You decided to thank your customer with a special offer after their first purchase. Sounds easy or is it harder than you think?
All you have to do is get a CSV with all of your customers who recently made their first purchase. You ask your data team for the CSV, and you mentally cross it off your To Do List. Unfortunately, when you come back to reality, your data team kindly asks you to add a JIRA ticket in a bottomless backlog of other data requests from across the company. The due date is going to be next month in the best case scenario. This is the typical scenario for most marketers. Not to mention that if you want to continue generating a fresh list daily, setting up a custom automated process for this can take even more time.
We have all experienced this pain. The question is whether this should be the norm? Here at StackTome, we are convinced that personalized marketing is a superpower that everyone in your company should have access to. Today, we are approaching a step closer to making this vision a reality by releasing Customer segmentation for marketers.
Our platform allows you to create the customer segments in a fashion of set it and forget it. And more importantly, we can do this without any SQL or any other programming language knowledge. You just need to know which customers you want to market to and select the suitable templates matching those criteria. Now, to make sure we’re on the same page, let's look closer at customer segmentation in general.
What is a customer segment?
We can define a customer segment as a cohort of customers which satisfy specific criteria. For example, all customers that made their first purchase in the last seven days would qualify as a segment. One of the most popular ways of segmenting customers is called RFM segmentation (RFM - Recency, Frequency, and Monetary Value). As for evaluating each segment potential, CLV metric is used (CLV - Customer Lifetime Value). Let’s have a quick look at where customer segmentation fits in in terms of marketing.
Backend marketing
In broader terms, we can say a customer segment is a tool that belongs to backend marketing (marketing to your existing customers). You might question why this is worthwhile? If you look at the graph below, we can see that 20% of the customers drive 80% of future revenue. (referenced from chap 11 Ecommerce Evolved)
The main reason for this is the cost of acquisition, meaning the cost of revenue for existing customers is significantly lower than that of new customers who have to be acquired. Though there is one caveat, to leverage this existing customer base, one must run personalized marketing campaigns. By personalized, we mean targeting customers in specific segments. For example, you might want to have different offers for customers who bought recently and customers who haven’t purchased in the last year. So once we have these segments created, how can they be used?
Use Cases
Here are a few common use cases that StackTome customer segmentation supports:
Lifecycle Marketing: Send a targeted marketing campaign to your customers that take a specific action, for example, those who added the item to their cart but didn’t purchase (cart abandonment), or browse your product pages but didn’t add them to the cart (browse abandonment).
Create lookalike audiences: Expand your existing segments by finding similar customers using Facebook or Google networks. This can help you to acquire new customers.
Reach with Paid Ads: Publish your segments to paid marketing channels like Facebook or Google Ads to supplement your email marketing campaigns as you can reach more customers who don’t open marketing emails anymore.
Acquire better customers - if you are using Google Ads, did you know that you can optimize your ad spend based on future CLV or also called pLTV (predicted lifetime value)? Based on Google paper you can improve profitability per new customer x2 and more using this strategy. StackTome supports CLV predictions and integration with Google Ads for you to be able to leverage pLTV based smart bidding on your Google Ads campaigns.
Improve Customer Retention - Based on CLV predictions which StackTome calculates using your sales data, decide how much is worth spending on your customer segments to improve retention revenue and reduce customer churn, improving your marketing campaigns ROI.
Comply with Privacy Regulations: Ensure your ad campaigns follow local privacy regulations by automatically excluding customers who explicitly opt-out of your marketing campaigns.
Sync with other tools (aka reverse ETL): Tools like Zendesk, Salesforce, etc., are widely used in a different business context like customer support, sales, and so on. To use them fully requires the data to be present, which is a huge task to enter data manually. Fortunately, suppose you already have customer data in place. In that case, it can be synced directly with these tools regularly, saving tons of time and ensuring data is accurate and up to date.
How does it all work?
You can compare StackTome customer segmentation as a seamless orchestra conductor connecting your data with all marketing platforms to make sure your campaigns are always up to date. The best part is that this works automatically without you having to do much apart from the initial creation of your marketing segments. Let’s look at the steps of setting up a simple segment:
- Let’s say you want to market to First time buyers. First, we set a segment name for that:
- Then you need to decide what data is required to be used and where the segment will be sent. In our case we only need RFM values to create this segment, therefore we are only going to use Customer Profile data without the need to include any events. To know more about Customer profiling see below. We also want to use this segment for an email campaign, in our case we select Mailchimp for this.
