You know that feeling – you walk into a shoe store, and the saleslady immediately recognizes you. She knows your size and your style, your favorite color, and remembers what you bought the last time you visited.
She knows exactly what to offer you, so you easily find a new pair of shoes that you like, and leave with a huge smile on your face. You’re even thinking about leaving a positive review on Google and telling your friend about this store.
Ladies and gentlemen, other than being great customer service, this is a great example of a personalized customer experience.
And what does it look like in the ecommerce world?
It’s more than an email starting with Hey, “insert your name here”, and it’s more powerful than you think.
In fact, we’ve got so used to personalization that we may get frustrated if we get an impersonal shopping experience. That’s at least true for 74% of customers who participated in a survey published in 2017. We can imagine that today this percentage has only grown.
So, if you’re running an ecommerce store, you may be wondering how you can ensure a personalized experience for your customers. Over 30 marketing experts provided us with some fantastic ecommerce customer segmentation tips that we’re sharing with you in this article.
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Why Is Customer Segmentation Important for Ecommerce?
Even when you narrow down your target audience as much as possible, it’s likely going to be a pretty large group of people. And not everyone will respond to your marketing efforts equally, so it’s also important to divide your customers into segments. That way, you can personalize the way you speak to each segment and help them get through their customer journey more efficiently.
In fact, without segmenting your customers, even your best ads may bring little results if they’re not well-targeted.
Customer segmentation for ecommerce is important because:
- 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.
12 Most Important Customer Segments for an Ecommerce Brand
In one of our surveys, almost 39% of respondents said that behavioral customer segmentation proved to be the most suitable for their ecommerce business.
It means they find it helpful to segment their customer base according to the way their customers behave when using their website. However, that’s only one of the important segments of your customer base that you can use to drive more sales for your ecommerce business.
Here are the 12 categories you can segment your customers into:
- One-timers. These are customers who’ve only purchased from your website once.
- Loyal customers. Everyone loves this kind of customer – the one who keeps returning to your business for a specific type of product.
- Newsletter readers / ebook subscribers. Customers who actually appreciate your email marketing efforts.
- Cart abandoners. Many people abandon their carts for reasons that are totally unrelated to your website, but if there’s something to fix in the buying process, you’ll want to know.
- High spenders. These customers spend a lot of money on your website – by placing a large order or by buying from you very often.
- Coupon lovers. They’re more than happy to use a coupon to buy from you, but not very ready to pay for a product when they can’t get a discount.
- Thrifty shoppers. They buy from you very often, but in a disciplined manner – only what they came for.
- Indecisive shoppers. These people spend a lot of time on your website browsing, but almost never make a decision to actually buy.
- Registered browsers (leads). They’ve registered to your website to download a freebie, but haven’t placed any orders yet, despite visiting the store several times.
- Curious browsers. They have visited your website recently, but haven’t ordered anything in a while.
- Idle (inactive) customers. Their last activity dates back to when Corona was only a beer.
- The trendy customers. They return and shop every time there’s a new product or collection.
And here’s a bonus segment you may also want to pay attention to. If your market is global, or at least involves several countries, segmenting your customers by location is a must. You wouldn’t want to offer a new collection of winter boots to someone who’s currently trying to survive a heatwave in scorching 105 degrees. Track the behaviors and actions of your customers at a glance with this ecommerce dashboard.
Cart abandoners are the most often targeted segment for 29.03% of respondents in a Databox survey. At the same time, 22.58% of respondents stated that they most often target loyal customers, which makes sense if you remember that keeping your old customers costs far less than acquiring new ones.
9 Customer Segmentation Strategies for Ecommerce
We asked 30+ marketers to share their most efficient strategies for ecommerce customer segmentation and marketing campaign personalization to drive more sales.
Here’s what they say has brought them fantastic results so far.
- Use Behavioral Segmentation to Identify Your Most Loyal Customers
- Add a Pop-up Chat to Help Your Customers Find What They Need
- Use Funnel Visualization to Retarget Your Customers
- Segment by Product Line
- Focus on High Spenders
- Follow the Consumer Journey
- Use a Segmentation Tool to Maximize Your Efforts
- Ask Your Customer Who They’re Representing
- Segment Customers by Their Previous Purchase
PRO TIP: Get Useful, Actionable Data on Your Ecommerce Store’s Performance
To improve the performance of your online store, it’s vital to have access to useful and actionable data. But, with so many metrics available to track, it may be hard to determine which ones will actually help you move the needle.
That’s why we have created a concise dashboard template that only tracks the most important metrics for analyzing the core elements of your ecommerce businesses, such as:
- Transactions and orders. How many transactions does your online store process in a day, a week, or a month? How many orders, and how many were placed on the same day of the previous month?
