The Key Benefits Of Customer Segmentation
Even the most loyal customers can be unpredictable. Today more than ever, their behaviors shift frequently, their needs change often, and their preferences vary widely. Customer profiles need to be fluid, too. As a result, the definition of a customer profile is evolving — and using them is now crucial because customer experience is increasingly a key area of differentiation for businesses across nearly every industry. It’s also time to rethink how to build and maintain customer profiles to get the most from them, and, more importantly, deliver the most value to your customers.
Most business leaders think of real time customer segmentation as everything that defines a group of customers captured in one detailed description. Generally, companies build customer profiles to support personalization, segmentation, targeting, along with other customer experience– and marketing-related activities. Often, this type of customer profile underlies buyer personas.
In some cases, a customer profile is based on an assumption of the type of customer that would benefit the most from a product or service. This type of profile is usually based on broad insights such as behaviors, demographics, and psychographics, but is static. Once it’s created, it stays the same for some extended time frame. As a result, its value is limited. Customers are changing; the customer profile isn’t.
Ideally, customer profiles focus on individual customers, rather than a group or segment, and encompass real-time insights from across channels, devices, and internal and external data sources. In this case, the customer profile matches the actual customer from moment to moment. These profiles are invaluable because they can help not only with personalization and targeting for groups or segments, but also for individual customers. As a result, the customer experience, customer journeys, and marketing communications and offers will be more relevant and valuable than ever.
Real Time Customer Segmentation Is Crucial
Organizations today must be prepared to interact with customers at an individual level at any time and in any channel. Static customer profiles simply aren’t sufficiently able to support this because they lack the currency and breadth that businesses need if they are to move at the cadence of each customer.
What’s more, today’s omnichannel interactions require real-time cross-channel insight that static customer profiles can’t provide. Companies need insight into more than just what they know about a customer in a single channel (e.g., mobile, website); they need to have access to and be able to leverage customer insights across many channels and touchpoints in real time—allowing them to use a customer’s behaviors in one channel to inform their actions when reaching out to that customer in another channel during the next interaction. This holistic view builds living, fluid customer profiles uniquely able to reveal the optimal next-best action.
Rather than have one overarching, static customer profile—or even a handful that represent key groups and segments—companies need to build and maintain a comprehensive view of each and every customer (e.g., a Golden Record). Simply put, this enables companies to be more relevant when interacting with individual customers.
Real-time customer profiles provide a host of benefits in the moment and over the long term:
Deeply Understand Customers
- Combine all customer data—internal and external; behavioral, demographic, financial, geographic, operational, psychographic, transactional—into a distinctive customer profile
- Gain a holistic view of individual customers
- Keep current on customers and their changing needs and preferences
- Continuously identify customers’ value over time and respond accordingly
Uniquely Personalize the Customer Experience
- Build more relevant and engaging customer journeys
- Personalize experiences at each touchpoint throughout the journey
- Unify the customer experience across channels
- Use your deep understanding of customers’ current and potential future value when you reach out to them with communications and offers
- Improve conversion rates
- Eliminate waste chasing the wrong customers or interacting at the wrong time or in the wrong channel
Quickly Access Comprehensive Customer Data
- Connect internal and external, online and offline, and first-party, second-party, and third-party data in real time to create a unique, robust view of each customer
- Ensure that customer profiles are always current and correct
- Identify prospects most likely to become high-value customers
- Better predict what new products/services are most likely to launch successfully
Imagine taking every benefit of a standard, static customer profile and revving it up with real-time insight. Everything from product development and positioning strategies to prospecting and loyalty schemes is enriched with real-time insights. As a result, you deliver more value to customers and they, in turn, become more valuable to your business.
Elements of Real Time Customer Segmentation
Real-time customer profiles comprise disparate customer data linked from many sources and included in a single location that users can easily access. Building comprehensive real-time customer profiles starts with bridging internal data silos and creating pathways to ingest external data.
Ideally, a real-time customer profile is continually pulling data from relevant internal and external sources. These could include first-party, second-party and third-party sources of behavioral, demographic, financial, geographic, operational, psychographic, and transactional data. The sources could be as varied as contact center and marketing interaction data or device and IoT data. What is specifically included in a customer profile will vary depending on a company’s industry, the types of customer data important to their strategy and goals, and their business objectives.
