UNIT 4

L1
Segmenting customer based on behaviour and demographics-
Customer segmentation is the process of dividing a company's customer into groups based on
shared characteristics. The goal is to better understand customers, communicate with them,
and tailor marketing and sales efforts to their needs.
There are four key types of market segmentation that you should be aware of, which
include demographic, geographic, psychographic, and behavioural segmentations.

Note-
Tailor marketing (customized marketing.)-Focusing on need and demand of small group
instead of large group.

Here are some benefits of customer segmentation:

 Improved customer understanding: Businesses can better understand their customers' needs
and pain points.
 More effective communication: Businesses can more effectively reach and communicate with
customers.
 Better targeting: Businesses can tailor messaging to a buyer's unique needs.
 Increased customer loyalty: Businesses can boost empathy, retention, and loyalty.
 Improved sales: Businesses can improve seller effectiveness.
Types of Segmentation:

1. Demographic Segmentation: This divides the market based on variables such as age,
gender, income, education, and family size. It helps businesses target specific groups
based on measurable characteristics.
2. Geographic Segmentation: This categorizes customers based on their location, such
as countries, regions, cities, or neighborhoods. It allows companies to tailor their
marketing strategies to fit local preferences and conditions.
3. Psychographic Segmentation: This focuses on the psychological aspects of
consumers, including their values, attitudes, interests, and lifestyles. It helps brands
connect with consumers on a deeper emotional level.
4. Behavioural Segmentation: This divides the market based on consumer behaviour,
such as purchasing habits, brand loyalty, usage rates, and responses to promotions.
Understanding how customers interact with products can guide marketing strategies
and improve customer retention.

NOTE-
Demographic: Age, gender, income, education.
Geographic: Location, region, urban vs. rural.
Psychographic: Values, interests, lifestyles.
Behavioral: Purchasing habits, brand loyalty, usage frequency.

Using these segmentation types effectively can enhance targeting and improve overall
marketing strategies.

Tools for Segmentation

A customer segmentation tool is a type of software that lets you automate the entire
segmentation process by: Pulling customer data from multiple channels. Analysing massive
 amounts of customer data, such as age, location, needs and wants, shopping habits, and
more – depending on what's relevant to your business.

 CRM (Customer Relationship Management) Software: Tools like Salesforce, HubSpot, or

Zoho can help collect and analyse customer data.
 Analytics Platforms: Google Analytics (Provides website traffic data that can be used
for audience segmentation) and social media insights offer valuable behavioural data.
 Surveys and Feedback Forms: Direct customer input can provide additional demographic
and behavioural insights.
When choosing a segmentation tool, you can consider things like:
 Ease of use: How intuitive the user interface is and how easy it is to use
 Integration: Whether the tool is compatible with your existing systems
 Customization: Whether the tool offers customization options
 Data accuracy: Whether the tool provides accurate and reliable data
 Analytics: Whether the tool offers real-time analytics, visualization tools, and
customizable reports

Implementation

 Data Collection: Gather data through various touchpoints (web analytics, social media, and
surveys).
 Analysis: Use analytical tools to identify trends and create segments.
 Tailored Marketing Strategies: Develop personalized marketing campaigns based on the
characteristics and behaviours of each segment.
L2
Tailoring marketing strategies for different customer segments

Tailor marketing also known as customized marketing. It focusing on need and demand of
small group instead of large group.

Tailoring marketing strategies for different customer segments is essential for maximizing
engagement and conversions.

A tailored marketing strategy is a customised plan that is specifically designed to meet the unique
needs of your business. It considers your business goals, target audience, and develop a plan that will
help you reach your marketing objectives.

Tailored Marketing Examples

Below are a few examples of how businesses have used personalized marketing to their advantage.
Amazon’s Personalized Recommendations
Amazon is a prime example of a company that excels in tailored marketing. By picking data from
customer browsing history, past purchases, and search queries, Amazon delivers personalized
product recommendations to each user.
These recommendations are tailored to the individual’s preferences, making it easier for customers to
find products they are likely to purchase. This personalized experience contributes significantly to
Amazon’s success, with research showing that 35% of the company’s revenue comes from its
recommendation engine.
Netflix’s Tailored Content
Netflix uses a similar approach to Amazon by tailoring its content recommendations based on user
behavior. By analyzing viewing history, ratings, and search activity, Netflix suggests movies and TV
shows likely to interest the user.
This tailored approach keeps viewers engaged and encourages them to spend more time on the
platform. According to Netflix, its personalized recommendations save over $1 billion annually in
customer retention costs.

