Lovehoney – the joy of segmentation

Lovehoney has quickly risen to become the world’s largest online retailer specialising in adult toys. For Lifecycle20, Chief Operations Officer Debbie Bond explained the source of its success and the brand’s ability to rise to meet individual customer needs and demands.

A year of lockdown measures has seen a rise in the demand for personalized customer experiences. As Debbie noted, “I was talking to someone the other day who told me that after toilet rolls, the most sought after items in lockdown turned out to be dogs and adult toys. Luckily, we had the toys”.

Lovehoney saw a significant influx of new customer profiles, with new traits, preferences and habits. For the Lovehoney team, it showed that segmentation and personalization are more important than ever before. For her keynote speech at Lifecycle20, Debbie shared her top five tips for retailers looking to effectively segment audiences.

Relevancy is essential; so do the research

The best recipe for life-time customers is creating the right conversation, with the right products and content, that reflect a specific user’s needs and intentions. This is why segmentation is essential for highly relevant shopping experiences.

However, as Debbie points out, segmentation has to be used carefully. “Over 30% of our customers shop with us anonymously – so we need to be careful in balancing our customers’ desire to be anonymous with delivering an optimized shopping experience. In addition, our customers have a vast array of needs. If we get our messaging wrong, we can scare off a customer for life. Or if it is too boring, we may lose their excitement and potential repeat purchases. And repeat purchases are essential for growth.” 

To accurately understand how customers are feeling, Lovehoney invests heavily in attitudinal segmentation. This means using surveys and data to understand why customers shop, and are engaging in particular categories. “This understanding underpins our entire customer acquisition and media strategy” added Debbie. “My top tip would be to never underestimate how much people will share, and how much they like talking about things and products they are passionate about”. 

Let data drive the creative

Lovehoney’s attitudinal research helped identify the right creative solutions that drive purchases. With the insight gained, Lovehoney could craft custom retention marketing campaigns which spoke to where consumers were in their journey; from browsing, to consideration through to purchase. 

Segmentation even helped power an OOH geo-targeting campaign. As different parts of the UK were placed under differing lockdown restrictions, billboards were deployed to reach customers and reflect their situation with a light-hearted message. 

Understand how your customers shop

Behavioral segmentation is the most common type of segmentation used – and one of the most effective. Debbie explained that retailers will look at the data gathered through shopper activity, from browsing to content engagement, account creation and purchasing. 

This is the most useful type of segmentation for CRM. It allows retailers to assign customers into distinctive segments, and then make tailored decisions for each segment on content and product promotion – and how much they should spend to engage them. 

Debbie highlighted that this segmentation can give retailers almost too many variables. From product preferences to average order value or profitability – it’s tempting to include all these variables in one big behavioral segment. But the more variables you have, the less clarity you have on what is in a segment, and less control over targeting those specific behaviors. 

To avoid this, Lovehoney creates multiple single segments, and uses models which can be layered on top of each other. For example, when Lovehoney invests in a campaign which re-engages a high-value lapsing female customer who has low-engagement, it is easily possible to select from each segment and combine this with their product preferences to create a highly relevant campaign. 

Segmentation is not a silver bullet; choose your tools wisely

If segmentation is done incorrectly, it adds a huge amount of extra work and complexity for retailers – with very little payback. It’s important to have the right tools for the job. Automation and dynamic content allow retailers to send the right content to the right customer at the right time. “Ometria’s platform is essential for us here” Debbie explained. “We build the templates and then let the clever AI deliver personalized experiences for our customers – all without drowning our teams in overwhelming manual tasks.”

Depending on where users are in their journey, and what segment of user ‘type’ they fall into, Lovehoney uses dynamic content to speak to individual user needs. Part of this offer is driven by Ometria’s Product Recommendation algorithm, which intelligently suggests products based on user habits and browser behaviour, as well as turning our basic broadcast emails into highly targeted and relevant communications. All of this is achieved while streamlining strategies and minimizing additional work for often lean marketing teams. “Combining these tools allows us to level up our scale and personalisation – but without overloading our team” Debbie summarised. 

Get the balance right

There is a delicate balance right between delivering highly tailored experiences that encourage long term relationships with customers and also understanding that privacy comes first.  “It’s about keeping your customer at the centre of your strategy” Debbie pointed. Data can tell us when to target consumers and with what – but it’s important not to trap audiences in an endless cycle of automated communications. This is why it is important to have broader, more generalist content alongside the more targeted messaging.