online grocery store segmentation presentation
TRANSCRIPT
ONLINE GROCERY STORECUSTOMER
ANALYSISWenyi Liang, Xinyu Liu, Natasha Smith, Pinfeng Zhao, Yang Zhao, Qimengyu Zhou
AGENDAMethodology
Customer GroupsCustomer Profiles
METHODOLOGY 1
METHODOLOGY
★ Behavior-based data★ We removed customers with only one order
Factor Analysis Cluster Analysis ProfilingIdentify Key
Variables
METHODOLOGYFactor
Analysis Cluster Analysis ProfilingIdentify Key Variables
Overall Spending Variables● Average total number of items per order● Average spend per order● Tenure● Incentive amount● Recency● Frequency
Spending Variables by CategoryPercentage of items by category per customer
● Household + Home Goods● Health & Beauty● Beverage● Pet● Baby● Fresh food
(produce + meat + seafood + deli)
● Grocery● Frozen● Dairy● Alcohol● Flowers
METHODOLOGYFactor
Analysis Cluster Analysis ProfilingIdentify Key Variables
Behavioral indicators:1. Stock-Up Shopper2. Focus on Home3. Frequent Loyalist4. Non-Perishables and Dairy
CUSTOMER GROUPS 2
CUSTOMER GROUPS
Loyal Shoppers One-Time Shoppers
Stock-up Shoppers
Fresh-Focused Shoppers
Quick Bargain Shoppers
Variety Shoppers
CUSTOMER PROFILES 3
PROFILE OVERVIEWS
1. Loyal ShoppersThe most loyal, frequent customers with the highest average spend, highest average item count and longest relationship.
4. One-Time ShoppersCustomers who have made only one purchase and have no identifiable purchasing patterns yet.
3. Stock-Up ShoppersOccasional shoppers stocking up on a lot of non-perishable items and avoiding fresh items.
2. Fresh-Focused ShoppersActive shoppers with higher income who prefer fresh foods and flowers and who avoid non-perishable products.
5. Quick Bargain ShoppersInfrequent, price-sensitive shoppers who mainly shop for dinner, buying a lot of fresh products and grocery items.
6. Variety ShoppersShoppers who buy a variety of items, but shop at a lower frequency and more recently started using the store.
LOYAL SHOPPERS PROFILE◉22% of the total population, 68% of the total revenue◉They spend the largest amount and purchase the largest number of items
on average for each order, but they do not need incentive to purchase.◉These highly frequent customers have longstanding relationships with the
store.
Average Spend per
Order
Average Items per
OrderIncentive Frequency Tenure Fresh
Purchases Beverage
Household + Home Goods
Purchases
$182.32Highest
62.9Highest
0Lowest
21.2Highest
342.6Highest
16.98% 1.7%Lowest
4.7%
LOYAL SHOPPERS MARKETING RECOMMENDATIONS
◉Develop a referral campaign to generate word-of-mouth promotions from the most loyal customers.
◉ The Loyal Shoppers are very satisfied with the store and thus are most likely to recommend it to their family and friends. Providing them with a shareable discount code would incentivize them to generate positive and powerful word of mouth recommendations. This is the most effective way to bring in new customers.
FRESH-FOCUSED SHOPPERS PROFILE◉ Relatively younger shoppers with a higher household income who shop
frequently and visited the store recently.◉ These fresh-focused shoppers spend lower-than-average amounts and purchase
fewer items than most other customers.◉ They prefer fresh foods, flowers and health & beauty products, but avoid
household items, home goods, beverages and frozen foods.
Average Spend per
OrderIncome Frequency Incentive Fresh
Purchases Flowers Beverage
Household + Home Goods
Purchases
$131Low 8.9 9.5
High-0.01 29.1%
Highest0.4% 1.7%
Lowest1.9%Lowest
FRESH-FOCUSED SHOPPERS MARKETING RECOMMENDATIONS
◉Provide these customers with more information about products, including nutrition facts and recipes, in order to increase their average spend per order from $131 (the second lowest) to $150.
◉Encourage them to buy products outside of the fresh departments. Use e-newsletters and pop-up advertisements to educate them of the full range of items carried in the store, especially household goods, beverages and non-perishable products.