How to Make a Tailored Marketing Strategy

Creating an effective, tailored marketing strategy involves several key steps. These
steps help ensure the content resonates with the target audience and aligns with their
unique preferences.
1 Market Research

 Surveys and Feedback: Gather data on customer preferences and pain points.
 Competitor Analysis: Understand how competitors target different segments.

2 Collect and Analyse Customer Data

The first step in developing a tailored marketing strategy is to gather and analyze customer data. This
includes information such as demographics, purchasing behavior, website interactions, and social
media activity. Tools such as Google Analytics, customer relationship management (CRM)
systems, and social media analytics platforms can provide valuable insights into customer
preferences.
Data collection should not be limited to surface-level information. To create a truly tailored marketing
experience, businesses need to understand their customers’ deeper motivations and pain points. This
can be achieved through surveys, feedback forms, and customer interviews.
3 Segment Your Audience
Once you have gathered sufficient data, the next step is to segment your audience. Segmentation
allows you to divide your customer base into smaller groups based on shared characteristics.
For example, you could segment customers by age, location, interests, or buying behavior. Creating
distinct customer segments allows you to tailor your marketing messages to resonate with each group
more effectively.
4 Develop Personalized Content
After segmenting your audience, develop content that speaks directly to the needs and preferences of
each segment. This could include personalized emails, targeted ads, or dynamic website content that
changes based on the visitor’s behaviour.
It’s essential to strike a balance between personalization and privacy. While customers appreciate
tailored experiences, they expect brands to respect their privacy and handle their data responsibly.
Ensure your marketing efforts comply with data privacy regulations such as the GDPR (General Data
Protection Regulation).
5 Automation Tools
Automation plays a crucial role in executing tailored marketing strategies efficiently. Marketing
automation tools such as HubSpot, Marketo, and Mailchimp allow businesses to send personalized
messages at scale. These tools can help deliver the right content to the right customer at the right time
by automating email campaigns, social media posts, and ad targeting.

6 Monitor and Optimize Your Strategy

The final step in creating a tailored marketing strategy is monitoring its performance and continuously
adjusting as needed. Use analytics tools to track the success of your campaigns, measure engagement,
and identify areas for improvement. Tailored marketing is an ongoing process, and strategies should
evolve based on changing customer preferences and market trends.

Example Strategies by Segment

  Young Adults: Focus on social media campaigns, influencer partnerships, and engaging
content like videos and memes.
 Families: Highlight convenience, savings, and safety in your messaging, using family-
oriented platforms and community events.
 Seniors: Emphasize trust, simplicity, and value, using clear communication through email
newsletters or print ads.
What are the Benefits of Tailored Marketing?
 Enhanced Customer Loyalty
 Improved Customer Retention
 Better Customer Insights

L3
Evaluating and effectiveness of E-commerce and social media campaigns

Evaluating the effectiveness of e-commerce and social media campaigns is crucial for
understanding their impact and optimizing future strategies. Here’s a structured approach to
assess these campaigns effectively:
1. Set Clear Objectives

 Define specific, measurable goals for your campaigns. Common objectives include increasing
sales, boosting website traffic, growing brand awareness, or enhancing customer engagement.
2. Key Performance Indicators (KPIs)
A performance indicator or key performance indicator is a type of performance measurement.
They help track progress, identify areas for improvement, and drive strategic decision-making.

o E-commerce KPIs: measuring the performance of an online store and

understanding customer behaviour. Some key e-commerce KPIs to consider:
 Conversion Rate: The percentage of website visitors who make a purchase.
Calculated as (number of purchases / total visitors) x 100.
 Average Order Value (AOV): Average amount spent per transaction.
Calculated as total revenue divided by the number of orders.
 Total Revenue: The total income generated from sales over a specific
period.
 Website Traffic: The total number of visitors to the website. Can be broken
down by source (e.g., organic, paid, social).
 Social Media Engagement Rate: Measures how actively users interact with
your content on social media platforms.

