Getting In Above the Ground Floor: The Value of Segmenting Customers at First Contact

Contributed by: Eric Eriksen

By some estimates, there are over 2 billion loyalty program memberships active in the United States, meaning that, on average, Americans actively use between 6 and 7 loyalty memberships each. Significantly, these memberships are skewed towards the prime consumer goods demographic of 18-44 year olds. The people buying the most with the most brand flexibility are the same people who have a pile of loyalty cards. Having a regular loyalty program is no longer an advantage; it’s the norm. In order to stand out today, companies need to have outstanding customer service from the start. Pre-purchase analysis is the next great frontier in this evolution. By leveraging data early in a relationship, companies can boost revenues and build brand loyalty.

It’s no secret that the rise of Big Data has reshaped targeted marketing. The ability to analyze a customer’s purchase history and demography to provide personalized products, services, and ad messages has changed the entire game of mass marketing. Data analytics has allowed modern businesses to incorporate the personal aspects of small business with the scale and performance of a major corporation.

Biology dictates that familiarity and positive experiences breed loyalty through an inherent sense of reciprocity. The more a customer feels that a business cares about her, the more she’ll feel an emotional attachment to the service provider. Before mass production and the bureaucratization of business, personalized service and products were the norm. Eventually, this gave way to the “take-it-or-leave-it” product-focused strategy of marketing. Companies turned their products into regularized commodities, and customers responded by becoming more rational consumers and eschewing loyalty.

Today, a business thinking of a single product and a single marketing strategy seems antediluvian. Big Data allows a company with two million customers to treat each one as an individual. Knowing about a customer’s personal life, preferences, and spending habits allows a company to leverage small-business charm on a big-business scale. Unfortunately, most companies fail to take this principle to its logical conclusion and go even further than a small business can.

Too many corporations wait until a customer has already had a number of contact points to begin customization, chiseling out an idea of customer needs from a standard template. Relying on internal data maturation requires a number of inefficient initial experiences, which bleed revenue. By looking outside of an organization for existing customer data, a company is able to skip the rough beginning stages of a relationship. Knowing a target’s demography from the beginning allows a better baseline specialization which the company can enrich to quickly build loyalty. The first few months of a business relationship are vital. In that period, the new customer does not have the tunnel vision that will eventually make a particular company his default option. By giving the customer what he wants from the moment of first contact, it’s possible to build flexible market segments from the beginning and to skip the most difficult stage of a relationship. 

This improved baseline also enhances omnichannel integration. By working in every channel from the same baseline, an organization can boost message conformity and contact points from the start. Making a good first impression through the power of baseline market segmentation means that a company can begin building a customer for life the moment contact is established, gaining an important competitive advantage in an over-saturated loyalty marketing world.