Cafe Rewards Customer Segmentation Analysis and Offer Strategy Report

1. Overview of Customer Base

The Cafe Rewards program has a total customer base of 14,820 members. The program provides insights into customer demographics, transaction behavior, offer engagement, and customer lifetime value (CLV).

• Gender Breakdown:
  • Male: 57.25%
  • Female: 41.32%
  • Other: 1.43%
• Age: The average customer age is 54.38 years.
• Income: The average annual income is $65,404.18.
• Transaction Metrics:
  • Average Transaction Amount: $13
  • Total Customer Lifetime Value: $1,774,898

2. Segmentation Analysis

A. Age-Based Segmentation

The customer base is broken down into six primary age groups, with the largest being the 60+ age group (5.9K customers), followed by 50-59 (3.5K customers). The younger segments, such as 20-29 and Under 20, make up the smallest proportions of the customer base.

B. Income-Based Segmentation

Income brackets show that most customers fall between $40K - $79K income levels, with a significant portion in the $60K - $79K range, a valuable target segment due to high offer engagement and lifetime value.

3. Offer Engagement by Segment

A. Offer Completion Rates

Customers are segmented by their offer engagement, with completion rates varying by age group and income. The overall offer completion rate is 44%, with the following key metrics:

• 76,277 offers received
• 57,725 offers viewed
• 33,182 offers completed

B. Offer Engagement by Income and Age

• Customers aged 60+ with incomes between $60K - $79K are the most engaged, completing 4,261 offers.
• The 50-59 age group with incomes between $60K - $79K also shows high engagement, completing 2,677 offers.
• Younger customers in the 20-29 age group and lower income brackets, particularly those earning $20K - $39K, show lower completion rates.

C. Lifetime Value by Segment

Customer lifetime value (CLV) varies significantly by age group and income. The 60+ age group has the highest lifetime value, particularly in the $60K - $79K and $80K - $99K income brackets.

4. Offer Types and Channels

A. Offer Types

There are three primary types of offers provided to customers:

• Discount Offers: The most common type of offer received, with over 31K issued.
• BOGO Offers: Slightly less in number but show higher engagement, with 30K received and high completion rates.
• Informational Offers: Lower engagement compared to other types.

B. Channels

Offers are distributed across four main channels:

• Email: The most effective channel, with 76K offers received.
• Mobile: Popular among younger segments, with 69K offers received.
• Web: Engages a wide range of customers, particularly older segments.
• Social media: Growing in popularity, especially among younger customers.

5. Recommendations for Future Strategy

A. Target High-Value Segments

Focus marketing efforts on high-value customer segments:

• 60+ and 50-59 age groups, particularly in the $60K - $79K and $80K - $99K income brackets, show high engagement and CLV. These segments should receive premium offers, loyalty rewards, and personalized promotions via their preferred channels (email and mobile).

B. Increase Engagement with Younger Segments

For the 20-29 and 30-39 age groups:

• Implement more frequent, time-sensitive promotions (e.g., flash sales or exclusive digital offers) using social media and mobile notifications to capture attention.
• Focus on BOGO and discount offers, which resonate well with these segments.

C. Optimize Offer Types and Channels

• Discount and BOGO Offers continue to perform well across all segments. Consider expanding these offer types and tailoring them to different customer demographics.
• Mobile and Email channels remain highly effective, but increasing engagement on social media may further boost offer completions, particularly for younger audiences.

D. Enhance Loyalty and Retention

• Leverage data to create personalized, long-term loyalty programs targeting high-value customers.
• Implement special rewards for frequent customers in the 40-49 and 50-59 age groups, focusing on their preferred income brackets ($40K - $79K).

E. Cohort-Based Retargeting

• Use cohort analysis to identify groups with decreasing engagement and target them with retention campaigns, focusing on re-engaging previous high spenders.

6. Conclusion

By focusing on age and income segmentation, optimizing offer types, and improving channel effectiveness, the Café Rewards program can significantly increase offer completion rates and overall customer lifetime value. A data-driven promotional strategy will ensure more targeted marketing, improving both engagement and retention across key customer segments.