o Social Media KPIs: measuring the effectiveness of your social media strategy and
understanding audience engagement. Here are some key social media KPIs to track:
 Likes and Reactions: The number of likes or reactions your posts receive,
indicating how well content resonates with the audience.
 Comments: The number of comments on posts, reflecting audience
interaction and engagement.
 Shares: The number of times content is shared by users, showing its reach
and popularity.
 Reach: The total number of unique users who have seen your content. It
helps assess the overall visibility of your posts.
  Follower Count: The total number of followers on your social media
accounts. Tracking growth over time helps assess overall brand popularity.
 Conversion Rate: The percentage of social media visitors who complete a
desired action (e.g., signing up, making a purchase). Calculated as
(conversions from social media / total social media visitors) x 100.
 Response Rate: The percentage of messages or comments that receive a
response. A high response rate can indicate effective customer engagement.
 Response Time: The average time taken to respond to inquiries or
comments. Faster responses typically lead to higher customer satisfaction.
3. Analytics Tools

 Utilize analytics tools to track performance:

o Google Analytics: Monitor website traffic, conversion rates, and user behavior.
o Social Media Analytics: Use built-in analytics tools on platforms like Facebook
Insights, Twitter Analytics, and Instagram Insights to track engagement and
performance.
o E-commerce Platforms: Use tools provided by platforms like Shopify or
WooCommerce for tracking sales metrics.
4. Customer Feedback and Surveys

 Gather direct feedback through surveys or reviews to understand customer satisfaction and
perception of your campaigns. Use tools like SurveyMonkey or Google Forms.
5. A/B Testing

 Test different elements of your campaigns (e.g., ad copy, visuals, CTAs) to determine which
variations yield better results. Analyse the outcomes to inform future strategies.
6. Evaluate Customer Journey

 Assess how customers interact with your brand across different touch points. Analyse metrics
like time spent on site, navigation paths, and drop-off points in the sales funnel.
7. Social Listening

 Monitor social media platforms for mentions of your brand, products, and competitors. Tools
like Hootsuite or Brandwatch can help analyze sentiment and engagement.
8. Competitor Analysis

 Compare your campaign performance against competitors. Evaluate their strategies,

engagement levels, and audience responses to identify areas for improvement.
9. Regular Reporting

 Create regular reports (weekly, monthly, or quarterly) that summarize campaign performance,
insights gained, and recommended actions for optimization.
10. Iterate and Optimize

 Based on the data collected, continuously refine your strategies. Focus on successful tactics
and learn from less effective ones to improve future campaigns.

L4
A/B testing and conversion rate optimization

A/B testing and conversion rate optimization (CRO) are crucial components of improving the
effectiveness of your marketing efforts, particularly in e-commerce and digital marketing.
A/B Testing

A/B testing, or split testing, is a method where you compare two versions of a webpage,
email, or other marketing assets to determine which one performs better in terms of a specific
goal (e.g., conversion rate, click-through rate).

Steps to Conduct A/B Testing:

1. Identify the Goal:

o Clearly define what you want to achieve with the test, such as increasing sign-ups,
boosting sales, or improving engagement.
2. Choose an Element to Test:
o Select a specific element to modify, such as:
 Headline
 Call-to-action (CTA) button (color, text, placement)
 Images or visuals
 Page layout or design
 Pricing or offers
3. Create Variants:
o Develop two versions (A and B). Version A is typically the current version (control),
while Version B includes the changes you want to test.
4. Randomly Split Your Audience:
o Use a tool to randomly assign visitors to either version A or B, ensuring that the test
is fair and unbiased.
5. Run the Test:
o Allow the test to run long enough to gather statistically significant data. Avoid
making additional changes during this period.
6. Analyze the Results:
o Use analytics tools to evaluate performance based on your defined goal. Look for
significant differences in metrics (e.g., conversion rates, click-through rates).
7. Implement Findings:
o If one version significantly outperforms the other, implement the winning variation. If
results are inconclusive, consider further testing or modifying your approach.
Example of A/B Testing:

Example1:

A real-life example of A/B testing can be found in the approach used by Amazon to optimize
its product pages.

