Many of our clients leverage their customer and loyalty data with segmentation analysis. Briefly, when appending customer information to a lifestyle segmentation dataset, companies can determine which segments shop and spend the most at their stores and online. This is also widely known as ‘psychographics’.
For many companies, this analysis lets them understand how their online shoppers behave and consume their offerings differently than their typical in-store consumers. Some can extend these insights to customers who buy online for store pickup, and what items they were able to upsell when at the physical store.
All this data can be leveraged with lifestyle segmentation to gain far deeper insights into customers. Which segments shop your products/services most often? Which spend the most money and on what items? How much is the average upsell at stores for each segment? With the pandemic’s influence shifting so many sales to online, having insights into how those segments’ behaviors are changing is critical to omnichannel success now and in the future.
A recent study by ICSC Research shows that 70% of consumers like the changes in online purchasing and hope they remain. Our ways of shopping have likely changed forever. If your customer segmentation profile was last done before or at the early stages of the pandemic, it’s likely your insights are not fully capturing the extent to which purchases moved online. Shop online with home delivery, order online with curbside pickup, and order online and pickup in store, have all grown significantly in the past year. Understanding which lifestyle segments prefer which model, and how to maximize revenue from that stream, is powerful insight.
Why now's the right time
At TAS, we expect many retailers are reassessing their brick-and-mortar footprint by leveraging updated segmentation data to calibrate strategy and optimize store size. Occupancy is one of the largest expenses to the P&L, so updated consumer insights are critical to renewal, relocation, and new site decisions. For many, traditional means of modeling are out the window at this point. There’s no true sales data to model from and no certainty of what's on the horizon.
Segmentation data provides valuable insight that can mitigate some risk associated with real estate and portfolio decisions, while offering simple levers to pull that could impact the P&L. Whether this is to change SF allocations to include more ship to store options, last-mile delivery from the store, or an expanded store count of smaller footprints, understanding how to best engage your customers now and in the future should be a focus of retail executives everywhere.
The investment in refreshing this data is seemingly insignificant when weighed against the benefit of remaining competitive and gaining significant advantages by understanding how customers’ spending behavior has changed. If you have solid customer data and haven’t recently completed a customer segmentation analysis, you’re sitting on potentially lucrative untapped resource.
TAS and lifestyle segmentation
TAS regularly performs lifestyle segmentation analyses for our clients. We can append spending details to go beyond traditional segmentation and dive into propensity to spend by core segments. If you would like any information, insights, or best practices in how to do so, reach out to TAS for more details.