- Sales volume and trends. See how much money has been generated from sales in the current month. Analyze daily trends to compare with your sales goals and take action to reach them.
- Website traffic trends. Track the number of new and returning visitors to your website and the number of individual sessions initiated by these users.
- Conversion to customers. See what percentage of your website visitors convert to customers.
- Revenue per customer. See how much revenue you get from each unique visitor that interacts with your store during a given time period.
- Amount per transaction. Track the average dollar amount each customer spends on a sale.
- Best-selling products. See your most popular products in terms of volume and revenue in a given period.
Now you can benefit from the experience of our Google Analytics experts, who have put together a plug-and-play Databox template showing the most important KPIs for monitoring your online store’s performance. It’s simple to implement and start using as a standalone dashboard or in ecommerce reports, and best of all, it’s free!
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Google Analytics account with Databox.
Step 3: Watch your dashboard populate in seconds.
1. Use Behavioral Segmentation to Identify Your Most Loyal Customers
“Although it’s almost an underrated approach, behavioral segmentation works wonders”, says Natasha Rei of Explainerd. And it’s true – if you learn which customers of yours prefer coupons, you’ll know exactly how to get their attention and give them a nudge to make another purchase.
“It requires a harder effort to crack the code to customer behavior,” adds Rei about behavioral segmentation, “but once you’ve mastered analyzing what works or not, the result is totally worth it. Behavioral segmentation allows you to understand the existing customers that lead you to plan strategically for the next campaign.”
Rei’s tip on how to drive more sales is to focus on your most loyal customers. “You’re able to identify which group of customers are loyal to your brand. This helps you send more personalized messages and connect with them at the right time. As a result, you can drive more engagement and gain sales.”
Note that well-thought-out segmenting and targeting can help you turn (almost) everybody into a loyal customer, even the inactive ones. “We had a system to segment our ecommerce subscriber list to retain loyal customers and to ultimately turn once-off customers into loyal customers. How we got this was by dividing our customer database by amount spent, frequency of spending, full-price vs. promotional price. We had to do the calculations separately on an excel sheet to get the best results.” explains Jane Neo of KeaBabies.
Imagine walking around a store, not being able to find what you’re looking for. Chances are, if you don’t find the desired product after a while, you’ll get frustrated and leave without making a purchase. A pop-up chat equals a real-life salesperson who walks up to you and asks if they can do anything to help.
This strategy has worked well for ORACLE Lighting, according to Tiffani Hartenstein. “We’ve introduced a pop-up chat service that appears to customers after they’ve spent a certain period of idle time on the site. This tool invites those customers to provide us with the information we need to direct them to the products they’re looking for. By analyzing on-site behaviors and adjusting our marketing strategies according to that data, we’ve been able to decrease the rate of idle states and abandoned carts on our site, streamline the sales process for our online customers, and convert more potential sales to final sales.”
3. Use Funnel Visualization to Retarget Your Customers
When you actually see a map of your customers and potential customers’ behavior on your website, it’s much easier to identify their needs and possible obstacles they stumbled upon on the website. It also allows you a more personalized messaging, whether it’s your email marketing or social media ads.
To visualize your customer’s behavior on your website, Rohan Kadam of Biking KnowHow suggests using Google Analytics – it can truly boost your remarketing strategy. “Collectively, remarketing and ad-personalization have worked wonders for me. I was able to reduce my Cart Abandonment Rate by 33% and improve conversions by 17% by using the exact strategy that I’m sharing with you,” says Kadam and explains how it works.
“Customer segmentation allows me to re-target customers with highly personalized ad messages. I use the goal tracking and funnel visualization feature of Google Analytics in order to track the customer purchase journey. Through funnel visualization, I can actually see how my customers transition from the homepage to the exit page. I am able to categorize my users, for example, home page viewers, category page views, cart-abandoners, etc. This allows me to segment my customers in a more efficient manner. I use all of this information to run re-marketing ads. This strategy ensures that I personalize my ad messages.” You can measure how effective this is with the help of this paid ads ecommerce dashboard.
4. Segment by Product Line
If your online store offers a bunch of different products, it may be challenging to anticipate what your buyers may need next. In that case, John Donnachie of ClydeBank Media suggests segmenting by product line.
“One of the ways we’ve found success segmenting our customers is by the product line purchased. We have a wide variety assortment – a customer who purchases one product may not have any interest or need for another product”, says Donnachie and adds: “By segmenting by product purchased, we can laser focus our messaging to the constellation of needs and interests people who purchased that product. Not only does it mean that we are always making the right offer to the right customer, but it also makes cross-selling opportunities easier to identify.” Easily track the impact this has on driving more sales with the help of this store overview dashboard.