Scenario: Product Page Optimization

Objective:
Amazon wanted to increase the conversion rate of its product pages, specifically focusing on
how the layout and presentation of product information affected customer purchasing
decisions.

A/B Testing Steps:

1. Define the Objective:

o Increase the number of purchases per product page view.
2. Choose the Variable to Test:
o Amazon decided to test the layout of the product description section. They had two
variations:
 Version A (Control): The original layout with a standard text description and
bullet points.
 Version B (Variant): A new layout that included larger images, highlighted
key features in a different format, and integrated customer reviews more
prominently.
3. Create Variations:
o The two versions were developed, ensuring the only difference was in the
presentation of the product information.
4. Determine the Audience:
o Amazon randomly segmented its traffic so that half of the visitors would see Version
A and the other half Version B.
5. Set Up the Test:
 o The A/B testing was set up using Amazon's internal testing tools to track user
interactions and conversion rates.
6. Run the Test:
o The test was run for a sufficient duration to gather enough data, allowing Amazon to
observe user interactions and sales for both versions.
7. Analyze Results:
o After the testing period, Amazon analyzed the data, comparing the conversion rates
of both versions. They found that Version B led to a significant increase in
conversions.
8. Draw Conclusions:
o The results indicated that the new layout was more effective in engaging customers
and driving sales. Amazon decided to implement the changes from Version B across
relevant product pages.
9. Iterate and Test Again:
o With the initial success, Amazon continued to iterate on its product pages, using A/B
testing for various elements, such as button colors, call-to-action phrases, and
additional customer testimonial placements.

Example 2

Another notable example of A/B testing comes from Netflix, particularly in its approach to
user engagement through its recommendation system.

Scenario: Improving Content Recommendations

Objective:
Netflix aimed to increase viewer engagement by optimizing how it presented content
recommendations to users on its homepage.

A/B Testing Steps:

1. Define the Objective:

o Increase the number of shows and movies watched per user, aiming to boost overall
engagement and retention.
2. Choose the Variable to Test:
o Netflix decided to test different thumbnail images for the same movie or show. They
had two variations:
 Version A (Control): The original thumbnail image used for a particular title.
 Version B (Variant): A new thumbnail image that emphasized different
aspects of the show (e.g., character focus, action scenes, etc.).
3. Create Variations:
o Multiple thumbnails were created for several titles, ensuring that each thumbnail
was distinctly different in style and imagery.
4. Determine the Audience:
o Netflix randomly segmented its user base, ensuring that a similar demographic mix
was exposed to both versions.
5. Set Up the Test:
o The A/B test was implemented using Netflix’s sophisticated analytics system to track
user interactions, such as clicks and views.
6. Run the Test:
 o The test was conducted over several weeks, allowing enough time to gather data on
how users interacted with the different thumbnails.
7. Analyze Results:
o Netflix analysed the data, looking at metrics such as the click-through rate (CTR) and
the number of hours watched for titles associated with each thumbnail. They found
that some thumbnails significantly outperformed others.
8. Draw Conclusions:
o Based on the results, Netflix identified which thumbnails led to higher engagement.
They determined that certain images resonated more with specific audience
segments.
9. Iterate and Test Again:
o With successful thumbnails identified, Netflix continued to test new images for
other titles and incorporated user feedback to refine their recommendations
further.

Example 3

Scenario: Optimizing the Website Landing Page

Objective:
Optimizely aimed to increase the number of visitors who signed up for their free trial by
optimizing their landing page.

A/B Testing Steps:

