1. Aggregate all sources of customer data to have a full view across channels and devices
- Customers frequently engage/shop with you across multiple touch points; online & in-store, using their smartphone and their desktop. Aggregating the data will show you the total value of your customers, rather than segmenting the value of a customer through one channel and/or one device.
- Use a common denominator across your reporting, such as a customer ID number or email address, in order to aggregate the data and have a single view of your customers.
2. Determine your business’s most valuable customer (MVC) as an exercise to start to build a framework for how to evaluate all of your customers.
- Understanding what a valuable customer means to you and who your MVC is gives you a starting point to understand the types of customers you have.
- If you value brand loyalty, along with revenue, your most valuable customer may not be the person who has spent the most, but rather someone who is a high spender and is also a frequent engager across multiple channels
3. Segment your customers based on value/profitability
- Looking at the signals similar to how you determined your most valuable customer can help us segment customers into manageable buckets for future interactions
- For instance: Segmenting like this will show us not only the most valuable customers, but who are becoming less valuable that you may want to re-engage with, who have the potential to be in the most valuable segment, and who is not worth investing in.
4. Apply your customer segmentation to your advertising strategy
- Each segment will have different preferences and want to hear a different message from you. The message your give to your MVC is not the same as someone who hasn’t engaged with you recently.
- Understanding these segments (who they are, where they come from) will allow you to make decisions on how to acquire similar users.
5. Bid & Budget Accordingly
- You should be willing to aggressively go after potential valuable customers and/or retain valuable customers. Make sure you don’t cap your bids and budgets for them
- It’s better to miss out on a low value customer than a high value customer - if you budget constraint, make sure you shift the budget to your MVCs