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Segmentation and membership levels

When designing your loyalty program, segmenting your customer base by membership level should be considered. This will give you insight into the degree of loyalty of each individual customer, while automated communication can be adapted based on which segment they belong to.
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January 31, 2023

Segmentation

The term refers to dividing a customer base into different groups with similar needs, desires, and/or purchasing patterns. The purpose of this is to develop a customized marketing strategy for each segment, so that marketing from your company is expected to meet the needs of various customers. Your customers expect to receive relevant communication, while you should aim to avoid sending unwanted content. Impersonal and general newsletters are "everywhere" and can neither be said to be interesting to the customer or particularly sales promoting.

A loyalty program allows you to segment your customer base by membership level. The division can be based on several parameters, including purchase amount, frequency of purchase, age group, gender, and average shopping cart. With such a division, you ensure that automated communication is tailored to the recipients.

The size of bonuses and offers from the customer club should be scaled according to the membership level. By doing this, long-term relationships are rewarded and your customers are encouraged to be loyal to your brand. Upgrading customers´ membership level should therefore be the goal.  

Non-Members

This segment refers to customers who are not yet members of your loyalty program. You generally have very little insight into their preferences, and no opportunity to communicate with them when they are not visiting your location.  

You should try to establish a personal relationship with these customers, so that the process of building loyalty can begin. The first step in this process is data collection and active consent. Welcome benefits are an effective means of obtaining consent and thus recruiting new customers to your loyalty program.

New Members

The first segment consists of customers who recently consented as members of your loyalty program. You are building loyalty and insight into this segment with each revisit, so that communication becomes increasingly tailored.

A general recommendation is to include birthday offers in loyalty programs. This is a form of personal communication that is often well received and can be used in nearly all industries. This contributes to creating a steady stream of activity throughout the year while building loyalty with the recipients.

Mid-Segment

The "Mid-Segment" refers to the customers you have acquired medium to high levels of loyalty from. Here you have both insight into preferences and purchasing patterns, so that automated communication through your loyalty program is largely relevant.

In this segment, offers should be more personalized and generous than those offered to non-members. This will encourage customers to continue their relationship with your brand and maintain their loyalty.  

Your Ambassadors

The top segment represents your most important and valuable customers. These should be well taken care of. This can be done, for example, by offering exclusive information, invitations to exclusive events, and special offers. This type of special treatment is an important tool for retaining these customers.

Communication to your ambassadors should be tailored to the purchase frequency, as it is important not to give the impression that you are "pestering" them.

In this segment, customers often have a personal connection to your brand. Their opinions and feedback are therefore highly valuable and should be listened to. The most loyal customers are a valuable resource when they contribute to word-of-mouth marketing, that is, they themselves recommend your business to their social circle.

The Purpose of Segmentation

The insight from your loyalty program should be used to design personalized campaigns. In this way, you ensure that the products you propose to customers are tailored to their shopping patterns and preferences. Relevant and personal communication is well received by your customers and is therefore an important driver for repeat visits and further relationship building.

Segmenting the customer base is an effective measure to avoid sending unwanted communication. A loyalty program gives you the insight you need to do this, as well as automating the sending of relevant content to the different segments that exist in your customer base.

Interested in learning more about loyalty programs? Click here to read more.