Why standard customer profiling is only the filling in your insight sandwich

These days, everyone in retail is aware that the customer must come first – and really understanding your customer is the linchpin in that.

As I mentioned in my previous blog post – Customer insight: what you should know and why– there are many types of data, both qualitative and quantitative, that you need to understand in order to form a full picture of your customers.

Many retailers utilise standard customer profiling services such as Acorn or Mosaic to provide them with insight into the types of people their customers are and where they located. These tools in themselves provide an excellent starting point to gain a top-level understanding of your customers and provide a wealth of socioeconomic data and general behavioural insight. They are extremely useful when starting to tailor your brand and communications to the people you want to sell to.

However at Leapfrogg, we believe that understanding the profiles of your current customer base is not enough and that it’s only the filling in a much bigger ‘customer insight sandwich.’

sandwich

Before you add the filling to a sandwich, you need to have the bottom layer of bread in place to add the filling to. When creating your ‘customer insight sandwich’ – the bottom layer of insight which supports your customer profiling is ‘transactional segmentation.’ Profiling your customer database will be so much more fulfilling if you have already segmented your customers by their value to you now and also in the future. It’s better to know the type of people that sit within your most valuable customer pot vs. those who hardly ever spend with you.

For example, a general segmentation of your database may show that you have 40% of customers within a certain profile. As this is a large proportion of your database, you start to tailor your marketing strategies to them, but what you don’t know is that they all sit within a single purchase segment and are not of high value. By using transactional segmentation first, you may find that 5% of your customer database is from a completely different profile, but make up your most profitable segment as they are loyal customers making repeat purchases which generate 50% of your profit. By not understanding your customers’ transactional value, you could be tailoring your marketing to the wrong segment.

Once the bottom layer of bread is in place and you have filled your ‘customer insight sandwich’ with profile data, you still need the top slice of bread to hold it all together.

The top slice of bread is the real actionable insight you can find from your own qualitative research. Asking your customers directly what their buying motivations are, how they want to engage with you and the buying experience they expect gives you all the sustenance your marketing belly needs.

With this insight in place, your sandwich is complete. You know who your most profitable customers are, the type of people they are, but now also that they are most likely to respond to video content, or they are driven by product over price. You know that they want targeted emails from you and will engage with you on Pinterest, but will never follow you on Twitter or Facebook. You know the people that influence them online and that their loyalty to you is driven by exclusive access to your brand, not discounts. It’s this extra layer of insight that is the really actionable part and forms the action of your marketing strategy. It’s only when you have all three layers of your sandwich in place that you will know WHO you are selling to, HOW much they are worth to you and most importantly WHAT you need to do to engage with them in the way they want.

Happy sandwich making!

If you need help with any of the elements in your insight sandwich get in touch with ben.potter@leapfrogg.co.uk

Image from Pixabay.

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