In a retail environment, an example of a customer profile might include lifetime value, website behavior, mobile and email interaction history, preferences, and intent, as well as purchase history. An example of a customer profile that a financial services company builds might include data such as products owned, life stage, balance history, and third-party intent data (e.g., is a customer looking at houses or new cars). In both situations, companies focus on gathering and using customer data specifically meant for taking action—whether making strategic decisions, determining next-best actions, guiding a customer along an optimal journey, or delivering the ideal marketing communications, offers, or promotions.
When building customer profiles, consider what data is most important to your business:
- What customers do: What channels do they use to interact with you and when? How long do they spend on your site or using your app? What are they doing while there? Are there any notable changes in their behavior? What is a typical journey for them? How do they generally respond to your experiences, interactions, and offers?
- What customers buy: What do they purchase and how often? Are there any clear product or service preferences? Have they tried related products? Are there any changes to what they usually purchase in terms of value or frequency? When was the last time they bought something from you?
- What customers say: Are your customers providing you direct or indirect feedback? If so, what input are they sharing? Do they participate in a brand community? What are they saying about your brand, customer experience, marketing or ads, and products or services on social media? Are their sentiments shifting positively or negatively?
- What customers like: What do they spend time doing on your site? Are they viewing specific products, adding to a wish list, reading your blog? Who and what do they follow and share on social media? What’s in their social interest graph?
- What experience customers have: What is it like for a customer to do business with you? Can they easily get the information they need about your products and services? Is the customer journey simple and optimized based on their specific interests and preferences? Is there a point in the journey where the customer is likely to leave?
- What customers in your industry value: How does your customer expect you to support them and their needs that’s specific to your industry? How relevant is their intent behavior in another industry to your interactions with them?
When selecting the data to include in these customer profiles, remember: Real-time customer profile data is continually updated, so companies can make quick decisions on what actions to take or offers to present to specific customers at specific times in the best channel. For instance, if the retail and financial services companies in the examples above were sending email campaigns, the retailer will likely want to highlight products relevant to the customer’s areas of interest (or purchase history); whereas, the financial services company will want to promote auto loans or mortgages—depending on what a customer has shown interest in.
Ultimately, having a real-time customer profile—a Golden Record—enables companies to be more relevant every time they interact with individual customers.
How to Build a Real-Time Customer Profile
There are many ways to build customer profiles, but there is one ideal method: establish an underlying support system that enables you to build and maintain a real-time comprehensive view of each and every customer as well as a dashboard to access that data.
Being able to do this—at scale—requires extensive data management skills. So, ideally, implement a platform that does the heavy lifting for you. Look for one that enables you to not only bridge disconnected data sources across the enterprise, but also ingest data from second-party and third-party data sources. It also should provide access to data in real time to allow you to create living, breathing customer profiles that change as your customers’ and their interests, needs, and preferences change.
When laying the foundation for building, maintaining, and using real-time customer profile, take these steps:
- Start with your “why”: Determine your overarching business objects, as well as your specific customer experience and marketing strategies and goals.
- Select the supporting data: Consider what you’ll need to include in your customer profiles to meet those goals. Determine what industry-specific data should be included in the profiles, as well.
- Implement a foundational platform: Creating and maintaining real-time customer profiles would be nearly impossible without a platform to bridge data silos and automate key processes, such as creating segments, determining next-best actions, adjusting customer journeys on the fly, and presenting real-time communications and offers.
- Get clarity: Use your connected data to build holistic real-time customer profiles. Then rely on your platform to continually cleanse, match, and update each and every customer record in real time. Harness the insight from your living, breathing customer profiles to better understand your customers and deliver unique and relevant experiences and interactions.
- Act fast: Static customer profiles quickly become irrelevant. Real-time customer profiles enable you to take immediate action. As a result, the customer experience improves, conversions and loyalty increase because customers see more value in doing business with you, and you see more value from each customer.
Don’t fall into the trap of assuming that your static customer profiles are good enough. In today’s customer-centric business environment, they lack the accuracy, comprehensiveness, and recency needed to deliver on customers’ expectations for experiences that provide value to them—by simplifying their journey, being contextually relevant, and helping them to solve a problem or improve their life in some big or small way. Only real-time customer profiles enable you to achieve all that, and more.
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