Have you ever experienced walking into a shoe store and getting immediate recognition from the saleslady? She has a good grasp of your size and preferred style, and even remembers your favorite color and previous purchase.
With her comprehension of your preferences, she effortlessly helps you locate a new favorite pair of shoes, leaving you beaming with satisfaction as you depart. So much so, that you contemplate leaving a favorable evaluation on Google and mentioning the store to your acquaintance.
This is not only exemplary customer service, but also an exceptional illustration of a tailored customer encounter. In the realm of ecommerce, it goes beyond just receiving an email that uses your name and has a casual greeting, as its impact is highly significant.
It’s become such a norm to have personalized shopping experiences that receiving one that is impersonal may lead to frustration. This was revealed in a survey conducted in 2017, which indicated that 74% of customers shared this sentiment. It’s likely that this percentage has only increased since then.
Importance of Customer Segmentation in Ecommerce
Although you may minimize your desired audience significantly, it will still probably encompass a sizable population. Given that marketing efforts may not resonate uniformly with all individuals, it is vital to segregate your clientele into distinct categories. By doing so, you can customize your message for every set and streamline their customer experience more effectively.
Succesful advertising may not be possible without proper targeting, which requires customer segmentation. This is why ecommerce businesses need to prioritize customer segmentation.
- You’ll get to know your customer base better. You will notice specific patterns in their habits, behavior, and more. Then, you will easily identify what works for each segment of your audience. You can replicate your strategy, campaigns, and messages addressed to your potential customers and get great results again.
- You’ll have a higher customer retention rate. By providing an excellent online shopping experience, you have a better chance of someone returning to your ecommerce store to buy again. Easily monitor your business’s client retention rate with the help of this customer success dashboard.
- You’ll find new customers more easily. By knowing the customers who are already in your base, you’ll be able to target people with similar interests and behaviors.
- You’ll learn which marketing channel works best for your store. If most of your customers come through your Instagram page, or a specific country, or are within a certain age range, you’ll know to address them more specifically in the future. You can track this easily in your marketing dashboard.
- Finally, ecommerce customer segmentation will bring you higher conversion rates. By identifying where there may be hiccups in someone’s customer journey, you can work on improving the flow and helping more customers actually finish their purchase.
Customer Segmentation Strategies for Ecommerce
1. Use behavioral segmentation to identify your most loyal customers
Natasha Rei of Explainerd advocates that behavioral segmentation, although often overlooked, can have a significant impact. Identifying the customers who are inclined towards coupons can help businesses effectively engage with them and promote repeat purchases.
Rei explains that behavioral segmentation demands more effort to decode customer behavior. However, the payoff is worth the endeavor once you become proficient in analyzing successful tactics. By studying the behavior of existing customers, behavioral segmentation enables you to strategize for future campaigns.
To increase sales, Rei suggests concentrating on your most devoted customers. By identifying this group, you can send tailored messages and connect with them when appropriate, resulting in increased engagement and sales.
It is important to keep in mind that a well-planned approach to segmenting and targeting can result in almost anyone becoming a loyal customer, including those who are currently inactive. Our company implemented a system to segment our ecommerce subscriber list in order to retain devoted customers, as well as to convert those who only made one purchase into loyal customers.
According to Jane Neo from KeaBabies, the way we obtained this information was by splitting our client database based on their spending frequency, the amount spent, and whether they made purchases at a regular price or during promotional offers. We had to compute these figures manually on an Excel sheet to achieve optimal outcomes.
2. Add a pop-up chat to help your customers find what they need
Picture yourself wandering through a store and failing to locate the item you seek. If you are unable to locate the product you want, it is likely that you will become irritable and depart without making a purchase. A pop-up chat, on the other hand, provides the same assistance as a salesperson who approaches you and inquires if they can assist you in any way.
Tiffani Hartenstein reported that ORACLE Lighting has achieved success with this approach.
After a specific period of inactivity on the website, we implemented a pop-up chat service for customers. This feature requests customers to furnish us with the information essential to guide them towards the products they seek. By scrutinizing customer on-site actions and modifying our marketing approach as per that information, we reduced idle states and abandoned carts. Consequently, we were able to simplify the sales process for customers, leading to more potential sales being converted into final sales.
3. Use funnel visualization to retarget your customers
Observing a map illustrating the actions of your current and potential customers on your website provides a simpler way of recognizing their requirements and any hurdles they may have encountered. Additionally, personalized communication is made possible through various means such as email marketing or social media promotions.
Rohan Kadam recommends making use of Google Analytics to enhance your remarketing strategy by visualizing your customers’ behavior on your website.
Kadam shares that through the combination of remarketing and personalized advertising, he achieved remarkable results. By adopting the same approach, he successfully reduced his Cart Abandonment Rate by 33% and increased conversions by 17%.
By way of customer segmentation, I am able to deliver very personalized ad messages to customers. Google Analytics’ goal tracking and funnel visualization feature enables me to monitor the journey a customer takes when making a purchase. With funnel visualization, I am able to witness the process through which customers move from the homepage to the exit page. By categorizing users- such as home page viewers, category page views, cart-abandoners- I am able to segment my clientele more effectively. From this information, I generate re-marketing ads that incorporate a personal touch, contributing to a more comprehensive marketing strategy.
