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From segmentation to contextual marketing

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From segmentation to contextual marketing

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Contextual marketing is about understanding not just who someone is but where they are, what they are doing, and what they are likely to do next. It’s about combining the right information about a customer and the context to deliver the right services and communication at the precise moment it offers the most value.

Contextual marketing is about understanding not just who someone is but where they are, what they are doing, and what they are likely to do next. It’s about combining the right information about a customer and the context to deliver the right services and communication at the precise moment it offers the most value.

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From segmentation to contextual marketing

  1. 1. FROM SEGMENTATION CONTEXTUAL TO MARKETING - GROWING VALUE THROUGH PERSONALIZED EXPERIENCES TOM NICKELS WWW.AVAUS.FI IMAGE BY MAURITSON FOTO / FLICKR
  2. 2. 2 We combine strategy, analytics and design with technology and outsourcing services. DRIVING BUSINESS Focus areas: •  Digital transformation •  Customer growth •  Digital sales and B2B Lead management •  Business model & service innovation •  Business process efficiency
  3. 3. SOME GREAT COMPANIES WE WORK WITH: 92 SPECIALISTS OFFICES IN HELSINKI, FINLAND AND WROCLAW, POLAND REVENUE 10 MILLION € (est. 2012)
  4. 4. WHY SEGMENT CUSTOMERS ?
  5. 5. CREATING A COMPETITIVE ADVANTAGE BASES FOR DIFFERENTIATION It’s difficult to differentiate based on price or product charac- teristics. It might work for a while, but usually competition UNIQUE catches up. PRODUCT However REALLY KNOWING YOUR CUSTOMERS and serving them based on their individual needs will set you apart. COST ADVANTAGE But traditional segmentation is NO LONGER ENOUGH TO CUSTOMER CREATE CUSTOMER INTIMACY. INTIMACY
  6. 6. THE CHALLENGE: THIS IS WHAT YOU SEE, BUT IT IS NOT REALLY ME A LOT OF THE CUSTOMER INFORMATION COMPANIES CURRENTLY USE ISN’T REALLY FOCUSED ON GETTING TO KNOW WHO THEY ARE AND WHAT THEY NEED. AND ABOVE ALL IT DOESN’T TELL MUCH ABOUT WHAT THE SITUATION – THE CONTEXT – OF THE CUSTOMER IS RIGHT NOW.
  7. 7. THIS IS ME ü  ü  Father of three, devoted husband Houseowner ü  Live outside city ü  Entrepreneur, owner of midsized business ü  Gadget freak ü  Time strapped, convenience oriented ü  Eco consiousness on the rise ü  Fair price, not necessary cheapest ü  Prefer digital channels ü  Visited website yesterday, looked at product page
  8. 8. MARKET VALUE NEED CONTEXT IN WHICH MARKET HOW CAN WE GROW WHAT SHOULD WE HOW SHOULD WE TREAT SHOULD WE INVEST? LIFETIME VALUE? OFFER? A SPECIFIC CUSTOMER? SEGMENTING ON A SEGMENTING BASED ON SEGMENTING BASED SEGMENTING BASED ON MARKET LEVEL. FOR CUSTOMER VALUE. FOR ON DIFFERING THE SITUATION OF THE INSTANCE CORPORATE INSTANCE HIGH-VALUE, ATTITUDES AND NEEDS. CUSTOMER. FOR CUSTOMERS VS CHURN-RISK VS FOR INSTANCE TASTE, INSTANCE VISITED WEB- CONSUMERS. UNPROFITABLE CONVENIENCE, OR SITE, ORDERED SPECIFIC CUSTOMERS. COST. PRODUCT OR IS AT LOCATION X. Different approaches to segmentation
  9. 9. THE HEART OF Products/ CUSTOMER INTIMACY IS services in use RELEVANCE Customer lifecycle Purchase history IS HELP FROM THIS COMPANY RELEVANT IN THE NEAR FUTURE? Contact DAYS TO history MONTHS IS THIS SOMETHING I Web searches RELATIONSHIP NEED RIGHT NOW? CONTEXT REAL-TIME Visit to webpage Purchase IMMIDIATE CONTEXT Expressed PERSONAL needs Call to CC CONTEXT Area of Weather residence Location Preferences YEARS Lifestage IS THIS IMPORTANT Attitudes TO ME IN LIFE? Social connections
  10. 10. understanding context + CUSTOMER REAL-TIME PROFILE DATA BEHAVIORAL DATA Contextual marketing is about understanding not just who someone is but where they are, what they are doing, and what they are likely to do next. It’s about combining the right information about a customer and the context to deliver the right services and communication at the precise moment it offers the most value.
  11. 11. PERSONAL CONTEXT Needs-based segmentation What should we offer?
