. Similarly, once customers become inactive, i.e. they have not purchased for a defined period such as 3 months, they become inactive and further follow-ups are required. Here's an example of the lifecycle segmentation approach used by e-retailer Tesco.com which they call a "commitment-based segmentation" based on recency of purchase, frequency of purchase and value. It's used to identify 6 lifecycle categories which are then further divided to target communications:
Logged-onancy Masterclass. It's actually more sophisticated than simple value in that it looks at a range of indicators of quality.
Here's a creative example for a VIP Mailing sent to highest value segment. ESP eCircle shared that the average performance was 5 times higher than the regular newsletter:
Option 3. Targeting by customer lifecycle groups
Cautionary
Developing
Established
Dedicated
Logged-off (the aim here is to winback)
This is an example of what I think is an excellent branded welcome email from Clinique:
Targeting option 4. Current and predicted behaviour in response and purchase
As customers progress through the lifecycle, if all interactions with different communications such as email cur (channel preference) = Right TouchingNo matter how enthusiastic you are about online channels, some customers will prefer using online communications channels and many others will prefer traditional channels. I call this Right Touching - this is the holy grail of digital marketing - delivering the perfect message for each customer. Just one aspect of this is determining which customers prefer email and then up-weighting email activity more for them, while reducing frequency and using more traditional communications for those who prefer these. These days we will also need to consider social media response.
So it's useful to have a flag within the database which indicates customers' channel preference
and by implications, the best channel to target them by.
Channel preference will be indicated by RFM and response analysis since customers with a preference for online channels will be more responsive and will make more purchases online. Customers can also be asked direct through surveys.
Customers that prefer online channels can be targeted mainly by online communications such as e-mail, while customers who prefer traditional channels can be targeted by traditional communications such as direct mail or phone.
To deliver relevance also requires a plan specifying the number, frequency and type of online and offline communications and offers. This is a contact or touch strategy which is described in a later section.
Targeting option 6. Customer personas including psychographics
Once we have reviewed and selected from the five targeting approaches above, it a final step to review using marketing personas for typical customer types.
These have the benefit that the characterise segment types in the context of the targeting options mentioned above such as stage in lifecycle, demographics and style preferences.
The design persona concept can also potentially be used for e-newsletters, but isn't used so often.
I'd like to hear about how personas can be used for email marketing, or your thoughts on any of the other targeting options listed here.
By Dave Chaffey
Digital strategist Dr Dave Chaffey is co-founder and Content Director of Smart Insights. Dave is editor of the 100+ templates, ebooks and courses in the digital marketing resource library created by our team of 25+ Digital Marketing experts. Our resources are used by our Premium members in more than 100 countries to Plan, Manage and Optimize their digital marketing. Free members can access our sample templates here. Please connect on LinkedIn to receive updates or ask me a question. For my full profile and other social networks, see the Dave Chaffey profile page on Smart Insights. Dave is a keynote speaker, trainer and consultant who is author of 5 bestselling books on digital marketing including Digital Marketing Excellence and Digital Marketing: Strategy, Implementation and Practice. In 2004 he was recognised by the Chartered Institute of Marketing as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing.licks and pages visited on site are captured, we'll be able to build up a detailed response and purchase history. Developing an activity score to show levels of customer activity or how "hot" they are to respond is one approach. A more sophisticated method of understanding behaviour is to categorise customers according to the details of their recency, frequency, monetary value and category of products purchased (RFM analysis). The RFM technique is quite involved, so we will cover that in more detail in a moment. Using these RFM techniques in combination with the other targeting techniques it becomes possible to use predictive modelling to identify the "Next Best Product" for particular customer types. With the right system of tracking and web analytics, it should be possible to see not only which types of links in an e-mail a customer has clicked upon, but also which types of web pages they have visited recently. For example, a Select on the database for a wine promotion could be used to target customers who have been to the wine section of the website in the last 3 months, but have not purchased wine. Targeting option 5. Multi-channel behavio
