The Data-Driven Approach

Delve Goes Deeper: Data-Driven Segmentation

Learn how our 4-phase methodology helps maximize customer segmentation capabilities and drive ROI.

This is the third post in our Data-Driven Segmentation series, exploring the methodology and business applications behind DELVE‘s approach to customer segmentation. 

As discussed earlier in this series, DELVE has found that Demographic- and Psychographic-Based Segmentation (pertaining to values, opinions, interests) leads to the most useful and robust results. Based on this knowledge, DELVE takes a 4-phase approach to every Data-Driven Segmentation project:

Phase 1: Demographic/Psychographic Data Append

During this first phase, demographic/psychographic data is processed and joined to customer level data. A starting slate of up to 20 variables to be used in segmentation are selected from the demographic/psychographic data based on a combination of business intuition and preliminary exploratory data analysis. 

The resulting appended data is used for both Data-Driven Segmentation and any additional modeling projects and will be sent back to the brand for ingestion into their own environment.

Phase 2: Machine Learning Clustering

Clustering for Data-Driven Segmentation is performed using the K-means algorithm, a machine learning algorithm which finds complex patterns in data. This algorithm groups customers based on their demographic data—customers who are more similar are located closer together and customers who are more different are located further apart. 

At the conclusion of phase 2, all customer records are assigned to one of the defined segments and prepared for further analysis. 

Phase 3: Segment Profiling and KPI Analysis

After Customer Segments are identified, the work of uncovering the customer personas, KPIs and behavioral trends of each segment begins. Detailed analysis of customers in each segment is necessary to pave the way for effective segmentation-based marketing strategy. 

Phase 4: Marketing Strategy Development and Implementation

Robust customer segmentation is the starting point for a mature personalization and targeting strategy. It is important to note that segmentation in of itself does not provide all of the answers. Instead, it offers a framework for improved testing and optimization that leads over time to significantly more effective marketing across all stages of the customer life-cycle, from prospecting through to loyalty. 

Ready to take your ads, and your business, to the next level? Get in touch with the DELVE team today.