  12. 12. Different needs and motives drive the development of customer offerings AtoB Status Convenience Lifestyle Green values ”I need a car to ”I have money and ”I need to be able ”The car goes along ”I appreciate get from one power, and I want to trust my car. It with my lifestyle. I ecological values. place to another” to show it to always functions have my own My car does not others. Everybody the way I wish.” personality and I pollute the admires my car.” want to experience nature.” it through my car.”
  13. 13. IMMIDIATE CONTEXT Behavioral triggers When is the best time to communicate?
  14. 14. TIMING HAS A BIG EFFECT ON RELEVANCE WHEN? Knowing when a product or service is relevant to the customer is one of the hardest things to do. But one that potentially pays of big time. Identifying the right customer behavior that SIGNALS THE MOST PRESSING CUSTOMER NEEDS and triggering communication based on that may increase relevance and sales SIGNIFICANTLY.
  15. 15. SIMPLE REACTIONS TO CUSTOMER ACTION WILL MAKE THE CUSTOMER FEEL THAT YOU RECOGNIZE HIM – IT HAS A CLEAR FEEL-GOOD FACTOR TO IT. (and it affects sales)
  16. 16. IMMIDIATE CONTEXT Contextual advertising How can we provide relevant ads?
  17. 17. 18
  18. 18. REMARKETING RELEVANCE TAKING REALTIME RELEVANCE ONE STEP FURTHER - KEEPING UP WITH THE CUSTOMER CONTEXT ONLINE Company User website leaves Popular sites Web user CLICK User returns ”Remarketing is a feature that lets you reach people who have previously visited your site, and show them relevant ads when they visit other sites.” - Google
  19. 19. IMMIDIATE CONTEXT Mobile context What interesting is nearby?
  20. 20. ”The world’s finest department store brings the greatest international brands to iPhone. In-store, navigate your way around 4,000 of the world’s most premium brands over 1 million square feet and 7 floors.”
  21. 21. RELATIONSHIP CONTEXT Customer scoring Which customers are most likely to buy?
  22. 22. FOCUS SALES EFFORTS ON THOSE THAT ARE READY TO BUY The different situations of customers and prospects should be recognized. Some are just doing initial browsing, while others are seriously thinking about buying. To optimize sales results we need to distinguish between customers in different phases of the buying cycle. Automated lead nurturing programs can be used for customers that are not quite ready yet. That allows us to focus scarce sales resources on customers most likely to buy. Image: www.smallbizwithkids.com
  23. 23. Scoring leads in order to find customers that are ready to buy ”Lead scoring is a sales and marketing methodology for ranking leads in order to determine their sales-readiness. You score leads based on the interest they show in your business, their current place in the buying cycle and their fit in regards to your business.” Image: Marketo – The definitive guide to lead scoring
  24. 24. RELATIONSHIP CONTEXT Predicting needs What will each customer likely need next?
  25. 25. PROPENSITY WHICH CUSTOMERS ARE LIKELY TO BUY SOMETHING, LEAVE OR DO OTHER SIGNIFICANT THINGS? THROUGH PREDICTIVE MODELLING TARGETING CAN BE MADE MORE EFFICIENT. THIS HAS A POSITIVE EFFECT ON BOTH THE BOTTOM LINE AND ON THE CUSTOMER EXPERIENCE.
  26. 26. PERSONALIZE MAKE COMMUNICATION MORE RELEVANT BY ADAPTING IT TO THE NEEDS AND CONTEXT OF THE INDIVIDUAL CUSTOMER.
  27. 27. RELATIONSHIP CONTEXT Segmentation based on context How can we add value to the customer experience?
  28. 28. MAPPING THE CUSTOMER JOURNEY WILL HELP TO DEVELOP THE SERVICE EXPERIENCE IN MORE DETAIL SEGMENT 1: The classic family traveler goes on holliday with the family and children. The scenario illustrates high , low and neutral emotional points. FAMILY They want certain services that make traveling with children easier and These all represent a potential customer experience design opportunity. that create unforgettable experiences for the whole family. TRAVELER PRETRAVEL TRAVEL POSTTRAVEL BEHAVIOR RESEARCH BOOK PREPARE LEAVE STAY RETURN REMEMBER SHARE Look for inspiration Efficiently book Look forward to Travel to Enjoy the Travel back home Enjoy memories of Share experience and plan the trip and pay the trip trip destination destination experience with friends CUSTOMER SCENARIO DESCRIPTION Hears about Collates the Reads about the Checks in at the Relaxes at the hotel Packs and checks Discusses Tells friends about experiences from package (pricing etc.) destination airpot out from hotel experience and experience friends Enjoys local memories with family Makes Tells friends about Excited about attractions Leaves for the Shares photos via Receives reservation own plans