5 Strategies for Customer Segmentation in E-Commerce You Might Not Have Thought Of

When you first set up your eCommerce business, did you spend hours pouring over target audience worksheets, building the perfect customer avatar for your company?

Maybe you even gave them a name and stuck a picture on your pinboard to help you focus on your customers as you developed products and marketing messaging for your online store.

Now that you’re getting to the next stage of growth, it’s time to take another look at your customers and find the different categories within them.

What are their similarities and differences and how can you group them together?

This is called customer segmentation.

Even small changes to how you address different groups of customers can have a huge impact on your conversion rates.

You might already know that dividing your customers into different segments is an effective strategy. Much more so than relying on one-size-fits-all messaging.

Do you treat new customers the same as returning customers? If you have different Facebook ads, email newsletters or landing pages for these two groups, then you’re already using customer segments.

The element of personalisation is so important for your customers.

In a busy marketplace, if you manage to catch the eye of your customer across a crowded room, and present them with products and a shopping experience them makes them feel like the only girl in the world, you’ve got a pretty good chance of getting a sale at the end of it.

Even just a few small changes to how you address different groups of customers can have a huge impact on your conversion rates and average order values.

Any time you have a visitor to your site, or someone interacts with an ad or contacts your customer support, they bring with them a whole load of data that you can use for customer segmentation in eCommerce.

Here at Heavy Head Social, we love helping eCommerce store owners like you to boost your sales with smart, targeted strategies. So let’s take a deep dive into how customer segmentation works and 5 strategies that will make your customers feel truly special.

What Are the Benefits of Customer Segmentation in eCommerce?

Not only are the benefits of customer segmentation numerous, but these days, savvy online customers see personalisation as an essential part of the shopping experience.

A recent survey from Salesforce found that 76% of customers expect companies to understand their needs and expectations.

Shoppers now know the value of their own data.

They want eCommerce retailers to use this to make the online shopping experience better.

Pie Chart customer segmentation in ecommerce

The main benefit of customer segmentation in eCommerce is that your store will stand out from the crowd.

This leads to higher conversion rates.

If you create the right environment and messaging for different groups of customers, sales will follow.

Customer retention is another key benefit of a good segmentation strategy.

Many eCommerce retailers spend a lot of time and money on attracting new customers to their store. While this is never a bad idea, it can sometimes mean that existing customers get pushed to the sidelines.

Use segmentation to reward regular customers, make marketing decisions and improve your product lines.

The cost of turning a repeat customer into a loyal fan is far less than that of turning an interested browser into a first-time buyer.

By using customer segmentation to celebrate and reward your existing customers, you’ll build a solid group of returning customers and can work on specific strategies to increase their lifetime value.

Customer segmentation can be proactive as well as reactive. You use the characteristics of your customer segments to make decisions about your marketing and sales tactics. But you can also use the analytics you have to improve your product lines and what you’re offering to your customers.

Ask loyal customers to tell you what they’d like to see in a new product.

Use data from conversion rates and surveys to ditch underselling products that don’t fit with your brand.

Try introducing laser-sharp cross-selling and upselling opportunities to increase your profits too.

How to segment your eCommerce customers

Figuring out the best ways to segment your customer groups to boost your eCommerce store’s profits will take some time and hard work, and an element of trial and error too. There’s a few factors you should always check when you’re deciding what customer segments you want to focus on:

Stability

How much can you rely on the defining features of your chosen segment? Will they change easily or can you be specific about definition? You should be able to plan clear strategies for your segments without being worried about shifting characteristics.

For example, segments around gender, location, or what device customers use are all things that don’t change very much.

Accessibility

Do you have dozens of ideas for how you could segment your customers? You may have some great plans for ways to segment your customers, but do you have all the tools available right now to achieve that? Think about what analytics, CRM system and customer data you have access to and use that as a starting point for choosing which customer segments you can easily define and track.

For example, most eCommerce store owners will be able to easily know which customers are logged in or browsing as a guest, and simple analytics software should also be able to tell you which customers have not visited your store in the last 30 days.

Diversity

Are you noticing a lot of similar features in your chosen customer segments? Do you sometimes forget which segment should see which version of your new facebook ad campaign? If you’re finding that your customer segments are too similar, it could be a good idea to merge them or cut back and focus on fewer segments.

For example, look at the characteristics of your age group segments, if your teens and early twenties groups have a very similar definition, you might consider merging them together for more efficient marketing messaging.

Who are your customers?

Some types of data that we use for customer segmentation in eCommerce are harder to collect than other types. One of the most simple is demographics. Segmenting your customers by age, gender, location, family status, income and occupation can create some clear groups that will respond well to specific marketing messages.

Here at Heavy Head Social, we’re experts in Facebook Ads. We love using Facebook’s vast data resources to really get into the details of refining audiences by specific demographics to make targeted ads that are seen by just the right customers.

