They discussed the many changes retailers have seen over the last several years, how it has impacted the way they interact with their customers, and how segmentation is an incredibly powerful tool for retailers looking to build stronger relationships with their customers. The following is a recap of their conversation.
Changes in supply chain and inflation
There are many interesting things happening with the supply chain, particularly due to the pandemic, and a lot to reflect on regarding where it started and where we are now as a result. The original issue with supply chain occurred when the virus hit China and they started to temporarily shut down factories. That shut down slowed production and it was difficult to get goods.
What came next is a little more complex — in a typical recession, incomes and spending will decline, and manufacturers will slow production expecting a softer demand. However, in this recent situation, incomes and spending increased and manufacturers lacked enough parts to keep up with the demand.
If you break the economy down into goods and services, the services side of business (such as travel, hair or massage appointments, restaurants, etc.) completely fell apart. This left more consumers spending more money on goods — in fact, 20% more than pre-pandemic — and we expect that trend to continue.
With this situation in mind, how do we think about it from a consumer marketing perspective?
The impact on consumers & how businesses can act on it
Consumers, whether they are newcomers to an industry or someone that has been served for a long time, have become extremely adept at getting their needs met. We are also seeing consumers doing whatever they can to find a product they want. Because of this, online business has exploded.
"What we see in our customer base is more business moving online, more business moving to ‘buy online, pickup in store’ — what that ultimately means is a lot of data collection."
- Scott Buelter
Most bike dealers have a swath of new customers that have been part of this influx for the last two years, but they also should consider their central core of consumers that are their “best” customers. For instance, 80% of a business’ revenue comes from approximately 20% of their customer base. How do you consider serving this core of customers versus the far-flung, one-and-done customers?
However, businesses can’t merely assume that 20% of customers will come in and buy. Instead, it should be an active pursuit, where if they know they have limited inventory coming in, they should purposefully target the best customers who have purchased in the past.
This can be accomplished by building a VIP list to inform them that new products are coming in, you thought they would be interested, and they can be added to a pre-sale list. It can even be funneled more granularly based on the type of product. Even if they’re not going to buy it, they are going to increase their loyalty to your business.
The power of segmentation
We’ve said for a long time that people will pay for good service. And if a dealer knows the business, will offer information, and treat customers like individuals, consumers are less likely to mind price increases that come along with inflation and supply chain adjustments.
So, how do you ensure you’re delivering five-star service, providing customers with what they need, and gaining long-term loyalty?
Some differences in individuals can have large effects on their differences in buying behavior. Age, income, gender, and geographical data can all be a determinant of what a consumer will do, but an even more powerful use of segmentation for small and mid-size businesses is through behavioral data. The consumer action that they’re taking tells you something about them that’s substantive.
For example, perhaps they’ve purchased a particular product from you before or they’re browsing your website. What are they looking at on your website? How much time are they spending there? Is what they’re looking at indicating some sort of change in purchase behavior?
If you are sending them marketing pieces, how are they interacting with that? Are they opening it or clicking on it? When you know this information, you create automations and customer journeys. An automation is the trigger point that tells you they’ve raised their hand and what they’re interested in, and you can then follow up with a cadence of relevant messaging.
How segmentation will continue to evolve
These ideas around segmentation are going to continue to accelerate. For example, only the largest, high-end chains in the restaurant industry were doing customer marketing. Nobody else had access to customer information. But this has taken a 180-degree turn.
More restaurants have a very good idea of who their customer is and who is loyal because of online ordering. Customers are giving them their personal information, and they are willing to do so for the convenience and good service. The same idea exists in all types of retail and other consumer-based businesses. Customers are receptive to building a relationship online to get what they need when they need it.
Our technology is also significantly better than 10 or 15 years ago, and now it only takes 45 minutes to get all of your data flowing into a platform like Ascent360. It can sound complicated, but just as “complicated” as Zoom is technologically, it is quite simple to execute for the end user.
At Ascent360, we’re helping small and medium-sized businesses of all kinds realize how easy it is to use your data to identify your customers, segment them into unique groups, and send personalized 1:1 messages at scale. But don’t just take our word for it, request a free, custom demo and watch your data come to life!