In this installment of Data Onboarding 101 we will discuss the concept of “segmentation” as it relates to marketers who want to use of their offline data online. At LiveRamp, we define segmentation as: the entire process of reading the file, importing the data, constructing segments based on the values in the file, and enabling the customer to define dynamic segments derived from raw data.
How does a marketer begin to segment offline data?
A marketer’s primary goals with regard to segmentation should be to optimize the bidding experience and to intelligently execute display ad creatives. At LiveRamp, we advise marketers to use the information they already know about their customers from past direct mail or e-mail marketing campaigns as a starting point for segmentation. Most marketers create segments by default based on these campaigns, such as sending a promotion only to customers in a certain zip code or only e-mailing customers who have purchased an item within the last six months.
The number of segments you create can vary widely by industry group and depends on the type of data aggregated. It is not uncommon for typical retail clients to carve their customer base into an average of 10 different segments. However, other clients have created up to 150 segments. It is best to include as much information as possible and let your data on-boarder serve as a guide for what segments are appropriate.
What are the segmentation guidelines?
LiveRamp can receive files in any format (CSV format is the most common). We understand that flexibility is important to marketers so we created the “Segmentation Console”, a product designed as a step-by-step guide for our clients as they segment their offline data with LiveRamp. The segmentation console is critical for giving marketers the flexibility of sending raw data and creating segments from that or creating combinations of segments. Additionally, the data can be segmented at varying levels of granularity (i.e. an “age” column or a “20-25” and “26-30” column).
Many marketers often ask about the number of customers it takes to create a solid segment. The answer largely depends on a marketer’s specific use case, but most industry participants agree that a minimum of 100 customers are needed to mitigate privacy concerns. However, segments containing around 1 million or more customers perform best.
The most common segments created with offline data are last interaction, value score, or time since last purchase. To discover the best performing offline segments, refer back to the primary goals for segmenting customer data in the first place. Marketers need segmentation to inform bidding decisions within an ad exchange, and higher value customers warrant a higher bid. Therefore your segmentation process should answer the basic question, “What is each customer worth?”
Marketers can serve a number of creatives to many different people. It is imperative that your segmentation practices incorporate basic differences is customer tastes and styles as they relate to your product (for example, segmenting customers who purchase children’s dolls and those who purchase children’s trucks).
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