What are your customers doing in your online store?

Data on how your customers have arrived at your site and what they do when they’re browsing is also quite simple to track. There are plenty of helpful customer segments that you can target with this information.

With the knowledge you already have about your target audience, find active and responsive groups that can help you level up your store activity and profits.

Consider whether your customers have created an account or are they browsing as a guest. How many times have they visited your site, how many times have they bought your products and how much do they spend? Are they direct visitors or do they always arrive at your site through an ad link, newsletter or affiliate site?

You can build up a clear picture of the habits of your customers with these types of analytics. With the knowledge you already have about your target audience, find active and responsive groups that can help you level up your store activity and profits.

For example, we’re big fans of the option on Facebook ad manager that lets you sort the most recent top 25% active users on your site. Targeting your most active users is always a super effective way of getting a great ROI.

Advanced Customer Segmentation Examples – 5 Strategies You Might Not Have Thought Of

1. Win back lapsed customers

Just like that third date that never called again, there are some customers that mysteriously drop off the radar and stop making purchases after a few positive interactions. Don’t just sit there wondering what you did wrong.

Segment your customers that have made more than a certain number of purchases, but haven’t done so in a long time. Reach out to these customers with a targeted email campaign or Facebook ad. Show off your new product line or offer a discount code to win them back and get this group on the road to customer loyalty.

2. Reward your most loyal customers

It can be easy to dismiss your most loyal customers – the top 5% that bring in a large amount of revenue for you. Brand loyalty takes work and customers can always be fickle, so don’t forget to keep this customer segment happy too.

You already know that this group are happy to make a lot of full-price purchases, so there’s no need to offer discounts unnecessarily. Show your appreciation with other incentives such as free shipping, premium customer support or a free gift.

Online Shopping customer segmentation in ecommerce

3. Think about your product cycles

Thrifty shoppers might not seem like the most glamorous group to target for customer segmentation. But this group can be a reliable source of income if targeted correctly.

Think about the type of products in your online store and the average life cycle of them. For example, if you run a skincare brand, how many weeks or months would you expect your products to last. Set up reminder emails or ads for these customers who maybe only buy one or two products at a time. With some helpful nudging, they will repurchase and become more loyal. You could even try cross-selling related products within the same budget range to up this group’s AOV.

4. Talk about the weather

For eCommerce store owners, finding out the location of your customers is one of the most simple pieces of data you can find. As soon as that first purchase is made, you have the delivery address for your customer.

But what can you do with this data?

Target your marketing based on weather and seasons in the different locations that your customers live. This works great if your eCommerce store sells clothing or home goods.

In the winter months, you might want to target a new line of coats to your customers on the East Coast of the USA. But California residents enjoying milder weather might engage better with some marketing about knitwear and layering options.

5. Find out about your customers’ interests

Every purchase from a new customer will build an ever-growing pattern of their likes and interests. Set up marketing for customer segments who have bought more than two or three products from the same brand.

Give them perks like early access or free shipping for new lines in their favourite brand. Or make your customer feel special with recommendations based on their previous purchases.

If they’ve recently bought a tent, showcase your best selling outdoors accessories. If they’ve splashed out on a high ticket kitchen appliance, show matching products to convince them to continue with the kitchen updates.

Think Outside the Inbox – Customer Segmentation Across Multiple Channels

When many people talk about customer segmentation, it’s often in the same breath as email marketing. It’s undeniably a really strong way of managing and communicating with your customer segments.

As MailChimp has reported, segmented email campaigns get more than double the amount of clicks than non-segmented campaigns.

Email Marketing customer segmentation in ecommerce

But email marketing is far from your only option when it comes to customer segmentation in eCommerce.

Social media platforms like Facebook and Instagram are the perfect place for diving into your customer demographics. Using a clear strategy like the Heavy Ecosystem, you can target very specific customer segments based on location, age, likes, interaction with previous marketing campaigns, income level, and so much more.

With images and video ads using striking brand images or engaging user generated content, you can attract brand new customers and reconnect with old ones, bringing in more qualified leads every time.

Consistent and specific customer segmentation will show positive results for your online store and increase brand loyalty.

Your eCommerce website itself is an underused resource in customer segmentation. There’s opportunities on every page to tailor your content and messaging to different customer groups.

Change up your hero section or featured products depending on where your customers have arrived from. Or try out different CTAs depending on if your customers are logged in or browsing as guests.

Whether you’re only just discovering the full benefits and scope of customer segmentation in eCommerce, or you’re looking for new ways to target relevant brand messaging to your different customer groups, customer segmentation that’s consistent and specific will show positive results for your online store and increase brand loyalty.

If you’re ready to get serious about Facebook and Instagram strategies for your eCommerce store that can scale your business to 6 or 7 figures a month, contact us at Heavy Head Social for a free strategy session.