Etail Presentation '11-New Wave of Segmentation

© Copyright 2010 Hewlett-Packard Development Company, L.P. 1© Copyright 2010 Hewlett-Packard Development Company, L.P.

Anita John & Karen ZhangFebruary 22, 2011

NEW WAVE OF SEGMENTATION

© Copyright 2010 Hewlett-Packard Development Company, L.P. 2

SEGMENTATION AS WE KNOW IT

Based on what they’ve bought

Based on what they’ve done

Based on what they might do


HPDIRECT STRATEGIC VISIONObjective: Create meaningful relationship with ALL existing HP customers across all touch points that maximizes repeat purchase and loyalty

= Customers for

Life!Ignite EngageRe-

engage

Build Relevance

• Market based on “who” and “what” they want

1

Our PillarsChannel Effectiveness• Maximize ROI by channel by customer

2

Data-driven Marketing

• Persona based marketing built on rich & predictive customer insights3

One Customer Voice• HP customer no matter the origin

4


STRUGGLE #1: DOING THE RIGHT THINGRepeat

Purchase

Prospect

New Customer

Active Inactive

Highly Active

Loyalty Winback1st Time

Purchase1st Time Visitor

Acquisition

Programs

Online Advertisin

g

Tell-a-friend/Referral Programs (Twitter, FB, Product Reviews, etc)

New Customer Programs

Repeat / Upsell / X-Sell

Promos

Best Customer Programs

Re-activation Program

Partnerships

Direct Mail/ Catalog

EmailSocial Media

Mobile SEO/SEM Print Contextual Affiliates

LearnRefine

Test

Test


STRUGGLE #2: RFM/RFC NOT ENOUGH WHEN…MATURE MARKET NEW PRODUCTS HOMOGENOUS

CUSTOMER VIEW

PCs – change in memory, style, hard drive

Printers –AIO, wireless

What audience do you tap into?

Purchase behavior similar

Demographics are few and far between to allow for distinction

Value based (ie-best) works, but can fatigue and leave majority of file untouched


COME ON…THERE HAS TO BE A BETTER WAY360 VIEW OF THE

CUSTOMERDIFFERENTIATION ACTIONABLE

360


Take away: it’s a journey, not a task

Business Needs Customer Intelligence Go- To-Market Execution

Persona V.1: Demographics

Persona V.2: Product Feature

Persona V.3: Life Value

A

B

C

1. Customer Core Value

2. Behavioral Differences

3. Actionable

Email

Direct Mail

Web

Outbound

UNDERSTANDING THE NEEDObjective: Resonate with customer core value at a deeper level


8

Attitudinal Measurements Customer Segments

Technology Readiness:

role of technology in a person’s life

Life value / purpose :

role of technology in a person’s life

PERSONASIdentify customer core values


Online purchase transaction

Demo/life style+

Web browsing

Marketing Campaign

Mini data mart

Product Registration Detail

Purchase behavior

Early adopter behavior vs. followers

Velocity of purchase -Time lag- (for repeat

buyers)

Repeat behavior

Attitudinal Segment Customer segments based on survey result

Campaign Response data

Program and Channel

influences

Site behavior (visits, pages,

duration,)

Velocity of purchase

(time from intent to purchase)

Product category pages visited

Demographic

Attitudinal (interest variables)

Life stage (movers, family,

retirement, etc)

Zip Level details

Income range

Occupation

360 VIEWCreated a data mart for overall analysis


Fewer Product Pages

Interactive: 1. Tendency is toward

comparison shopping

2. Less Likely to use search

Higher tendency toward repeat purchase

Segm

ent

1

•Young, success driven

individuals with a rich social

life

• Technology is a great

companion that helps them

stay in touch with their social

network.

Highest high performance PC penetration

Least Photo smart

Printers

Repeat Customer

Purchase Behavior

Less likely to be small home office owners

Demo/LifestyleSOHO

Marketing response

Web Browsing

BEHAVIORAL DIFFERENCESUnderstand how attitudinal segments relate to behavior


X =

F(x) = Supervised Classification algorithms

y, segment

x

x

.

.

.

x

Total Universe

i

n

Go-To-Market Execution

Email

Direct Mail

Web

Outbound

Go-To-Market Execution

Email

Direct Mail

Web

Outbound

ACTIONABLEExtrapolate to Total Universe


TESTING STRATEGYCampaign Level

Persona 1 Persona 2 Persona 3

Phase 1 – Tested creative and product – prove it works Back end analysis conducted with a hold out group

Phase 2 - Multivariate – Offer, pricings, product, creative messaging


LEARNINGS

– Validated the segmentation: good predictor of customer behavior, response and value.• Need to continue to iterate and perfect

– Use of segments help drive more qualified traffic• Lift in conversion was as high as 56%*

• Lift in rev/send was as high as 46%*

– Automation and templates were critical to execution

*All results were at a 90% confidence level.


NEXT STEPSConstant Journey

– Integrate into all channels (display, social, DM)

– Expand analytics & revamp forecast models (customer-driven)

– Create personalized web, call center and order processing experience

– Build out a robust automated & dynamic content management platform

– Multi-offer engine

– Iterate on segment definitions (refresh every other year)

Customer segments


TAKEAWAYS

– Gain senior management sponsorship

– Your database and analytics group are your right hand

– Link attitudinal and behavior at the deepest level• Customer’s needs may change, but their core values stay the same

– Consider this an iterative process• Test at a campaign and customer level overtime

• Think of customers as multi-dimensional

– Make sure you have the infrastructure to support personas in the long-term

Etail Presentation '11-New Wave of Segmentation

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