Increasing Sales with Personalization or Segmentation

Increasing Sales with Personalization or Segmentation

Distribution is becoming a remote game. COVID-19 has forced many distributors to abandon face-to-face selling and instead sell exclusively through remote channels. However, before the pandemic, many distributors leaned on e-commerce and telesales reps to drive profits. As more distributors go remote, merely having remote channels is not enough to beat the competition. Distributors need active channels that can drive new sales instead of just passively take orders.

There are a few strategies distributors can use to activate their remote channels, including unstructured pitching, segmentation and AI personalization. As we take a look at these three options, I’ll argue that personalization is the best way to drive remote sales.

Let’s examine these three different approaches through the example of one HVAC distributor. These stories do not represent any distributor in particular, but are merely meant to illustrate the challenges and advantages of different sales methods.

Strategy 1: Unstructured Pitching

In this example, the HVAC distributor uses remote selling to increase customer exposure. Their telesales reps contact many customers in quick succession, and their e-commerce site is even better! It can host any number of customers at once.

Their main problem is that these selling strategies are entirely impersonal. Telesales reps spend too little time with each customer to truly understand their needs and desires, and normal websites treat all customers exactly the same way. This means that while the HVAC distributor’s remote channels are collecting many orders, they are not maximizing each sale. After all, how can they pull off effective upsells, cross-sells, or add-on sales if they don’t actually understand each customer?

One way the HVAC distributor could try to activate these sales channels is with unstructured pitching. To do this, managers could advise telesales reps to try to pitch items to different customers. Without any kind of technical assistance, however, reps would have to make these pitches using memory and intuition alone. This likely wouldn’t work very well, but it would be better than nothing.

Likewise, they might run mass promotions on their website to try to sell each customer on one key item. This method probably wouldn’t work on most customers. However, they could increase sales in a few lucky scenarios.

Strategy 2: Segmentation

Segmentation is a different strategy that the HVAC distributor could use to increase sales. Segmentation means grouping customers based on key characteristics. There are many different ways to segment customers. For example, you could group customers based on their location, or you could split them up according to order volume. Once customers have been divided into the appropriate segments, a unique marketing strategy is defined for each group.

For example, if the HVAC distributor wanted to segment customers based by location, they might look at the average temperature of each state and create a marketing strategy that pitched air conditioners to hotter states and heating systems to colder states. That way, when customers logged onto their website or phoned a call center, the distributor could at least provide a semi-targeted product pitch.

This strategy is better than nothing, but it is certainly not optimal. Every customer is unique, so operating under the assumption that every customer in a state is the same is not likely to end well. Pitching the same air conditioning unit to every customer in Texas will generate more revenue than not pitching anything at all. However, it will also leave many customers out, like the buyers in cooler regions who need heating units instead of air conditioners.

Strategy 3: AI Personalization

The best strategy that this HVAC distributor could use is AI personalization. As the name suggests, this strategy means personalizing the customer experience for every customer. Here’s how it works.

Personalization leverages AI to calculate the best item for every customer. Instead of considering just one data point, AI analyzes hundreds of pieces of information. These complex calculations paint an in-depth picture of each customer to reveal what items each customer is most likely to buy. So, instead of making decisions based on what state a customer is in, this HVAC distributor could actually make decisions based on each customer’s unique characteristics.

Continuing with this example, the HVAC distributor could use AI to market specific items to each customer. For example, they could program their website to offer a “recommended just for you section,” or give telesales reps an app that tells them what items to pitch to each customer. Or, better yet, they could do both.

AI personalization would give this distributor a much better chance at activating channels and increasing revenue. In fact, 88% of marketers report a noticeable increase in business with personalization. This is not all that surprising, given that personalization fundamentally considers customers to be multi-dimensional people, while segmentation fundamentally considers them to be one-dimensional.

Conclusion

Remote channels are a profitable and important method of selling. By activating your remote channels, you can further enhance customer experiences and increase your sales. There are a few different ways to do this. You can make unstructured pitches to customers, or segment customers manually and serve them according to their grouping. Or, you can treat each customer as a valued individual and use an AI-supported, data-driven method of selling.

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