Guest Post: Using Cohort Analysis to Increase RelevancyMay 31, 2012 - by Marketing Team
Welcome to the first in a series of posts where we speak with industry leaders. Here, they’ll share their experiences in marketing and how they’re continuing to iterate in an ever-changing industry. Up first, Cassie Lancellotti-Young, Senior Director at High Table.
[Note: Cassie’s also hosting a Skillshare class at Sailthru this Wednesday, June 13. She’s graciously opened up a few extra spots. Sign up here.]
SAILTHRU: At Sailthru, we’re not afraid to take a controversial stand on some key issues. For instance, we often say that not only is mass marketing dead, but so is segmentation, mostly because we believe the goal should be to tailor every piece of communication to the individual. Your reaction?
CASSIE LANCELLOTTI-YOUNG: Sailthru’s “customers are not segments” doctrine is hands-down my favorite tenet of the company’s core beliefs. Targeted one-to-one messaging should be table stakes at this point; all marketers should be making best efforts to deliver hyper-targeted content at all times. Cohort analysis, a marketing optimization tactic that compares the behavior of a group of customers that share particular characteristics (e.g. sign up date, age, revenue generation), empowers a marketer to get some context that can help drive that one-to-one marketing. For example, maybe an analysis indicates that if repeat customers do not purchase for 60 days, they are highly likely to be lost. I can then extrapolate that I should build trigger emails to try to “win back” those customers, but the messaging in those emails should be as specific as possible.
ST: What makes you such a big advocate of using cohorts and segmentation as a marketing strategy?
CL-Y: The reality is that most businesses aren’t Facebook; most suffer from a very severe lack of engagement. Targeted content is a wonderful idea in theory, but oftentimes you know very little (if anything at all) about your end users. Cohorts are all you have. Using them, you may discover that a massive spike in membership in January is grossly underperforming in terms of activation and engagement. Then you recall that the company was featured in The New York Times that day, in an article that miscommunicated your brand. So, segmenting out that cohort, you can launch an engagement campaign focused on member education.
Segmentation can be a very powerful way to plug a leaky bucket where people who have been less active are falling out, but you shouldn’t use it for its own sake. You can also use cohort analysis to assess the qualities/attributes of users that are most valuable to you (whether it’s age, registration source, etc.). In this light, cohort analysis is incredibly powerful for acquisition teams.
ST: What are the biggest challenges you’ve had in trying to create and implement a segmentation strategy?
CL-Y: Two main things come to mind here. One, Deciding where to draw the line. Should I be concerned about a repeat customer not coming back to my site after 90 days? Or should I be worried after just two weeks? This question is, to a large degree, very product-specific (i.e. high-priced goods vs. a utility product vs. an ongoing engagement platform), but it’s also a function of what your historical data is telling you. You can’t just start firing off emails to people because you’ve determined that they are at-risk customers; you first must understand the key metrics of your business to really understand what makes a customer good, great, bad, etc. Two, rallying resources and company buy-in. I like to say that the best marketing solutions aren’t tech-light, they are tech-right. Even the most technical marketers will need buy-in and support from their engineering or data science teams to implement a targeting strategy. The key here is to work alongside a management team that really understands the value of one-to-one and knowing the customer; as a marketer, this type of mindset amongst your peers is absolutely critical.
ST: What advice do you have for marketers who are looking for ways to be more relevant to their customers?
CL-Y: I recommend that people think about what’s happening with their customers through three lenses:
1) Your channels – are you presenting relevant content in email and on your website? Are your subject lines working? Are people engaging with email via clicks and on site via page views, time on site, etc.?
2) Your “business ecosystem” – what else is going on with your business? Are you under-staffed in customer service and slow to respond to customer inquiries? Has your site been crashing frequently? Oftentimes marketers fail to think about the less trackable/more offline experiences users might be facing.
3) Your industry – what is going on in the industry and the world? How does the media view your industry right now? How do holidays impact your business? Is your business impacted by the economic climate? (this last one was incredibly important at TheLadders during the credit crisis and subsequent unemployment surge in 2008.)
Also, think about where you’re hitting your consumers. You may want to breed loyalty with a high-volume customer, but that person is notorious for not opening emails (or worse yet, opting out – ugh!). Think about other messaging touch points…maybe it’s an overlay or alert window when they come back to your website for the first time in a while, maybe it’s re-targeting out on the web (and please, don’t do the creepy thing where you show me the shelves I was just looking at – give me a coupon or something), or maybe it’s just squeezing a LOT more into the subject lines to protect yourself against the non-open downside (Gilt Groupe, anyone?).
When are you are strategizing how to be relevant, think about all of these factors, not just how to get your users to open their emails.
Cassie is a senior director of Gerson Lehrman Group’s HighTable beta product, a new online community for business professionals to connect and share expertise, where she helps guide business growth through analytics and business intelligence. Previously, Cassie served as Vice President of Marketing at Savored and held several marketing and partnership roles at TheLadders.com. Cassie began her career on Wall Street as an analyst at Citigroup. She is a master teacher with Skillshare and a regular speaker at industry events. Cassie holds a bachelors degree from Duke University and an MBA from the Tuck School of Business at Dartmouth.