INMA_A01.QXD

1 Identify customer lifecycle groups
Figure 4.14 illustrates this approach. As visitors use online services they can potentially pass
through seven or more stages. Once companies have defined these groups and set up the
customer relationship management infrastructure to categorise customers in this way, they
can then deliver targeted messages, either by personalised on-site messaging or through e-
mails that are triggered automatically by different rules. First-time visitors can be identified
by whether they have a cookie placed on their PC. Once visitors have registered, they can
be tracked through the remaining stages. Two particularly important groups are customers
that have purchased one or more times. For many e-retailers, encouraging customers to
move from the first purchase to the second purchase and then on to the third purchase is a
key challenge. Specific promotions can be used to encourage further purchases. Similarly,
once customers become inactive, i.e. they have not purchased for a defined period such as 3
months, they become inactive and further follow-ups are required.

2 Identify customer profile characteristics
This is a traditional segmentation based on the type of customer. For B2C e-retailers this
will include age, sex and geography. For B2B companies, it will include size of company
and the industry sector or application they operate in.

3 Identify behaviour in response and purchase
As customers progress through the lifecycle shown in Figure 4.14, by analysis of their data-
base, the marketer will be able to build up a detailed response and purchase history which
considers the details of recency, frequency, monetary value and category of products pur-
chased. This approach, which is known as RFM or FRAC analysis, is reviewed in more detail
in Chapter 6. See Tesco.com Case Study 4 for how Tesco targets its online customers.

4 Identify multi-channel behaviour (channel preference)
Regardless of the enthusiasm of the company for online channels, some customers will
prefer using online channels and others will prefer traditional channels. This will, to an
extent be indicated by RFM and response analysis since customers with a preference for

STRATEGY FORMULATION

Figure 4.14Customer lifecycle segmentation

7 Purchased active: e-responsive

6 Purchased inactive

5 Purchased once or n times

4 Registered visitor

3 Newly registered visitor

2 Return visitor

1 First-time visitor