- Finally, we have to set the actual criteria for the segment. We can do this simply by selecting relevant RFM templates and putting in the values:
Standard segmentation options like RFM, Cart abandonment, Browse abandonment are already available out of the box. Also, one can create custom templates using SQL, which anyone on the same account can then use. - Optionally, we can also change the schedule when the segment gets updated. In our example, we want to send emails once per day, so we set the segment to be updated at 10 AM. Note that the schedule is set in the GMT timezone.
That’s it! After three simple steps, you have your first time buyer segment live, allowing you to reach new customers with no CSV or any other manual preparation. Now that you know segmentation can be done relatively quickly, you might ask if there are any benefits of using one tool rather than another?
What are the benefits of StackTome Customer Segmentation?
CDP with data ownership
You might have already heard about CDP (Customer Data Platform) and why it’s useful. In fact, it has become so popular that now there is a virtual CDP institute. The issue with most of the vendors in this space (and no, it’s not just about the high price or vendor lock-in) is that you have little control over how the data is being used and do not always have access to it. At StackTome we made it our priority to ensure that all of the data that we collect, generate, and use for customer segmentation can be synced to any cloud data warehouse. We argue that data is the most valuable business asset, and for an e-commerce business, customer data is of paramount importance t.
Rich Customer Profile
Out of the box, we create a Customer Profile table from all the data sources we collect. The profile table enables segment creation for RFM, customer retargeting, improving review collection, and much more. This allows you to focus on the business value immediately rather than going through a long process of cleaning and managing the data before it can be put to use.
You can find all the available data fields for profile and event data on our documentation (by clicking show schema).
Three products for the price of one
To support customer segmentation, one must first acquire the data. Data acquisitions usually require a couple more solutions in addition to segmentation itself. At StackTome we provide tools for:
- Getting data - we enable you to import data from different sources. For example, to get sales/orders data, we support the custom repository, CSV, API, or integrate with any e-commerce shop like Magento. To do this, you would need some sort of ETL tool or service, e.g., Fivetran.
- Collecting data - we support event collection from your visitors and customers with a managed Snowplow clickstream service. Our service supports not only standard events like page views, add to cart, etc., but also any custom ones relating specifically to your business context, e.g., “select gift card occasion”. Event collection is almost always sold as a separate product. Examples of companies that provide this are Mixpanel, Heap, GA 360, Snowplow, etc. In one way or another, there is always a cost of collecting clickstream data.
- Acting on data (Customer segmentation) - Finally, once your customer data is transformed and cleaned to be ready for use, we can use it for different purposes. In our case, we automate customer segmentation. Also, data can serve as an analytical tool for understanding your business KPI’s, customer metrics like LTV, and so on. Note that it’s crucial to have data prepared correctly before we can get any value out of it. The last thing you want is to have your team distrust the data and try to go back to using personal estimates to make decisions.
A Cloud data-warehouse is optional
We know that a data warehouse is beneficial for your data ownership. However, not every company is ready to pay the cost of a data team or even just a data warehouse. That’s why StackTome works without the need of having a data-warehouse in place. We want to make it easy for any company to start collecting data, and once they are ready to own it, we provide an option to sync to any cloud data warehouse of their choice.
Combines customer segments with reviews
In addition to customer segmentation, we provide a tool to gather and analyze customer reviews from third-party review platforms. The benefit of collected review data is that we can use it for segmentation, e.g., creating customer segments of your recent reviewers to add them to your reward campaign or incentivizing negative reviewers to change their rating to positive. Also, customer segments can be used for review invitations when you need to send invitation requests to specific customers (e.g., those customers who have not created a support ticket).
Calculates future CLV for your customers
Creating and using segmentation for your marketing is the first step into a more personalized marketing approach. Next is to understand the relation between cost and revenue potential. For example, you have a segment of first time buyers, and you would like to know the future CLV of this segment, or even better to spend on customers whose likely CLV is high. Using StackTome customer segmentation, you get a predicted CLV for the next 12 months and the likelihood of the customer buying again. It allows you to optimize your campaigns to spend on customers who are likely to make further purchases and thus provide you with the best potential ROI.
Works with your favorite BI
As data can be synced to your data warehouse, there is no restriction which BI product you can use. Meaning you can get a pricey BI tool like Looker or Tableau or just use a free open source tool like Metabase or Redash.
What do I need to get started?
To gain the most from using the StackTome product, we recommend adding sales data to our app. Import can be done quickly with a few clicks if you use any popular e-commerce platform like Magento, Shopify, etc. Or, if you have a custom e-commerce website, we accept orders data through automated CSV imports or directly via REST API. We provide a free onboarding process to help you put this in place. Alternatively, customer segmentation can be used just with review data which is the easiest step to test out your campaigns and achieve immediate value out of your review data.
How do I try out StackTome?
Are you ready to take your customer marketing to the next level with StackTome customer segmentation? If so, you can book a quick demo with us here.
