Customer segmentation 101: Who’s your #1 customer? [guest post]

By Chris Tauber

February 24, 2015

For one minute, let's not worry about ALL your customers. Let's just worry about the best one. So, who’s your best customer? If you know your #1 customer, you've already taken your first step on the road to meaningful website personalization.

When I worked on the website for a global luxury travel brand, I was overwhelmed by customer data. We had our own analytics, sales reports, and surveys. Plus we were tapping into industry statistics, Google search data, and competitor benchmarks. I built a cumbersome matrix in an attempt to analyze it all. But how were we going to serve all these customers with custom content to move them down the conversion funnel?

Then I met—or, rather, created—John Tavenport. Everything became clear. More than a persona, he was the customer who guided our personalization efforts. We used John to bring customer segmentation to life. Read on to find out how I created John.

1) Ignore the long tail of your data (for now).

If you haven't addressed your main customers yet, don't worry about the fringes. On that long-tail bar graph, focus not on the tiny bars way to the right, but on the big bars on the far left, the "short head." To do that, I plotted the volume of travel to all the global destinations we covered. While our brand was trying to capture travelers from Tahiti, the Seychelles, and other far-flung exotic locales, the data showed that the vast majority of travel was to Caribbean destinations.

2) Go deeper into the "short head" of data.

On those big bars, most travel was to the Caribbean. So I concentrated my analysis there. Where in the Caribbean? The Dominican Republic. How? Via cheap direct flights from the U.S. east coast, especially New York. Where in the Dominican Republic? The beach town of Punta Cana. Why? Amazing deals on a diverse range of all-inclusive resorts. Punta Cana has the highest concentration of all-inclusives in the world.

3) Distill a story from your demographics and psychographics.

Next I went into our survey data and took the same approach of going after the "short head." Most customers were male, married, age 45–54, with household incomes of $200k+. They took about two international trips a year. Their kids were older or out of the house. And they bought high-end cameras.

4) Create your "John."

With all these data, I was ready to build our best customer. Again, this wasn't meant to be an advanced persona or a comprehensive set of all personas. This was one example guy. Our best guy. Our #1 person. Our "John" wanted to take a two-week vacation in Tahiti, but for now, he just wanted an easy beach getaway with zero stress. And somewhere beautiful, so he could put his new camera to the test. We gave him a face, dubbed him "John Tavenport," and put his picture on everyone's desk. The purpose was to get our entire team to see how there was an actual person there behind the data, so we could build an effective website personalization strategy for people like him.

5) Build your personalization strategy around John.

With John created, we were ready to create a customer segmentation plan. We weren't dealing with that big matrix. We were just trying to give John what he wanted. I pulled in some more data to shed light on John. So here's John, in his New York corner office on a cold Thursday in January. It's too late to plan a getaway for this weekend, but what about next weekend? John wants something easy, warm, and for a good value. With the latest personalization tools at our disposal, we could target John with a special "Escape the Cold" weekend getaway to Punta Cana. It would give him maximum relaxation with minimal effort. John's happy; we're happy.

When you get more in tune with John and optimize your personalization efforts with him in mind, it’s time to find your next John. This approach gets you in the right mindset for true personalization and helps you prioritize your tactical resources.

For more, check out my SlideShare presentation below.

Image courtesy Shutterstock.

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