As a marketer, you likely already know about demographical and geographical segmentation. Behavioral customer segmentation is the next logical step to increase your average revenue per user (ARPU). You don’t necessarily need complex models to get started. Below are five ideas that are either already achievable or easy to work toward.
1. Send Time Optimization (STO)
Customers tend to be more attentive to their emails at certain times. You can use this info to determine a general send time, but it is much more effective to take your different customer personas into account. Some customers like reading emails during lunch, others when they get home. Part of your audience will be more attentive during the weekend, while others will not touch their computers at all.
You can take advantage of these different behavioral patterns with Send Time Optimization (STO). When using STO, your email marketing service looks at previous campaigns to see when a customer usually opens his mails. It will then send out your campaign around that time, making sure your email is on top of your customer’s inbox.
Many free and cheap services offer STO. If yours does not, it might be time to switch providers.
2. Time Since Last Transaction
Sending out campaigns to customers who have not made any recent purchases is a great way to increase your revenue. As these customers are already churning, you can’t really go wrong. You may even want to consider sending them a special offer, such as a discount or free shipping.
Once you have some more data on your customers, you may want to finetune your strategy, however. While some customers shop every week, others only do so once a month. For such a customer, two weeks without any transactions isn’t alarming. Sending this customer extra advantageous conditions would probably be an unnecessary cost.
3. Last Action Undertaken
The last action your customer performs on your website is very valuable. If you know that a customer added an item to the shopping cart but did not finish his purchase, send a friendly reminder. If the reminder does not work, consider sending a discount coupon. The customer clearly showed interest and just needs a little extra push.
Similarly, you may want to follow up on customers who sent a complaint. The complaint may have cleared without much difficulty, but it was still a negative customer experience. Even loyal customers may hesitate to make further purchases after a complaint. Don’t hesitate to send them a special offer to get back on their good side.
4. Favorite Categories
When a customer buys a particular item, other similar items are likely to interest him in the future. Taking advantage of this does not need to be overly difficult. You can divide what your offer into very broad categories. You don’t even need to send separate campaigns. Changing the order of items in your campaign can already be very effective.
Do make sure to avoid common mistakes when defining your customers’ favorite category. People don’t often require a second toilet, nor do they need Christmas lights in February.
5. Bonus Behavior
Marketers keep finding clever ways to increase their Return on Investment, but customers are also getting quite savvy. Studying your customer behavior will reveal that some of them are so-called bonus hunters. They may not buy anything without a discount, or they deliberately leave things in their cart to provoke an offer.
How you deal with this type of customer depends on your business model. If you are working with large margins, you can exploit their behavior by sending them more frequent offers. If discounts take a significant cut of your margin, you may want to experiment with smaller offers.
Taking Behavioral Customer Segmentation to The Next Level
Behavioral customer segmentation is a potent tool. The further you segment your customers, the more you can increase your ARPU. Advanced behavioral segmentation does require some technical implementations, however. The examples in this article are a good start with minimal investment. They will also give you an idea of what works best, helping you decide which investments to prioritize in.