Increasing Customer Loyalty and Lifetime Value

Answer

Personalization of marketing site content and recommendations can have a dramatic impact on customer satisfaction loyalty and ultimately value. By segmenting customers into groups identifying their content and product affinities and targeting those individuals with offers and messages organizations can more effectively manage their customer relationships as opposed to just managing their Web presence.

This chapter provides a series of best practices focused on different approaches to segmentation and the uses of segment value affinity and Clickstream data to analyze and target consumers online. While these best practices are specific in nature they can be easily generalized to approach any segment or group of visitors that an organization deems important.

Business Owners
Email marketers and site personalization teams frequently use tactics that leverage profile data to increase online marketing relevance. Because segmenting customers into groups and mining their affinities for data can be a complex task analytical power users typically will be involved in setting up and delivering segment report data.

Best Practices
Digital Analytics presents several best practices for increasing customer loyalty and lifetime value including:
? Targeting High Value Customers ? This analysis segments your site traffic into average and high value customers allowing you to target high value customers for repeat visits and conversions as well as to understand how to drive more customers into the high value segment.
? Targeting Product Abandoners ? This best practice explains how to identify visitors who have abandoned particular products and target them with email to recapture lost conversion opportunities
? Personalizing the Home Page ? The goal of this analysis is to pinpoint behavioral patterns for new and repeat visitor segments on the home page. Identifying these patterns allows for the opportunity to personalize your home page based on visitor preferences to accelerate conversion.
? Delivering Targeted Recommendations to Site Search Users ? The goal of this analysis is to identify the products that are most popular among a specific segment of your visitor population (in this instance visitors using your on-site search engine). Leveraging data-driven insight into product preferences allows for improved up sell and cross sell.

7.1 Targeting High Value Customers

Goal
This analysis segments your site traffic into average and high value customers allowing you to target high value customers for repeat visits and conversions as well as to understand how to drive more customers into the high value segment.

Reports
This best practice leverages the following reports:
? Profile Segments
?1. Email List Download?
?2. Overview
?3. Top Pages
? Clickstream

Steps
1. Create a segment of visitors who transacted once or more during a three-month window. This segment of ?customers" will serve as a baseline for comparison to ?high value customers."
2. Create a segment of visitors who transacted twice as much in terms of revenue total applications total bookings etc. (whatever your key conversion metric may be) than the baseline segment.
3. Obtain metrics for average transaction size and transactions per visitor for both segments.
4. Obtain the email addresses of visitors belonging to the high value customer segment.
5. Obtain a list of the top pages browsed by visitors in the high value customer segment. Identify the most popular page for high value customers (typically this will be the home page).
6. Create a report to view the Clickstream paths originating from the most popular page for visitors belonging to the high value customer segment.
7. Create a report to view the Clickstream paths originating from the page above but view the paths of visitors in the baseline segment for comparison.

Actions
? If the high value customers segment has a higher average transaction size than the baseline ? These visitors are transacting more business than average consumers when they convert. If this is the case download these visitors? email addresses and send a targeted email blast with a basket-size based promotion (e.g. ?Save $5 on every order over $100"). This will encourage these high value customers to return for another large transaction. Make sure to track the effectiveness of this email for comparison to typical broadcast emails.
? If the segment has a higher number of transactions per visitor than the baseline ? These high value customers are your frequent customers transacting more times on average than the typical consumer. If this is the case consider a recurring targeted email campaign to continually bring these individuals back to the site. Make sure to track the effectiveness of this email for comparison to typical broadcast emails.
? If high value customer paths differ from typical site users on popular pages ? Redesign these pages to help drive traffic in directions that high value customers take. For instance if the high value customer segment predominantly clicks on a home page banner consider enhancing the banner creative to improve click-through.

7.2 Targeting Product Abandoners

Goal
Identify visitors who have abandoned particular products and target them with email to recapture lost conversion opportunities.

Reports
This best practice leverages the following report:
? Top Abandoned Items
? Profile Segments
?1. Email List Download

Steps
1. Determine the most frequently abandoned items on the site over the last month. These products represent a tremendous opportunity for conversion because consumers have displayed a strong interest in them already.
2. Segment site traffic to identify visitors who abandoned each of these top products during the time period.
3. Download the email list of visitors for each of these segments.

Actions
? Target abandoners with emails that include links to the products they abandoned ? Given that these visitors have already shown interest in the product targeting them with email will increase the relevance of your message and the likelihood that the individual will return and convert.

Note: When possible you should avoid leveraging discounting in targeted email campaigns. This rewards visitors for the wrong behavior and encourages them to continually abandon with the hopes of additional future discounts. Instead consider a campaign focusing on the category as a whole or on other benefits of the specific product. These campaigns provide a vehicle back to the site without rewarding bad behavior or eroding margin.

7.3 Personalizing the Home Page

Goal
The goal of this analysis is to pinpoint behavioral patterns for new and repeat visitor segments on the home page. Identifying these patterns gives you the opportunity to personalize your home page based on visitor preferences and accelerate conversion.

Reports
This best practice leverages the following reports:
? Profile Segments
? Clickstream

Steps
1. Segment site traffic into new and repeat visitors that entered through the home page during a specified time period. As a best practice for creating segmentation reports new visitors should have an initial visit within the specified time period. Repeat visitors should have an initial visit prior to the specified time period. Creating the segmentation reports with this logic will omit the chance of double counting.
2. Create Clickstream reports beginning from the home page based on each visitor segment.
3. Compare conversion rates for each Clickstream path. Identify who converts better from the home page: new or repeat visitors.
4. Evaluate the paths of the two segments to identify differences in navigational preferences.

Actions
? Consider creating two versions of the home page ? One that caters to the needs of new visitors and returning visitors respectively. For instance if new visitors are heavy on-site search users consider expanding this functionality on the new visitor home page. If repeat visitors are more interested in your special offers such as a discount or sale category consider making this information easily accessible for this segment.
? If resource limitations prevent you from deploying two different home pages ? Compromise by reinforcing the most valuable areas of the home page for each segment. For example consider enhancing both the on-site search functionality on the page and the accessibility to the clearance category. Free up necessary real estate by minimizing low-performing links for both segments (i.e. infrequently used paths or paths that result in low conversion).

7.4 Delivering Targeted Recommendations to Site Search Users

Goal
The goal of this analysis is to identify the products that are most popular among a specific segment of your visitor population (in this instance visitors using your on-site search engine). Leveraging data-driven insight into product preferences allows for improved up sell and cross sell.

Reports
This best practice leverages the following reports:
? Report Segments
? Merchandising/Product Categories

Steps
1. Create a segment of visitors that use your on-site search tools.
2. Filter your merchandising/product reports to obtain a list of the most popular products and categories transacted by on-site searchers over a monthly time period.
3. Obtain a list of the most popular products and categories transacted on your site as a whole for comparison.
4. Identify your ?primarily search" items. These are the items that are much more popular among searchers than they are among the general site population.

Actions
? Consider displaying the most popular products for searchers on the ?No Results Found" page ? This will help struggling searchers to locate products that are frequently popular among searchers in general.
? Consider promoting ?primarily search" products as cross sells or up sells ? Contrast the most popular search products with the most popular products for the site as a whole. Products that appear only on the search list are those that tend to be more popular among searchers rather than site navigation browsers. Consider promoting these ?primarily search" products within the search functionality as cross sells or up sells.
? If your search results page contains results by category consider making the most popular product categories for searchers more prominent on the page ? This will present searchers with the product categories they are most likely to browse.