August 31, 2008

Multichannel Forensics A to Z: Segmentation

Catalog marketers love to look at "RFM" segmentation (recency, frequency, monetary). Online marketers seem to gravitate to new/existing users/buyers. Both are examples of segmentation, the process of grouping customers together on the basis of past purchase or visitation activity.

Online marketers typically segment customers for the purpose of analyzing conversion rates. The industry is too new to have evolved to a point where segmentation is used to predict the future on a widespread basis.

Catalog marketers segment customers to analyze performance of catalog mailings. Catalog marketers developed clever ways to segment customers in ways that allow them to derive additional intelligence. For instance, the concept of "current season" or "current quarter" segmentation schemes allow the marketer to measure the percentage of customers who purchased across each segment.

Those of us who practice Multichannel Forensics segment customers for the sole purpose of visualizing the future. Based on what customers did in the past, we want to see how our business will evolve over the next five years.

The Web Analytics community has the biggest opportunity to embrace Multichannel Forensics. We clearly need better visibility into how different website users are likely to evolve in the future. Going forward, we're likely to see more segmentation of online visitors using Multichannel Forensics. In particular, we'll segment Google visitors apart from other search engines and customers who visit the site on their own, measuring the long-term impact of Google on our business.

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