STOCK-UP SHOPPERS PROFILE◉ The stock-up shoppers spend large amounts and purchase lots of items on each
trip, but only shop occasionally.◉ They are buying home-related goods, non-perishables and dairy items at
higher rates but are buying fresh items at below average rates.◉ While these customers have a relatively long relationship with the store, they
appear to only be using it for certain shopping occasions.
Average Spend per
Order
Average Items per
OrderFrequency Grocery
PurchasesFresh
PurchasesDairy
PurchasesFrozen
Purchases
Household + Home Goods
Purchases
$160.67High
54.3High
4.52 20.6%High
12.3% 8.3% 7.8% 6.3%
STOCK-UP SHOPPERS MARKETING RECOMMENDATIONS
◉Develop creative, discounted bundles of related household goods and fresh foods to increase the sales of fresh items.
◉ Emphasize the quality and freshness of the store’s fresh products to educate and reassure customers. If these customers recognize the store as a place to buy fresh items, they will have more purchase occasions with the store.
◉ Fresh food has higher margins, so driving more fresh food purchases can increase the overall revenue from these customers.
ONE-TIME SHOPPERS PROFILE◉These customers have only made one purchase, so we cannot accurately
determine their purchasing preferences or patterns. ◉ On their only visit, they spent an average of $133.50, which is less than other
customer segments, but they bought a similar number of items.◉These customers may be experimenting with online grocery shopping or
they may prefer another online store.
Average Spend per
Order
Average Items per
OrderFrequency Incentive Grocery
PurchasesFresh
PurchasesDairy
PurchasesFrozen
Purchases
$133.49Low
47.9 1Lowest
-4.2Highest
19.3% 19.9% 9.4% 6.1%
ONE-TIME SHOPPERS MARKETING RECOMMENDATIONS
◉These customers should be sent general coupons through email to encourage them to return to the site and make another purchase.
◉ Their purchase patterns are not yet known, so targeted coupons won’t work.◉The store will add a new page on the website that automatically detects
the visitor’s purchase frequency. If it detects a one-time customer, a “Welcome Back” page will reappear with incentives for them to redeem.
◉ This segment had the highest average incentive amount.◉A small increase in return users could have a large impact on revenue.
◉ This segment makes up 31% of the total customer base.
THANK YOU!
QUESTIONS?
APPENDIX 4
FACTOR ANALYSIS RESULTSFactor 1 Factor 2 Factor 3 Factor 4
Average Item Count per Order 0.94152 -0.08564 0.15684 0.05423
Average Total Spend per Order 0.91943 0.05235 0.17837 0.03358
% of Items Purchased - Household + Home Goods -0.0495 0.72454 0.06649 -0.14369
% of Items Purchased - HABA -0.10344 0.60673 0.0707 -0.02797
% of Items Purchased - Beverage -0.02397 0.38985 -0.02847 -0.01213
% of Items Purchased - Pet 0.05709 0.32152 0.00402 -0.06803
% of Items Purchased - Baby 0.00655 0.23754 0.05558 -0.02467
Frequency (Visits in last year) -0.02894 0.06826 0.91329 -0.04127
Tenure 0.16345 0.15723 0.48256 0.08636
Average Incentive 0.04621 0.00019 0.08977 -0.02129
Recency 0.02289 0.02925 -0.63477 0.07016
% of Items Purchased - Fresh Deli + Meat + Seafood + Produce -0.22157 -0.65704 0.03366 -0.35032
% of Items Purchased - Grocery -0.06513 -0.0689 0.01643 0.69267
% of Items Purchased - Frozen -0.09391 0.09759 -0.05539 0.6182
% of Items Purchased - Dairy -0.31208 -0.27656 0.12365 0.39656
% of Items Purchased - Alcohol -0.05044 0.0637 -0.00637 -0.17164
% of Items Purchased - Flowers -0.06095 0.00234 0.07744 -0.27086
CLUSTER ANALYSIS RESULTS
Cluster
All1 (Stock-Up Shoppers)
2 (Quick Bargain Shoppers)
3 (Fresh-Focused Shoppers)
4 (Variety Shoppers) 5 (Loyal Shoppers)
N 9,870 5,626 5,327 7,798 13,228 41,849
Factor 1 Mean 0.1609 -0.485 -0.339 -0.0262 0.2382 0
