August 27, 2021
Customer segmentation in retail: 6 powerful client case studies
Are you still talking to all of your customers the same way? In today’s hyper-competitive retail environment, that just won’t cut it. You need to use customer segmentation to send each customer unique communications and offers. Here are 6 case studies demonstrating the value of customer segmentation.
Customer insights and segmentation can help you unlock a new competitive advantage, identify opportunities to grow customer lifetime value, and optimize campaign performance.
By employing data-driven customer segmentation, you can improve your performance across every sales channel and customer touchpoint. Customer data platforms (CDPs) like Lexer can help you manage your data effectively, create valuable customer segments, and automatically update audiences across other retail systems.
In fact, Lexer is the CDP of choice for leading brands like Quiksilver, Igloo, Nine West, Rip Curl, Supergoop!, and more. Here are 6 case studies from brands and retailers who have used Lexer's customer segmentation tools to implement data-driven retail strategies and drive results.
Customer segmentation case studies for acquisition
Black Diamond
An excellent customer segmentation example as it pertains to customer acquisition is the case of retail company Black Diamond. The business's primary aim was to grow its direct-to-consumer business to improve personalization, acquisition, and retention.
The challenge: Black Diamond had a healthy wholesale business, but a small DTC team without a dedicated IT team. The lack of an IT team meant there was no resourcing to provide actionable customer insight and execute on growth goals. They needed to scale their direct-to-consumer channels without the resources of a major enterprise team.
The solution: Black Diamond partnered with Lexer to overcome these challenges. Lexer focused on providing customer data and gathering insights into customer behaviors. Together, Lexer and Black Diamond built an agile 5-phase strategy that included:
- Collecting and analyzing historical customer data
- Creating targeted lead generation campaigns
- Deploying high-value lookalike audiences for acquisition
The results:
- Black Diamond was able to cut their cost-per-acquisition (CPA) by 50%.
- 2x increase in return on ad spend (ROAS)
- 1101% increase in revenue per email when targeting lapsed customers.
Brand Collective
With the onset of Covid-19, Brand Collective was looking for a way to drive online sales as the performance of their traditional brick-and-mortar stores had significantly been affected.
The challenge: Brand Collective needed to pivot fast in order to drive online sales and engage a new wave of digital-first shoppers without losing momentum. They were faced with building a new strategy and therefore needed a more robust understanding of their customers to so they could engage those who were increasing digital-first shoppers.
The solution: Lexer enabled Brand Collection to access robust holistic customer data in real-time. Lexer built targeted segments across all marketing channels, including their email, mobile, and search. These yielded an action plan that helped the brand take on new opportunities and avoid the risks of the ever-evolving marketplace.
The results:
- 220% increase in ROAS
- 2x increase in new customer acquisition
- 5x increase in revenue from paid channels
Customer segmentation case studies for lifetime value growth
Rip Curl
The global surfing brand Rip Curl needed intelligent segmentation to help them identify high-level customers and achieve growth goals while staying within budget.
The challenge: The Rip Curl team wanted to see an increase in impact while minimizing its digital campaign budget. In order to do so, they needed smarter segmentation and better campaign orchestration across channels.
The solution: Rip Curl partnered wth Lexer's CDXP to help gain insights, perform advanced segmentation, and target high-value customers. Lexer also offered the ability to orchestrate omnichannel campaigns.
The results:
- 93% more revenue per segmented campaign (August performance)
- 15x higher revenue than benchmark for Lexer segments
- Significant customer lifetime value (CLV) growth through precision targeting
PAS Group
PAS Group wanted to significantly reduce ad wastage, re-engage lapsed customers, and create unique customer experiences.
The challenge: PAS Group operates within the highly competitive fashion and apparel industry and were focused on making their brands stand out against their competitors in order to drive revenue.
The solution: PAS Group used Lexer's CDXP to unify all of its customer data and focus on data-centric decision-making. PAS Group was able to segment its customer audiences and deliver targeted campaigns to recent and lapsed customers on paid social and email.
The results:
- 4x return on ad spend
- 18x overall return on investment
- Reduced ad wastage and increased revenue across multiple brand
Customer segmentation case studies for retention
Wondercide
Wondercide was focused on a marketing strategy that combing digital campaigns with more traditional direct mail in order to re-engage high-value customers.
The challenge: In order to execute effectively on a direct mail strategy, Wondercide needed to understand their customer retention metrics and measure what actually worked.
The solution: Wondercide used Lexer's CDXP to send out personalized direct mail postcards. The direct mail campaign targeting three key segments:
- Lapsed customers (last order 1-2 years ago)
- Inactive customers (no engagement in 2+ years)
- Opted-out customers (unsubscribed but purchased within the past year
The results:
- 600% overall ROI from the direct mail campaign
- 310% ROI for opted-out customers
- 203% ROI for inactive customers
- 155% ROI for lapsed customers
Mountain Khakis
Mountain Khakis was strategically focused on increasing holiday season sales.
The challenge: In order to target the right audiences, Mountain Khakis needed an in-depth understanding of their audience segments.
The solution: Using real-time insights from Lexer's CDP, Mountain Khakis launched a 'treat yourself' campaign targeting female gift-buyers during the post-holiday shopping window.
The results:
- 7.1x increase in sales 2-3 weeks post-campaign
- 5x return on ad spend from female customers
- 49% boost in sales heading into Christmas
- 47% boost in total customers
Effective customer segmentation begins with mastering your data
As a business, you need to lean on customer intelligence to orchestrate specific high-value customer segmentation.
Lexer’s customer data and experience platform provides you with customer insights tools, data enrichment tools, segmentation tools, and predictive analytics tools that helps your business identify and target the right audience. As the only CDP built for retail with native tools to support every customer touchpoint, we are well equipped to help you drive incremental sales from improved customer engagement.
FAQs
How much can customer segmentation actually improve ROI?
Real results from brands using Lexer's segmentation tools include a 220% increase in ROAS (Brand Collective), 18x overall ROI (PAS Group), and 600% ROI from targeted campaigns (Wondercide). Black Diamond cut their cost-per-acquisition in half while doubling ROAS. These results demonstrate that strategic segmentation can deliver 4-20x returns when executed with the right data and tools.
What's the difference between customer segmentation and customer personas?
Customer personas are fictional representations of ideal customers based on research and assumptions. Customer segmentation uses actual behavioral data to group real customers based on shared characteristics like purchase history, engagement, and lifetime value. Segmentation is more precise and actionable because it's based on what customers actually do, not what you think they might do.
Can customer segmentation work for both online and offline channels?
Absolutely. The most effective segmentation strategies are omnichannel. Lexer's CDP unifies online and offline data, allowing you to segment customers based on their complete behavior across ecommerce, retail stores, email, social, and more. This holistic view enables you to target customers through their preferred channels with consistent, personalized messaging.
Book a demo today to see how Lexer's powerful segmentation and personalization tools can help you drive incremental sales growth.
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