Finding Customers Who Will Weather This Storm: Customer Segmentation in a Down Economy
November 11th, 2008 by Chris HerrickWith today’s news peppered with articles about the possible demise of Circuit City, the sinking Dow, and the continued decline in consumer spending, many companies are concerned about how their customers are going to respond to the tough times ahead. Several online retailers are already going down the discount path to try and get customers to spend their money early– well before their credit dries up. I’m sure many of you have already been hit up like I have with numerous discounts from shops that don’t typically give discounts – I’ve been surprised by the recent emails I’ve received from the likes of JCrew, a company that never seems to discount their merchandise.
The question now is what kind of customers are worth pursuing – who is going to continue to shop during the economy and which customers are going to buckle down and close their wallets. Perhaps more relevant for marketers, who needs to be enticed to buy with discounts and who will buy no matter what happens in the near future. Well, a recent Retail Consumer Dynamics Study paid for by Acxiom helps shed a little light on who they predict will continue to buy in the down economy.
Of the many customer groups they highlight, the top “rebounder” segments were the most interesting. Acxiom predicts that high income households who are highly opportunistic in terms of what they buy and what they will spend (“Savvy Shoppers”) will be more likely to spend in the near term than any of their other segments. The survey suggests that this segment’s purchases will also be the most likely to be online (20%). The two other segments in the top category consisted of young affluent shoppers (one with kids, one without) who are worried about the economy, but have yet to curb their high end retail purchases.
The conclusion of the study isn’t earth-shattering: in general, customers who have more money to spend are less likely to be driven by discounts than consumers who are budget conscious, but the report suggests that’s not all to the story and segmenting your own house file can provide you with the insight you need to get the most of out of holiday shoppers. In particular, the report shows that segmenting is necessary for:
- Protect your customer base by determining the proper pricing, assortment, and services to keep your strong customers interested
- Capture new customers by pinpointing the demographics that matter in high performing segments
- Targeting your communications to individual customers and increase your sales by tailoring the message and the channel to resonate best with each group.
With a shortened holiday season and the worsening economy, it makes sense to implementing a segmentation strategy soon.
Tags: customer segmentation
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