Visualizing Customer Segmentation and Lifetime Value Analysis
Following Garr Reynolds’ opening keynote is no easy act but Stephen McDaniel, author of Freakalytics, held his own. And, distilling the complex subjects of customer segmentation and lifetime value is not a simple task. Stephen used a few tips from Garr and involved the audience early with a question asking who here is involved with customer segmentation. Surprisingly most all hands went up.
Stephen told the story of a niche winery who sold almost exclusively direct to consumer. They were struggling to know which marketing programs were most effective. From a high level, tasting rooms drove the most sales, however they knew there was more to the story and Stephen showed them how the data could tell.
Stephen helped the winery’s marketing team segment the wine customers into the wine enthusiast, casual wine drinker, high roller, and luxury estates. Once the data was segmented they looked at it again. They found that though both the casual and wine enthusiast segments purchased more in the tasting rooms, the luxury group bought more as a result of the newsletter and the high rollers were most impacted by personal calls made by the winemaker.
We also got to see who was most impacted by discounts. After segmentation, the data showed that the wine enthusiasts were most persuaded by discounts and the data told more. It showed the best discount range to be 15-20%. Fascinating stuff! Makes me long for a nice glass of Pinot.
The data visualizations Stephen showed using Tableau were so easy to understand and he says, easy to create. Stephen left us with the following suggestion: go ahead and take a shot at segmentation, even if it’s not perfect. You probably won’t be able to go from A to Z in the first iteration, but you will definitely learn a lot and improve over time.