Piecing together post-pandemic customer segments

As retailers work to recover revenue following lockdown, they must not rely on past models and assumptions when formulating new marketing strategies. Shopping behaviour has changed significantly, and will continue to evolve in both the short and long-term. In these unstable circumstances, marketers will need to frequently review their approach to customer relationship management, and adjust to new developments. However, any shift in strategy must be accompanied by a thorough understanding of how segments within the customer base have evolved as a result of the pandemic. Identifying new behavioural profiles is critical to ensure that budgets are deployed where they are most needed, and where they can be most effective.

Changed habits

A particular source of concern is how existing customers have changed their shopping habits. At Go Inspire Insight, we began assessing customer purchasing early on during the lockdown. We analysed the behaviours of a pool of five million customers, in partnership with multichannel businesses that temporarily closed their physical stores. We found that existing customers tended to fall into three categories. The first category, which we named Loyal Stalwarts, continued to spend despite some unevenness of basket mix. The second category (Grown Apart) spent less, and though some of their store spend migrated online, it was not enough to compensate for the downturn. The final group, Trial Separation, refers to in-store customers who didn’t switch to online, and stopped spending completely.

Retailers must now intelligently re-establish relationships with these customers based on their ‘new normal’ profiles. Previous in-store devotees tend to be high-value high-loyalty customers, so regaining their attention is a matter of urgency. Going beyond promotions and incentives, retailers may need to offer a new type of customer journey, and adapt to changed priorities. For instance, one retailer’s post-pandemic offering includes personal after-hours shopping trips, online beauty appointments and entertainment for queuers. Marketers should also keep an eye on footfall to sales conversion now that stores have reopened. Though fewer customers may be coming in-store, it is likely that a higher percentage are ‘on a mission’ to buy, rather than simply window-shopping. In short, 50% lower footfall may not mean 50% lower sales.

New beginnings

New customers must likewise be assessed for future potential. As consumers spent more time online during lockdown or shopped for different things – home and garden renovations were a notable trend, for instance – they discovered new brands. However, since new recruits may not deliver the same value as previously established customers, businesses must be careful not to waste resources. Marketers should not rush to offer discounts to newcomers without distinguishing between those in the Marriage of Convenience segment, and those who are Chance Lovers. Shoppers in the former category may leave after taking advantage of offers, while shoppers in the latter segment are high spenders who may continue spending in the long-term if properly nurtured.

Familiar faces

This is not to say that all new customer segments will be unfamiliar. Go Inspire Insight’s analysis identified new customers with the expected pre-pandemic profile, the My Usual Type segment. However, marketers should continue to avoid assumption, and evaluate how this group is behaving in the current circumstances. Another familiar group was comprised of previous customers who returned to trusted brands during lockdown (Together Again). These reactivated customers should be welcomed back with rewards for their incremental spend.

Tailored analysis

In addition to behaviour profiles, businesses must take a view of trends across a range of different factors such as age, channel usage and purchasing categories. Go Inspire Insight’s analysis of these factors produced many interesting insights, which can feed into marketing activity immediately. A closer look at age, for instance, showed that this factor had no bearing on whether customers switched from store to online, while assessing purchasing preferences showed that most store-only shoppers failed to migrate online. The impact of marketing also evolved, with traditional sales emails seeing a lower open and click-through rate; meanwhile, emails with an editorial focus (e.g. ten tips for growing tomatoes) had a four-fold increase in click-through rates, causing a sales spike in the product offered.

By making it clear that businesses cannot proceed as before, the emerging segments identified by this study are intended to be a starting point for marketers. A bespoke analysis of their own customer base is therefore essential to identify where efforts should be focused, but also where new opportunities lie. They must begin by reviewing the relevance of existing customer segmentation, and assessing how spending patterns have changed during and after lockdown. As well as identifying profiles that represent the most value and loyalty, assessing longer term potential is essential for sustainable business recovery. This knowledge will be a foundation for carefully considered communications, aiming to retain valuable new customers, and tempt back former loyal shoppers.

by Beth Powell, managing director at Go Inspire Insight

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