How Customer Segmentation Helped an Electronics Retailer To Gain a Leading Edge in the Smart Wearables Segment
Driving Sales with Customer Segmentation Models About the Client A Fortune 500 electronics retailer specializing in the consumer electronics and smart wearables segment. A huge chunk of their revenue was generated from their most valuable customer segments who made repeat purchases, hence it was crucial for them to effectively manage attrition rate and prevent potential [...]READ MORE >>
Driving Sales with Customer Segmentation Models
About the Client
A Fortune 500 electronics retailer specializing in the consumer electronics and smart wearables segment. A huge chunk of their revenue was generated from their most valuable customer segments who made repeat purchases, hence it was crucial for them to effectively manage attrition rate and prevent potential customers from opting out of the conversion funnel by leveraging customer segmentation.
With the rise in digital transactions and changes in customer behaviors, businesses have a great opportunity to capture, analyze, and leverage data for better decision-making. However, capturing a complete view of customers seems to be daunting when data has to be integrated from several online and offline channels. Today, customer segmentation plays a key role in targeted marketing, lead generation, and conversion, which is one of the main reason that is compelling businesses to implement a customer segmentation framework. In this case, the technology company was facing a decline in the sales volume of its flagship wearable devices, which accounted for over $2 million of its overall annual sales revenue. It recognized that this area of their business was underperforming. But, to address these challenges and performance issues they required in-depth customer insights, which required them to implement robust customer segmentation models.
A compelling opportunity to use existing enterprise data to answer key strategic questions about its customers, products, geography, and sales channels is what made them approach Quantzig. The client wanted to leverage customer segmentation and data visualization to predict customer behaviors and effectively engage them well in advance for improving sales.
Top Challenges Faced by the Electronics Retailer
Problem Statement 1
To better understand business performance and improve marketing budgets and resource allocation to achieve business goals.
Problem Statement 2
To identify areas of improvement and drive performance consistently across businesses, products, channels, and customer groups.
Problem Statement 3
To integrate data visualization dashboards to gauge and analyze customer behavioral data.
Solutions Offered and Value Delivered
Quantzig worked with the client to determine the specific challenges that they wished to address. Once this analysis was complete, we worked with them to source the relevant data, which came from disparate data sources. The solutions offered were designed to identify key drivers for unique customer segments and key product attributes. This helped the client to develop new products and promote existing products to trade-up low-tier consumers.
By leveraging customer analytics businesses are revolutionizing the way they operate. We have created entirely new methods for engaging customers—illustrating the disruptive power unleashed by comprehensive customer segmentation models.
To address the challenges faced by the client the analytics experts at Quantzig adopted a comprehensive approach which consisted of the following three phases:
In the initial phase of this customer segmentation engagement, we built a consolidated data visualization platform and leveraged the use of analytical dashboards for effective customer segmentation analysis and decision-making.
Phase two of the customer segmentation process revolved around the integration of disparate sources of structured and unstructured business information, including customer data obtained from product billing information, campaign data, and promotions, as well as net promoter scores (NPS), panel surveys, and competitor research data.
Using data visualization techniques we empowered the client to forecast performance at granular levels and assess risk factors to strategic goals. The use of robust customer segmentation models further improved their ability to mitigate risks and achieve desired results.
Once the data was sourced, we determined the various ways in which that data could be represented visually. The two approaches to customer segmenttaion that were selected included- a roadmap map of the state that interactively represented the purchase histories of their customer segments, with overlays of population density and other key sales metrics, the second approach revolved around the implementation of a variety of bar graphs depicting comparative data about the different customer groups.
Identification of key brand-drivers across markets revealed opportunities for global campaigns and product innovation, along with market-specific customization needed in communication strategies. This customer segmentation engagement was completed in a short span of time, starting with conceptualization and planning phases, to customer segmentation strategy development, and the rollout of the new dashboards to track customer behavior.
Based on the key drivers that emerged for each of the customer segments, our experts identified the winning product proposition for the market and developed a customer segmentation framework which helped them trade-up the low-tier customers towards high-tier products and increase revenue for the business.
As a result, the client realized several key benefits:
- The customer segmentation framework offered a ‘one source of truth’ that resulted in a 50% reduction in cost
- Analyzed the key drivers of customer satisfaction
- Devised suitable strategies to counter the decline in sales
Why is Customer Segmentation Important?
It’s no secret that customers are key to driving profitability for businesses. But to stay profitable in the long-run businesses must comprehend how customer segmentation correlates to profitability. This is because variations still exist between highly targeted customer demographics, making it essential for them to tailor their approach toward addressing the needs of different customer segments. Though customer segmentation seems like an uphill task if done precisely businesses can gain tremendous returns when compared to a one-size-fits-all approach.
Quantzig offers a complete, turn-key approach to define, implement, and support a wide range of big data and advanced analytics solutions. We combine our analytics and subject matter expertise with best-in-class customer segmentation methodologies to ensure timely completion of our initiatives. Our customer segmentation models help drive business value, thereby helping our clients meet their ROI expectations within a short span of time.
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