5. Focus on High Spenders
If you really want to boost your sales, you should be laser-focused on your high spenders, says Bram Jansen of VPN Alert. “This is a subset of customers who spend significantly more money on items than the typical customer. This group either shops frequently or orders in big quantities every few months or weeks. They have shown to be crucial to the success of our eCommerce shop since they generate more income than other consumer categories.”
Retaining this type of customer can be critical for your business revenue. “Our objective is to find methods to treat them nicely in order to keep them. We show our appreciation for their commitment and contribution to our brand’s success through the marketing emails and offers we give them,” explains Jansen.
“We make every effort to make their purchasing experience as enjoyable and painless as possible. To make it easier, we have a dedicated customer service staff. The high spender category includes all customers who have spent more than the average customer lifetime value (CLV). Multiple revenue criteria that are beyond the CLV might help you limit down your options. The next stage is to please them with rewards.”
Here are a few reward ideas Jansen shared with us:
- Wrapping presents
- Including a surprise with shipping packages
- Providing early access to new items to them
- Maintenance and special guarantees
- Shipping is either expedited or free
- Special value packs and bundles are available
6. Follow the Consumer Journey
Combining the data you get from different marketing channels and then placing your personalized ads strategically can bring you a lot of success, according to Sasha Matviienko of Growth360.
“One of the ways we like to use for an eCommerce brand is based on the consumer journey. We all go through the process of considering, buying, and (often) return after the fact or refer a friend. We use a mix of channels and topics all placed strategically within certain time windows. This way, combining simple analytics, the consumer journey, and knowledge of multiple channels you can tell a story of your brand in the right place, at the right time” says Matviienko.
Analytics and segmentation tools make a marketer’s job much easier. So why not leverage their potential? Bruce Hogan of SoftwarePundit recommends solutions like Klaviyo. “Klaviyo has robust segmentation tools and native integrations with ecommerce platforms like Shopify and WooCommerce. This means the data is ingested automatically into Klaviyo, and anyone (technical or not) can use the application’s interface to create complex segments.”
Andres Ossa of Mundango and his team, on the other hand, use Google Colab. “We use Google Colab to apply clustering models to our moving services customers. In particular, we’ve used techniques such as k-means, segmenting our customers into “k” different clusters. Then you can analyze the different groups of customers to understand what makes them unique and implement marketing campaigns that are tailored to those specific groups of customers.”
And if you’re worried about being bad at math, here’s some good news. “The interesting thing is that all the advanced mathematics to implement these techniques is included in different libraries, so it is actually fairly simple to implement and it doesn’t require coding experience,” explains Ossa.
8. Ask Your Customers Who They’re Representing
Is someone on your website purchasing for personal needs or they’re buying supplies for their organization? Based on this information, their needs may vary, and so should your message addressed to them.
“Data collection is king. And once you know who your audience is, you will be that much better at speaking to them. One of the data points we ask our customers is about the type of organization they are (personal, school, non-profit, etc.) Knowing that helps us craft tailored email campaigns to each segment and thereby improving the engagement rate of our emails and our returns and conversions.” explains Christian Nelson of Reminderband, and adds that other factors may impact their ads on social media platforms.
“For something like Facebook ads, we also take into consideration the age and gender and target the demographics who perform best. Lastly, targeting cart abandoners is incredibly valuable for any remarketing campaigns and we see great success with it.”
9. Segment Customers by Their Previous Purchase
By offering your customers products similar to those they’ve already bought, you’re showing them you figured out what they like. And if you help them discover new products, they’re more likely to say, “yeah, well, I actually do like this” than if they had to do the browsing on their own. You’ll also avoid spamming people with offers they’re not interested in.
“Because we are a jewelry business, we track what type of jewelry the customer originally purchased from us. We can then send segmented emails to that customer based on their purchase,” says Jeff Moriarty of Moriarty’s Gem Art. “For example, if they purchased a ring, we may send an email about the rings we have available to match it.”
And if someone purchased an engagement ring, chances are high that they’re also going to need a pair of wedding bands pretty soon.
Leverage Customer Segmentation to Grow Your Audience and Revenue
By segmenting your customer base, you can ensure efficient use of your advertising budget, improve communication with your existing audience by showing them you recognize their needs, and reach more of your potential customers. Moreover, you can easily identify what works for each segment and create strategies you can replicate for future use and more sales.
Whether you choose to segment by location, customer characteristic, or products your customers have bought, don’t forget that there isn’t a universal categorization that you can apply to all businesses. The first step towards a successful personalization and sales boost is to monitor and analyze your audience and get to know them. You can do this using an ecommerce sales dashboard. Once you learn what they need, how they think, and why they leave their carts or prefer coupons, you’ll be able to keep your top-paying customers and easily turn the one-timers into loyal buyers.