Here’s a question for you - why would you offer a coupon to a customer who you *know* would buy from you even in the absence of a deal? I guess the hard part would be determining which customers you *actually* need to offer promotions to and which you don’t. But it’s wrong to think that it’s a waste of your time to figure this out. By handing out coupons left and right, you’re simply losing money - and this is a mistake many companies (like Blue Apron) have made and continue to make. BUT there’s a solution! Just like for many problems we’ve covered in the past, segmentation is the key here. Let’s use the company Everlane as an example.
Here’s a question for you - why would you offer a coupon to a customer who you know would buy from you even in the absence of a deal? I guess the hard part would be determining which customers you actually need to offer promotions to and which you don’t. But it’s wrong to think that it’s a waste of your time to figure this out. By handing out coupons left and right, you’re simply losing money - and this is a mistake many companies (like Blue Apron) have made and continue to make. BUT there’s a solution!
Just like for many problems we’ve covered in the past, segmentation is the key here. Let’s use the company Everlane as an example.
This is Janice (How to Treat a Top Customer)
Let’s see what we know about Janice based on the ecomm data we have access to:
She’s been a customer at Everlane for almost 3 years now
She makes on average 2 purchases every 3 months
She hasn’t made a purchase in 3 months
The last items she browsed were neutral-toned sweaters, 2 weeks ago
Her past purchases include clothing items made exclusively of cashmere and organic cotton
Now, if we’re trying to get Janice to make another purchase, you shouldn’t necessarily start waving a coupon in her face. We already know that she’s a top customer, staying loyal to the brand for over 3 years. A financial incentive is always attractive, but it’s pretty likely she won’t need one since she’s already made so many orders in the past without one. So what can we do? Making a thoughtful product recommendation in a personalized email may just be the gentle nudge Janice needs to pull through with another purchase. Look here!
See what we did here? We 1) tried to make Janice feel appreciated and important as a customer, 2) played into her specific preferences and desires, and 3) made strong product recommendations by presenting new relevant clothing items in Everlane’s sweater collection (no coupon necessary)!
BUT this won’t work for every type of customer.
Sienna (How to Treat a New Customer)
Here’s what we know about Sienna:
She’s been a customer at Everlane for around 7 months
She’s made 2 purchases from Everlane in total, with an average order value of $120
She hasn’t made a purchase in 3 months
She hasn’t browsed the site since her last purchase, which consisted of a recycled nylon crossbody and a cotton beanie, both of which were on sale
So for Sienna, it's clear that it may be harder to get her to make another purchase without some sort of financial incentive. But like I said before, that doesn’t necessarily mean that immediately offering up a discount of 15% or 20% is the answer. Instead, let’s look at her AOV: $120. Using this information, it may be a good idea to offer Sienna a promotion like this: Spend $150, get $20 off. Take a look here.
See how we once again personalized both the recommendations and the promotion? The more personalized your marketing campaigns are, the stronger the effect they will have. Believe us when we say that spending the extra time to set up smart campaigns through customer segmentation is worth it.
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