While everyone is talking about AI and hyperpersonalisation, customer segmentation might sound ‘old school’. But on the contrary: Segmentation is back, and is here to stay! In this talk, we show how we combined segmentation and machine learning (prediction) to enable personalised campaigns towards the entire customer base at Delhaize.

1. Customer segmentation is dead,
long live customer segmentation!
XAVIER VALENTINI
WOUTER BUCKINX
SEPTEMBER 19, 2019

2. CUSTOMER PERSONALISATION
Personalisation is key to build
a close and long relationship
with your customers.

3. SEGMENTATION IS DEAD
AI
“SEGMENTATION IS TOO SIMPLE TODAY”
It seems that Segmentation is
too simple to tackle this
challenge. AI is more trendy…
However, AI can be too
complex, too blackbox to use
and implement…

4. “SEGMENTATION BRIDGES THE GAP BETWEEN TECH AND BUSINESS”
LONG LIVE CUSTOMER SEGMENTATION!
VALUE BASED
SEGMENTATION
NEEDS BASED
SEGMENTATION
Personalisation
Product
Assortment
Channel
Management
Pricing
Prioritisation
Targeting
Rewards
Store
Management
Up- & Cross-sell
€
So Segmentation still has a
future, since it is easy to
understand, and it enables
immediate marketing action!

5. OUR CHALLENGES
LONG LIVE CUSTOMER SEGMENTATION!
Scalability
Missing
information
- OUR SOLUTION
Combine best of
both worlds by using
Machine Learning
Survey
Database
We combine survey and
database information to segment
large customer bases based on
interesting shopping needs.

6. WHO WE ARE
Wouter Buckinx
Managing Partner
Xavier Valentini
Data & Analytics Manager

7. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
OUR PROCESS
Step 1: send a survey to
understand the Belgian
shopping market for FMCG.

8. MARKET SURVEY
Setup

9. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
CLUSTERS
Build segments
from the survey.
OUR PROCESS
Step 2: build clusters
based on general Belgian
shopping behaviour.

10. CLUSTERS
Result: 5 Market Segments
Segment A
Segment B
Segment C
Segment D
Segment E
Segments

11. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
CLUSTERS
Build segments
from the survey.
Collect key information
from 5000 Delhaize
customers.
DELHAIZE SURVEY
OUR PROCESS
Step 3: collect crucial
information of a
representative group of
Delhaize customers.

12. DELHAIZE SURVEY
Result: 5 Delhaize Clusters
Golden questions
to 5000 Delhaize
Customers
Assign surveyed Delhaize
customers to 5 discovered clusters
Based on a limited number of
important questions, Delhaize
customers are assigned to our 5
segments.

13. Challenge: Less than 0.25% of our customers are assigned to a segment…
DELHAIZE SURVEY
As a result, the surveyed customers
can already be segmented.
But what about the other 99,75%?

14. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
CLUSTERS
Build segments
from the survey.
Delhaize survey based
on golden questions to
5000 customers.
DELHAIZE SURVEY
Build model to
predict segment
membership of all
customers.
PREDICT
OUR PROCESS
Step 4: we use machine
learning to assign all other
customers to a segment.

15. PREDICT CLUSTERS
Segments
Predictors
5000 Delhaize customers
Combine surveys and Delhaize’s
database to build predictions.

16. PREDICT CLUSTERS
Data
Preparation
Model
Building
Model
Validation
A robust machine learning process is
used to build our predictive model.

17. PREDICT CLUSTERS
Data
Preparation
Model
Building
Model
Validation
HABITS
Data linked to the number of visits,
the moment of visit, usage of self-
scan…
PRODUCT
Data linked to properties of a
product, such as nutriscore,
fairtrade, bio, top brand…
PRICE
Data linked to the value of items
and the total amount on the
ticket
PROMO
Data linked to coupons,
actions, promo displays…
OTHER
Lifetime, age,…
Predictors are created to
include different dimensions.

18. PREDICT CLUSTERS
Data
Preparation
Model
Building
Model
Validation
Algorithms Accuracy
Different algorithms are checked to
optimize performance.

19. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
CLUSTERS
Build segments
from the survey.
Delhaize survey based
on golden questions to
5000 customers.
DELHAIZE SURVEY
Build model to
predict segment
membership of all
customers.
PREDICT
Profile the segments
for better
personalization.
PROFILE
OUR PROCESS
Step 5: we validate the final
segments by profiling and
comparing.

20. SEGMENT C
What is in my basket?
TOP products XX% +25%
Prepared meals XX% +53%
Food cat x XX% +21%
Drugstore XX% +25%
Non-food XX% +21%
World food XX% -39%
What are my shopping habits?
Number of SKU XX +39%
Delhaize shops XX% +15%
Visits per year XX +25%
Visit on weekends XX% -16%
How and how much do I pay?
Credit card XX +56%
Amount spent XX +35%
Do I make use of promotions?
Promo stands XX +57%
% of € from promotions XX% -57%
Who am I?
Age XX +18%
Male XX% +33%
Dutch XX% +10%
Services
E-commerce XX% +32%
Traditional POS XX% +10%
Fictive profile of one
of the segments.

21. SEGMENT E
What is in my basket?
365 products XX% +200%
Cheapest products XX% +100%
Bread XX% +5%
Beer XX% -28%
Bio XX% -8%
Fair trade XX% -27%
What are my shopping habits?
Visit on Sunday XX% -89%
AD shops XX% +12%
Number of SKU XX -31%
Delhaize shops XX% -23%
Visits per year XX -22%
How and how much do I pay?
Credit card XX% -47%
Amount spent €XX -40%
E-commerce XX% -9%
Do I make use of promotions?
% of € from promotions XX% +7%
Scanned coupons XX -26%
Who am I?
Age XX -4%
French XX% -20%
Services
Self-scanning XX% +60%
Self-pay XX% -93%
Clearly different from
other segments…

22. OUR JOURNEY TO A NEEDS BASED SEGMENTATION
Belgian shopping
behavior survey.
MARKET
SURVEY
CLUSTERS
Build segments
from the survey.
Delhaize survey based
on golden questions to
5000 customers.
DELHAIZE SURVEY
Build model to
predict segment
membership of all
customers.
PREDICT
Profile the segments
for better
personalization.
PROFILE
Use and test the
Segmentation.
USE
OUR PROCESS
Step 6: how will
Delhaize use the
outcome?

23. USAGE OF THE SEGMENTATION
Performance Management
Commercial Plan
CRM
Category Management
Different ways to
deploy the
segmentation
scheme.

24. THANK YOU
Departement Name/first name
DATA & ANALYTICS XAVIER
XAVIER VALENTINI
WOUTER BUCKINX