Part 2: Customer Lifetime Value & Segmentation
CONNECTING THE DOTS FOR MULTICHANNEL RETAILERS
Now, if you’re an eCommerce-only vendor, you might be saying to yourself “That’s not true. I can do all of this easily through my CRM, Google Analytics, etc.” And you’re right. It’s important to know that for eCommerce-only merchants, this type of product-level segmentation has been available for years and large retailers frequently leverage it to decide what metrics should be driving targeted online advertising campaigns and the like.
Multichannel brick-and-mortar-based retailers (who may have an e-commerce channel as part of their greater business strategy) on the other hand, have and continue to struggle with obtaining the same level of granularity in-store as they do online.
More specifically we get to the question of how to connect the two marketplaces. Insights on how and where customer shop can affect CLV as much as who they are and what they buy, after all.
For Example:
Within our group of 50+ women who buy staple SKUs, we might find that online shoppers tend to place smaller orders, more frequently. Because of delivery fees, this would lead to a lower customer lifetime value and thereby prompt us to focus a higher percentage of the overall marketing budget on a customer set that is more likely to shop in-store.
UPGRADING TO OMNICHANNEL
Omnichannel loyalty programs help unlock that problem by allowing merchants to track customer purchase behavior through tokenized account identifiers that can be retrieved over almost any channel available, including your website, brick-and-mortar locations, email, social, text, and more. This provides a single seamless customer record that is vital to understanding segmented customer lifetime value.
Understanding your flat CLV across channels is important, but perhaps more vital to multichannel retailers is understanding how each channel compares to the next.
WORKING WITH SEGMENTED CUSTOMER LIFETIME VALUE
Does it matter that your loyalty program only reaches 40% to 50% penetration? Yes and no. We need to ensure that all our buyer personas are represented in significant enough measure, of course. That said, we only need a percentage of our overall customer base, in order to create actionable insights from this sample data.
The more active users we get, the more reliable our core data will be. That means that it’s important that we direct marketing resources not just toward customer retention but bringing new customers into our program through various user interfaces and merchandising calls to action.
Understanding Segmented Customer Lifetime Value
Let’s take another look at that formula WITH SKU level product and demographic data thrown in.
Contrary to what it may seem, we don’t suggest replacing your aggregate LTV model. Traditional LTV exercises can create valuable insights into your business’ aggregate success over time. We do suggest adding some texture and nuance with segmented customer lifetime value.
CUSTOMER LIFETIME VALUE – THE BOTTOM LINE
What we recognize today as LTV is, at some level, a product of the digital revolution and while it’s relatively easy for businesses that exist solely in eCommerce realm to gather the required data points to understand the insights it provides, it’s another matter entirely for multichannel brick and mortar retailers.
None of this is to say that ecommerce only merchants don’t have quite a bit to gain by leveraging segmented LTV. Having access to this data and knowing how to put the pieces together into a single dashboard can be daunting proposition. Wherever you do business, loyalty software can act as an excellent hub for collecting, communicating, and interpreting what this data means.
Omnichannel loyalty programs however, can help your business close the loop on building segmented customer lifetime value into your overall key performance indicators in a way that exposes truly actionable intelligence.
If you like to learn more about how you can get started with bLoyal please contact our sales team or request a free demo.