Factor 2 Mean 0.8958 -0.6222 -1.05 -0.2838 0.1864 0
Factor 3 Mean -0.664 -0.5328 0.2068 -0.7595 1.0865 0
Factor 4 Mean 0.3464 1.0507 -0.5633 -1.0099 0.1169 0
MEANS TABLE
Stock-Up ShoppersQuick Bargain
ShoppersFresh-Focused
Shoppers Variety Shoppers Loyal ShoppersOne-Time Shopperss
Total RevenueAverage Spend per OrderAverage Item Count per OrderLength of RelationshipFrequencyAverage Incentive AmountRecencyHousehold IncomeAgePercent of Items - AlcoholPercent of Items - BabyPercent of Items - DairyPercent of Items - FreshPercent of Items - FlowersPercent of Items - FrozenPercent of Items - BeveragePercent of Items - GroceryPercent of Items - Health & BeautyPercent of Items - Household + Home GoodsPercent of Items - Pet
713.1773500160.674570254.2621676
256.69868294.5172239-0.2041135
130.54184408.6811822
49.45074720.000983392
0.00201730.08324870.1234150
0.0000698800.07795150.04000490.20571320.02441390.06349790.0166437
502.4844880119.154673143.6853303
227.75666554.2140064-0.4459563
115.86686818.4786298
44.64944650.0005895240.000332610
0.12799660.1922696
0.0000311240.09269960.02090780.25316070.00589380.01875050.0054003
1252.49131.983719148.8347869
266.03022349.4507227-0.016895145.55359498.9111044
44.86179280.0011134
0.0004259120.10486670.2907680
0.0004837640.04168250.01691320.17067540.00598360.01912340.0036022
554.8742044136.488371249.8664643
211.37689154.0034624-0.2609515
119.23441918.8054988
48.09693880.0023856
0.0008102970.07183520.2288060
0.0005142620.03498220.02815440.13558700.01031990.03400780.0093762
3694.45182.318209662.8557204
342.606894521.1775023
020.59245548.9398224
50.66453330.00104700.00157110.09448290.1698016
0.0002392910.06234220.03117050.19456590.01697040.04746310.0121174
133.4949761133.494976147.9407249
186.60852311.0000000-4.1864999
186.60852318.7095617
46.34411890.00155830.00129590.09395620.1988225
0.0003732710.06088930.02835730.19262350.01309230.03858310.0091376
QUICK BARGAIN SHOPPERS PROFILE◉The quick bargain shopper spends the least amount, purchases the
fewest number of items and shops infrequently.◉They are price-sensitive, with a comparatively high average incentive
amount.◉This shopper buys frozen food, grocery and dairy.
Average Spend per
Order
Average Items per
OrderFrequency Incentive Grocery
PurchasesFresh
PurchasesDairy
PurchasesFrozen
Purchases
$119.15Lowest
43.68Lowest
4.21 -0.45High
25.3%Highest
19.2% 12.8%Highest
9.3%Highest
QUICK BARGAIN SHOPPERS MARKETING RECOMMENDATIONS
◉Develop a marketing campaign providing tasty, everyday recipes. Offer recipes that bundle fresh ingredients with grocery items to increase total trip spend.
◉Send out coupons in the late afternoon when these shoppers are thinking about going to the store for dinner.
◉ Quick bargain shoppers are price-sensitive, and coupons work as a reminders to increase their shopping frequency and item count.
VARIETY SHOPPERS PROFILE◉These customers buy a variety of items without a focus on particular
categories, and they shop less frequently. They make a small part of total revenue and buy an average number of items.
◉ They buy the lowest amount of dairy and grocery items, but buy large amounts of fresh items.
◉ They have a relatively short relationship with the store.
Total Revenue
Average Spend per
Order
Average Items per
OrderRecency Frequency Grocery
PurchasesDairy
PurchasesFresh
Purchases
$554.87 $136.49 49.9 119.23 4 13.6%Lowest
7.2%Lowest
22.9%High
VARIETY SHOPPERS MARKETING RECOMMENDATIONS
◉The store should send these variety shoppers e-mail reminders to encourage more frequent visits and maintain the relationship.
◉These shoppers should receive general coupons, such as a $5 discount on a purchase of $100 or more.
◉ This segment does not display a strong preference for category or food type from its buying behavior, so targeted coupons may not work as well.