1. Define the Objective:

o Increase the conversion rate of visitors signing up for the free trial.
2. Choose the Variable to Test:
o They decided to test the headline on their landing page. The variations were:
 Version A (Control): The original headline focused on general benefits of the
product.
 Version B (Variant): A new headline that was more specific about how the
product could solve a particular problem for the user.
3. Create Variations:
o The two versions of the landing page were designed, with the only major difference
being the headline.
4. Determine the Audience:
o Traffic was randomly split between the two versions, ensuring that each group was
statistically similar in terms of demographics and behavior.
5. Set Up the Test:
o The A/B test was implemented using Optimizely’s own platform, allowing them to
track user interactions effectively.
6. Run the Test:
o The test was conducted over a set period, gathering sufficient data on how users
responded to each headline.
7. Analyze Results:
o After the test period, Optimizely analyzed the conversion rates for both versions.
They measured how many visitors completed the signup process for the free trial.
 8. Draw Conclusions:
o The analysis revealed that Version B significantly outperformed Version A in terms of
conversion rate, indicating that the more specific headline resonated better with
visitors.
9. Iterate and Test Again:
o Following the success of the new headline, Optimizely continued to conduct A/B
tests on other elements of the landing page, such as call-to-action buttons, images,
and layout, to further optimize their conversion rates.

L5
Conversion Rate Optimization (CRO)

Definition: CRO is the process of increasing the percentage of visitors who take a desired
action on your website, such as making a purchase or signing up for a newsletter. It
encompasses a variety of strategies, including A/B testing.

Key Strategies for CRO:

1. Analyze User Behavior:

o Use tools like Google Analytics, heatmaps (e.g., Hotjar, Crazy Egg), and session
recordings to understand how users interact with your site. Identify drop-off points
and areas of friction.
2. Improve User Experience (UX):
o Ensure your website is user-friendly, mobile-responsive, and easy to navigate. A
streamlined UX can significantly impact conversion rates.
3. Optimize Landing Pages:
o Create targeted landing pages that align with specific campaigns or ads. Ensure they
have clear messaging, strong CTAs, and minimal distractions.
4. Enhance Trust Signals:
o Include testimonials, reviews, security badges, and clear return policies to build trust
and reduce buyer hesitation.
5. Refine Your CTAs:
o Experiment with different CTA texts, colors, sizes, and placements. Ensure CTAs
stand out and clearly convey the action you want users to take.
6. Leverage Scarcity and Urgency:
o Use tactics like limited-time offers, countdown timers, or low-stock alerts to
encourage immediate action.
7. Personalization:
o Tailor content and offers based on user behavior, demographics, or location.
Personalized experiences can increase relevance and engagement.
8. Regular Testing and Iteration:
o Continuously test different elements on your site, from copy to design. Use insights
from A/B tests to inform ongoing optimization efforts.

Steps to Implement CRO

1. Set Clear Goals
o Define what actions you want users to take (e.g., purchases, sign-ups, downloads).
o Establish specific, measurable objectives for each goal (e.g., increase sign-ups by
20% in three months).
2. Analyze User Behavior
o Analytics Tools: Use tools like Google Analytics to track user behavior, conversion
paths, and drop-off points.
o Heatmaps: Tools like Hotjar or Crazy Egg can show where users click and how far
they scroll, providing insights into engagement.
3. Conduct User Research
o Surveys and Feedback: Gather insights directly from users through surveys,
interviews, or feedback forms to understand their needs and challenges.
o User Testing: Observe real users navigating your site to identify pain points or
confusion in the user experience.
4. Identify Areas for Improvement
o Conversion Funnel Analysis: Map out the user journey from arrival to conversion,
identifying stages with high drop-off rates.
o Content and Design Review: Evaluate the effectiveness of your copy, visuals, CTAs,
and overall design in guiding users toward conversions.
5. Create and Prioritize Hypotheses
o Based on your analysis, develop hypotheses about changes that could improve
conversion rates (e.g., "Changing the CTA color will increase clicks").
o Prioritize these based on potential impact and ease of implementation.
6. A/B Testing
o Design Variations: Create variations for specific elements (e.g., headlines, images,
CTAs) to test against the control version.
o Run Tests: Implement A/B tests, ensuring a statistically significant sample size and
duration for reliable results.
o Analyze Results: Evaluate which version performed better based on your defined
metrics.
7. Implement Changes
o Once a winning variation is identified, implement it site-wide.
o Document changes and the reasoning behind them for future reference.
8. Monitor Performance
o Continuously track the impact of changes on conversion rates and other relevant
metrics.
o Use this data to inform further optimization efforts.
9. Iterate and Optimize
o CRO is an ongoing process. Regularly revisit your site for new opportunities for
improvement.
o Keep testing new ideas, elements, and strategies to continually refine user
experience and drive conversions.