Segmentation is key to understanding your customers. Identify the best ones, attract more like them, and limit discounts for low-value customers. Move customers up the ladder through repurchase and increased AOV. Thanks, Scott.
Scott Zakrajsek
➡️ Post | Profile
Not all customers are the same. Yet, we assign the same blended CAC to each of them. That's where segmentation kicks in 👇
Below is an example of a quantile analysis. It's a fancy term that splits your customers into equal chunks.
Example below is 20 chunks (5% customers each) based on Lifetime Net Sales (LTNS) over a 12 mo. period.
Some crazy things...
Your best 10% of customers make up 30% of sales.
How do we find more of "them"? We need to know who they are...
- What products they're purchasing
- Where do they live?
- Where do they hand out?
- What channels are you acquiring them?
- When are they buying?
Double-down and adjust marketing & merchandising strategy to attract them.
Your worst 10% of customers are a PITA. Low LTV (likely negative) and often buy on discount in a single category.
Fire them.
Repeat...Fire them.
You can't truly "fire" a customer, but you can limit discounts and promotions. Remove them from hard-cost channels like direct mail. Stop spending money on them.
What about everyone in between?
Move them up the quantile ladder.
- Increase repurchase & retention
- increase AOV
They want to be a fan of your brand. Celebrate them, and push them there.
Are you segmenting your customers? I would love to know how you approach your existing customer mix (and how you apply it toward future ACQ spend).
