Customer Segmentation: Channel
Are you from around here?
As a growing business, your customers will come from many different channels. Some may respond to your advertisements, others will take calls from your sales team and still others will be referred by your existing customers. The larger your business, the more diverse your customer acquisition channels will become.
Segmenting your customers by acquisition is critical to your business because it’s the only way to understand the relationship between Customer Acquisition Cost (CAC) and Lifetime Value (LTV). Each channel will have a different CAC and the customers you reach through different channels will have different LTVs. How will you know if a channel is cost effective if you don’t track both the CAC and the LTV for customers acquired through that channel?
That sounds important. How do I do that?
Luckily, there are many tools that will allow you to track and segment your customer by acquisition channel. For web based applications, there is a common convention called UTM parameters which are provided by many customer acquisition channels to help you understand where users came from. Most analytics tools can use these parameters to segment your customers for you automatically! If you need even better tracking or if you use channels where UTM parameters are not available, there are complete channel attribution tracking services that specialize in this segmentation.
Segmenting your customers by their acquisition channel is a necessity if you spend money on customer acquisition to make sure you know whether you are getting your money’s worth!
Next Week: We’ve spent a few weeks talking about the past, but what about the future? There are a lot of ways that data can help you predict what will happen next in our series on Predicting the Future.
Quote of the Day: “It’s always good to remember where you come from and celebrate it. To remember where you come from is part of where you’re going” – Anthony Burgess