Effective Customer Segmentation

Blueffect: II Ogólnopolski Kongres Efektywności Warsaw, June 26, 2013

Pavel Jašek

Agenda

1. How can a customer segmentation change your usage of web analytics data

2. Why your marketing campaigns are evaluated wrong

3. Customer cohorts

4. Actionable content segmentation and prioritization

Why to Segment Your Customers

● Understanding the behaviour of different customer segments on your website

● Evaluating acquisition and retention campaigns properly

Important progress in understanding website traffic

1

2

Customer Segmentation Options

Most Important Customer Segmentations (1/3)

● Customer Type

• Anonymous

• Registered users

• Customer with purchase history

Most Important Customer Segmentations (2/3)

● Customer Lifetime Status

• New Customer

• Frequent Customer

• VIP Customer

• Nonactive Customer

Most Important Customer Segmentations (3/3)

● Value segments for frequent customers

• <1 000 złoty in last 3 months purchases

• >1 000 złoty in last 3 months purchases

• > 10 000 złoty in last 3 months purchases

3 Ways to Gather Data for Segmentation

1. Implementing Custom Variables

• _gaq.push(['_setCustomVar', 5, 'customer', 'VIP', 1]);

• _gaq.push(['_setCustomVar', 4, 'ID', '123', 1]);

• For GA: visit-level or visitor-level scope

• Similarly in Piwik, Adobe, Webtrekk and Webtrends

2. Backward integration to customer ID

• Universal Analytics: Dimension Widening

3. Without any implementation

• Ad-hoc segments based on pageview /login.html

Recommendation #1 Start with a simple segmentation of logged-in visitors. Your view on web analytics data will change forever since than.

Pavel Jašek

Good Sources to Read

● Google Analytics Custom Variables

• https://developers.google.com/analytics/devguides/collection/gajs/gaTrackingCustomVariables

● Ideas from Lunametrics

• http://www.lunametrics.com/blog/2012/08/28/20-ways-use-custom-variables/

Demystifying the conversion rate

Demystifying the Conversion Rate

● CR = Conversions/Total Visits

● What if not all visits come to your website in order to convert?

70-90 % of bank homepage visits come only to login to e-banking

Prospects Instead of Visits

● CRp = Conversions/Prospects

● CRp = Conversions/(Total Visits – Visits of current customers)

Using Visits Using Prospects

• 100 total visits

• 2 new registrations

• CR = 2/100 = 2 %

• 100 total visits

• 2 new registrations

• 30 visits from customers

• CR = 2/(100-30) = 2,9 %

Your registered users also come via organic and

paid traffic sources. This

impacts campaign

evaluation.

Recommendation #2

Calculate conversion rates from potentional customers only.

Pavel Jašek

Customer Cohorts

Understanding customer activation and retention using cohorts based on registration

date

0

100

200

300

400

500

600

700

1 8 15 22 29

Nu

mb

er

of

visi

ts

Days since registration

Registered in April Registered in May

What Cohorts Are Mostly Used

● Date, month or year of acquisition

● Most recent purchase date

● Traffic source of first visit

Recommendation #3 Don’t limit yourself to what your web analytics tool offers. Make the tool measure, process and visualize what YOU want.

Pavel Jašek

Good Sources for Cohort Analysis

● Cohort Analysis 101 by RJ Metrics

• http://cohortanalysis.com/

● Cohort Analysis in Google Analytics

• http://cutroni.com/blog/2012/12/11/cohort-analysis-with-google-analytics/

● Cohorts in Kissmetrics

• http://www.kissmetrics.com/demo/reports/cohort/

Content Segmentation Matrix

Content Segmentation Matrix Principles

● Group your content into sections of interest

● Compare pageviews by different types of visits

● Find significant differences as insights

Segmenting by Desktop and Mobile Traffic

Content section Desktop pageviews

Mobile pageviews More on mobile?

Bank branches 2,0 % 5,4 % 174 % Loan calculator 1,0 % 2,8 % 166 % ATM Locations 0,4 % 1,8 % 333 % Contacts 1,2 % 1,7 % 39 % Currency exchange rates 0,6 % 1,0 % 70 % First login 5,9 % 2,8 % -52 % Mortgage products 3,6 % 1,7 % -52 % Saving Accounts 1,5 % 0,8 % -47 %

What to Segment Content by

● Mobile traffic

● Traffic source (organic, PPC, affiliation, email…)

● Geolocation

● Customer segments

Recommendation #4 This segmentation allows you to understand e.g. if your VIP customers are visiting your new products.

Pavel Jašek

Content-Content Matrix

Content-Content Matrix Principles

● Group your content into sections of interest

● Find number of visits that saw both sections from each combination

● Using cross-selling principle „those who saw section A also saw section B“

● Compute relative frequency of visits in such combinations

Number of Visits in Section Combinations

Outdoor Clothing Shoes Light Sale

Outdoor 1 500

Clothing 540 2 500

Shoes 300 450 900

Light 655 600 477 1 450

Sale 732 777 151 633 1 780

Relative Visits to Site Sections

↓Outdoor ↓Clothing ↓Shoes ↓Light ↓Sale

Outdoor 100 % 22 % 33 % 45 % 41 %

Clothing 36 % 100 % 50 % 41 % 44 %

Shoes 20 % 18 % 100 % 33 % 8 %

Light 44 % 24 % 53 % 100 % 36 %

Sale 49 % 31 % 17 % 44 % 100 %

What Page Types Are Useful for Segmentation

● Homepage

● Product categories

● Contact pages

● User login

● Support pages

Recommendation #5 Sections cross-views give you actionable insights about which site sections should be better linked together.

Pavel Jašek

Conclusion

Conclusions

1. Customer segmentation is important for unfolding what really happens on your website

2. Evaluate campaigns only by the relevant traffic

3. Make your web analytics tool measure, process and visualize what YOU want

4. Compare what different customers want on your website

5. Segmentation gives you actionable insights

Action Steps

1. Start with the easiest segmentation possible

2. Make a draft output with a pencil

3. Think how would such output help you

4. Implement it

5. Analyze the data

6. Present your insights to your colleagues

7. Use those insights to improve your website

@paveljasek

pavel.jasek@dobryweb.cz