This paid ads ecommerce dashboard can assist you in gauging the effectiveness of this.
4. Segment by product line
John Donnachie of ClydeBank Media recommends segmenting your online store by product line if you find it difficult to predict what your customers may require next due to the wide range of products you offer.
Donnachie suggests that segmenting customers based on their purchased product line has been a successful approach. As the company offers a diverse range of products, a customer may not necessarily be interested in other items after purchasing a particular one. By segmenting based on products, the company can finely tune their communication to cater to the needs and interests of those who bought a specific product. This ensures that they always put forth the most suitable offer to their customers and simplifies the identification of opportunities for cross-selling.
Assist yourself with the store overview dashboard to effortlessly monitor how much it contributes to increasing sales.
5. Identify your targeted segmented groups
After setting your objectives, the next step is to discover and focus on your divided clusters. Initially, you should determine the method of categorizing your clients.
Retrieve the customer segmentation models and types and correlate them with your particular objectives. The approach to accomplish this will unavoidably differ for your enterprise, and there is no definitive or incorrect solution. It relies on the distinctiveness of your business, clientele, and the goals that you establish.
An instance would be running a marketing campaign that focuses on women as the target audience, with the aim of boosting sales for your menswear products during the period leading up to Fathers’ Day.
By segmenting your customers based on demographic factors such as gender, age and marital status, you can customize your ecommerce marketing to a smaller audience, enabling you to engage and interact with them more efficiently.
6. Set principles around collecting and sorting your data
In today’s ecommerce landscape, data holds utmost significance when it comes to crafting a successful marketing strategy. While all businesses have the capacity to collate and scrutinize data pertaining to their present and future customers, it is the most adept businesses that understand how to leverage it.
What is the best approach for managing the substantial quantities of data you possess?
By establishing guiding principles, you can expedite and simplify the segmentation process. This also empowers you to define parameters concerning your objectives and the segmented groups you want to target, as well as focus more narrowly on the pertinent data.
- Establish a base number of customer segments to work from. This will mean you can really focus on current and future ecommerce marketing without having to re-segment your customer base. For simplicity, we would recommend five.
- You will need the ability to look back at past, current, and future performance for long term viability.
- Agree on a single source of truth for segmentation inputs for data integrity.
- Allow for the ability of subsets and overlays for complete context.
- Ensure the segments are compatible across departments within the business (e.g. sales, marketing, product, engineering, etc.) for shared reference points and to remove the duplication of effort and data.
If you establish agreement on these factors, it will be simpler to find a resolution and gain approval from all stakeholders within the organization.
7. Recognize what special things you can do to keep them engaged
After identifying your segmented groups and categorizing your customers, you can focus your efforts on targeting them and customizing your ecommerce marketing. Evaluating the behavior of each group and understanding their response to your marketing will enable you to identify opportunities to capitalize on.
“High Spenders” Case Study
It can be contended that the customers who shop frequently or place sizable orders are the ones most valued by your business. Such customers spend significantly more than the average customer and are important because they generate greater profits compared to customers who are acquired at the same cost.
Due to this reason, it is important to treat these customers as your top priority. It is crucial to make them feel valued and keep them coming back for as long as possible. Therefore, your communication and offers to them should demonstrate gratitude and focus on enhancing their shopping experience by ensuring it is hassle-free and enjoyable.
- Ideas to keep the ‘High Spenders’ engaged:
- Remove out of stock items from view – it’s also important to know how to account for inventory and keep financial records for stock up to date.
- Early bird access to new products.
- Free shipping, express / nominated day shipping etc.
- Premium products and special additions.
- Free gift wrapping.
- Free gifts / surprises in packages.
- Dedicated support.
- Special offers / early bird access to sales.
- VIP subscription.
8. Don’t confuse segmentation with anti-personalization
There is a common misconception that personalization and segmentation in ecommerce marketing are opposed to each other. However, segmentation should be seen as a preliminary and general step towards achieving genuine and significant personalization in the future. True personalization is actually the result of advanced optimization of the initial segmentation process.
By implementing segmentation, you can improve your ability to personalize and manage relationships with clients. This approach will demonstrate your flexibility and enable you to move beyond enforcing your own methods onto customers.
Segmentation is utilized by all VoIP services, even the top ones. An instance of this is the ability to produce various numbers that are connected to a single phone line. This technique is crucial in marketing since people are inclined to answer or initiate calls from numbers that seem local.
9. Automation Software
It may take some time to work on your segmentation objectives, principles, and process. However, after finishing the meticulous planning, you should consider exploring various software options that can help achieve your goals.
By using customer segmentation platforms, gathering customer intelligence, lifetime value, and potential becomes effortless. The top-tier platforms offer predetermined analytics and customizable models to generate countless segments, enabling personalized marketing strategies to achieve better engagement.
When considering automation software, it is important to ensure that data is able to automatically update whenever any system activity occurs. A system that can organize customers automatically based on predefined segments, goals, and workflow is highly beneficial.
One can use information from the webpages they browse, forms they fill out, links they select, and phone calls they place. Additionally, you can harness data from your current ecommerce tracking efforts to analyze customer engagement.
In essence, it is crucial for any automation software to effectively gather all significant information related to your customers, such as their activities within the focused ecommerce marketing. Additionally, the software should not only collect such data, but also present it in a comprehensive report.