flight to destination airport and checks in Looks at photos email or uploading to communication Eats out at hotel or from trip photo sharing site Wants to include Plans activities at Solves local restaurants Sad about flying Resarches and personal requests in the destination unexpected problems home Enjoys stuff bought Gives feedback via compares destinations own order during transit Excited about on trip tour operators online online Receives shopping opportunities Solves questionaire Pays the communication Finds bus and unexpected problems Order print photos Unsure about reservation travels to hotel Goes on trips to during transit or album Positively surpised where to travel Asks questions nearby attractions by offer for new trip Receives (GOL, contact center) Meets Arrive at airport Thinks about the Excited about confirmation Finnmatkat guide Taking photos of and travel home experience by him/ attractive price offer Prepares for family and sights herself Unsure about traveling by packing etc. Checks in at hotel Unpack Chooses travel details Solves unexpected destination and plans Receives Enters own hotel problems (with guide) ENJOYMENT own holliday information about room changed travel details Solves problems + with hotel/room –
  29. 29. A SEGMENT OF ONE. NEW PLAYERS FOCUSING ON ADDING VALUE TO THE CUSTOMER CONTEXT ENTER OLD MARKETS. THEY BREATHE LIFE INTO THE MARKET BUT MAY ALSO SHAKE UP THE VALUE CHAIN. + ”runtastic Roadbike is your comprehensive bike app for your smartphone. The integration of heart rate, cadence, and speed sensors lets you get more precise tracking and analysis of your biking”
  30. 30. RELATIONSHIP CONTEXT Value based segmentation Who are our most valuable customers?
  31. 31. value Segmenting customers based on Most valuable Most growable customers: Retain customers: Grow Marginal customers: Business as usual Unprofitable customers: Dismiss or lower cost Cost to serve Customer value segments Current value Potential value Image: Peppers & Rogers group
  32. 32. Developing customer STRATEGIES CUSTOMER ISSUE BUSINESS CHALLENGE with reasons to stay Understand me and provide me Retain high value customers (e.g. Loyalty recognition, Next be st action) purchase more Provide me compelling reason to Broaden the relationship Remarketing) trig gers, (e.g. Next best action, Behavioral t, competitive offers Understand me and make relevan Acquire the right customer (e.g. Exclude high defectors, Debt risk, Matching customer type) Improve margin of Can I be satisfied with less to sel f-service, Raise prices) (e.g. Identify, Communicate, Steer unprofitable custmers
  33. 33. ANOTHER PERSPECTIVE ON CUSTOMER VALUE ENGAGEMENT Interactions € € € € CUSTOMER VALUE Money spent
  34. 34. What next? What does it take to introduce contextual marketing?
  35. 35. TO SUMMARIZE THERE ARE MANY WAYS TO IDENTIFY CUSTOMER CONTEXTS – USING ONLY ONE IS NOT ENOUGH BUSINESS Personalisation Value Proposition NEED / Targeting management development CONTEXTUAL INDICATOR RECOMMENDATION ENGINE TRANSACTIONAL / VALUE BEHAVIORAL PROPENSITIES DEMOGRAPHICS / GEOGRAPHY LIFECYCLE ATTITUDINAL NEEDS Useful Sometimes useful Not useful on its own
  36. 36. INVEST IN DATA 10011001010011101001100100011001100111001100011001 101001001100101001110100110010001100110011100110001 101001001100101001110100110010001100110011100110001 Good data is like the ears of a sales man. Without it you 101001001100101001110100110010001100110011100110001 have no clue what the customer needs. Integrate traditional customer profile data with real-time behavioral data from all channels in order to UNDERSTAND the need and REACT to the context .
  37. 37. Real-time segmentation – the here and now For relevance to be meaningful, it must be as close as possible to real- time.  JUST LIKE BREAKING NEWS, RELEVANCE HAS A SHORT SHELF-LIFE and has its greatest value at the moment something occurs. 
  38. 38. REACT IN REAL-TIME RELEVANT TIMELY INTERACTIONS ARE POSSIBLE ON A GRAND SCALE ONLY THROUGH AUTOMATING PROCESSES.
  39. 39. CREATE BIG EMOTIONS “ I've learned that people will forget what you said, Apple. Zappos. Net-a-Porter. people will forget what you did, but people will never forget how you made them feel. ” Maya Angelou, american poet 42 avaus.fi website
  40. 40. Thank you! Tom Nickels Senior advisor / Avaus Consulting +358 40 5443348 / tom.nickels@avaus.fi

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