Operations

The Secret to Healthy & Happy (Customer) Relationships …and lots of them

the-secret-to-healthy-&-happy-(customer)-relationships-…and-lots-of-them

Today’s the big day. 

You’ve marketed yourself in the best way possible, put yourself out there, and if all goes well, you score a new customer. They take a tour of your site, opt in for email, and even check out some of your reviews. With all that mounting tension, the moment arrives and they finally make a purchase. You’re thrilled. 

You’re thrilled but wondering if the feeling is mutual?

Okay, okay. So that’s not really how it goes, but if we’re being honest, the dance between businesses and customers actually is a lot like dating. And chances are that when it comes to your customers, you’re looking for lifelong connections — just like in your personal relationships.  And if you’re not, well, you should. 

Why?

Studies show that roughly 65% of your business is likely coming from existing customers and by increasing customer retention by just 5%, you can increase profits by anywhere from 25-95% (SmallBizGenius, G2). 

When it comes to your customers, you should be looking to marry (not date) them, but the problem lies in how well this whole dating analogy stands up. Maybe you have a bad date and the relationship turns sour. Or, even worse, you think things are going well but you end up ghosted. The bottom line? Just like in the dating game, taking the time to understand your customers is key to owning the relationship. 

Doing this on a 1:1 basis is relatively simple, but in the world of eCommerce, owning and maintaining the customer relationship must be done at scale. And we’re here to help. 

  1. Getting to know you: the basics of segmentation
  2. Taking it to “the next level”: personalization 
  3. In it for the long haul: Say ‘I do’ to data 

1. Getting to know you: the basics of segmentation 

First thing’s first. What is segmentation and why does it matter? Segmentation is the process of breaking down your customer base into buckets that can help you make strategic decisions on how to engage them (like who’s most at risk of churn or which customers have the highest lifetime value). Doing so allows you to pull back the veil of anonymity for each customer so you can get extremely targeted in how you engage them. Customers today expect a 1:1 experience. Segmentation makes that possible.

There’s lots of ways you can segment your customers. Here’s are the four main types: 

  • Behavior – How has your customer engaged with your brand? (e.g., RFM. We’ll dive more into this in point #2 below). 
  • Demographic – What basic identifiers do you know about your customer (gender, age, geographic location, etc.)?
  • Socio-Economic – What is their socioeconomic status? Are they married or single? What is their income? What do they do for a living?
  • Psychographic / attitudinal – This one’s a bit tricky, but essentially gets at the attitudes of your customer? What do they think or believe? As you can imagine, this one is difficult to measure and track, but extremely important to your brand and how you’re messaging to your customers. 

Check out the video below for a deeper dive into customer segmentation best practices.



2. Taking it to “the next level”: personalization 

Now that you’re thinking about the basic areas of segmentation, you’ll want to dive in a little bit deeper so you can start to create targeted engagement strategies. This is where understanding behavioral data becomes very important. In particular, we’re talking about RFM. We’ve covered this one before (read the full blog here), but we’ll touch on it again here because it’s that important. Why? If you can zero in on a customer’s RFM score, this will be a huge indicator of whether or not they’ll come back and buy again from you. Nailing that gets you one step closer to that everlasting customer love. 

To refresh your memory, RFM stands for: 

  • Recency (when was the last purchase?)
  • Frequency (how often?)
  • Monetary (how much?) 



When segmenting your customers, you’d typically break these buckets down even further into several subcategories for analysis. When all is said and done, this process will amount to hundreds of combined segments to track and manage. That’s overwhelming.

Here’s what we recommend instead:

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When working with our customers, we recommend using the Recency Frequency method instead, which looks a little something like the image above.  

We break R (recency) into three categories: 

  1. Active: last purchase <90 days ago
  2. Lapsed: last purchase >365 days ago
  3. Churning: last purchase >90 days ago)

For F (frequency), we do the same by breaking it into three categories: 

  1. Single Buyers:  purchase
  2. Multi Buyers: 2 purchases
  3. High Value Customers: 3+ purchases

What results is a very simple, but powerful, matrix to understand key groups (or segments) of your customers. This allows you to get very strategic about which groups are more critical to engage and how. 

3. In it for the long haul: say ‘I do’ to data 

If it isn’t obvious by now, a deep understanding of your customers is absolutely essential to making them stay. But there’s no need to get desperate. If love really is in the details, then data is the secret to happy, healthy, and long-lasting customer relationships. At Daasity, we’ve got a dashboard for that. 

Last month, we launched our Retention Performance Dashboard which is designed specifically to increase the lifetime value of your customers. We’ve pulled in the metrics that matter most to help you assess customer behavior and improve segmentation and personalization efforts to turn shoppers into raving fans and increase revenue. Sound too good to be true? It’s not. 

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The retention dashboard pulls in the most important metrics including:  

  • Month-to-Date performance by customer segment
  • Sales and Customer Count by segment
  • Top product by customer segment
  • YoY customer segment movement

We pull in all of your customer data, break it down into easy to map segments and pull together a single look of the most critical insights for your business.

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While we know this isn’t going to help you nail the dating game in your personal life, there’s likely some important overlap. When it comes to turning new customers into lifelong customers, data is key to obtaining a deep understanding of what makes them tick. Relationships are hard, but with a little attention, effort and maintenance, you can make it to ‘I do’ ;-).

Special thanks to our friends at Daasity for their insights on this topic.

About the author

Steve Hutt

Steve has entrepreneurship in his DNA, starting in the early days of online commerce when he achieved Power Seller status through his eBay store. This propelled him to become a co-founder of VisionPros.com, a contact lens and eyewear retailer. With a successful exit from his startup, he embarked on his next journey into agency work in e-commerce and digital strategy.

Currently, Steve is a Senior Merchant Success Manager at Shopify Plus, where he helps identify, navigate, and accelerate growth in the complex world of commerce.

To maintain his competitive edge, Steve also hosts the eCommerce Fastlane Podcast and Shopify Founder Stories, a top-rated twice-weekly podcast where he interviews Shopify Partners and subject matter experts who share the latest marketing strategy, tactics, platforms, and must-have apps, to help Shopify brands improve efficiencies, grow revenue, profit, and lifetime customer loyalty.

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