Quick & Actionable Guide to eCommerce Customer Segmentation

Have you already heard that you should not be doing a “one-size fits all” kind of marketing?

Of course you have. Probably a million times, I bet.

You’ve also heard of segmentation and that you should hack and slash your customers into separate groups called “segments”.

All good, but you never started doing it, simply because you’ve never been quite sure how to do it exactly.

What segments do you need to have?

How do you even identify those segments?

Let’s first see WHY you need to segment your customers.

You can’t simply communicate the same message to every single customer, not take into consideration their behavior, habits, preferences, etc. By segmenting your customers, you will eliminate a significant chunk of all the marketing guesswork.

Having a few groups of customers that share certain traits will make it easier for you to be relevant, send messages that are an extra bit more personal, and ultimately your marketing will not only work better, but will become easier with time.

Once you have your segments, you will also see that coming up with offers and CTAs won’t be as hard as it used to be, even though you’ll now have to think of different offers and CTAs for each segment.

Accepting that your customers are different and working with this information as your guide and not your enemy will help you generate those coveted extra sales.

Okay, okay, enough fancy talk. By now you are probably going crazy asking yourself, “Alright, that makes total sense, but HOW do I do it? What segments do I need? What messages should I send each of them?”

Well, let’s go through the different segments you can easily identify.

Note: Using an eCommerce CRM that can filter customers by events and actions will greatly help you with segmentation.

3, 2, 1… Go!

Segment #1 – Cart abandoners

You know these guys very well. They are tough and they leave you at the finishing line, and it hurts. You continuously try to make them come back and place an order with a “Come Back” email, but that doesn’t convert as well as you’d like.

Filtering this segment by product or category of interest would be a smart move. By leveraging their interest in a certain product/ category, you can include different options for them to choose from in your “Come Back” email.

They can have various reasons for not buying, so you can include offers and deals alongside other products from the same category they have already expressed interest in.

In the end you are aiming for a conversion, no matter what the product sold is, right?

Segment #2 – Coupon lovers

If you run an online store, you most likely use coupons as an incentive (if you do not, you should!). In this case, you will have people who only buy using a coupon and avoid paying full price for your products.

Sure this can be annoying, but you can take advantage of this behavior and use it to make the coupon lovers buy from you again and again.

How to find out who these people are?

Head over to your CRM and filter people by action performed – “used coupon”. In a perfect-case scenario, your CRM will be able to show you everyone who only buys using a coupon on the spot, but if not, do not worry, there are workarounds.

You could, again, filter people by the action “used coupon” and then add another filter – “number of orders equals 1”.

Or you could tag those users for each coupon used and then check if the number of tags equals the number of orders they have. Yes, it’s not the most pleasant activity, but it’s justified in the end!

Now, once you’ve identified your coupon lovers, you have to start guiding them toward making more purchases.

How?

You guessed it right – give them more coupons. While giving more coupons to this segment, try to minimize the amount of coupons you give to other segments. You don’t want to hurt margins too much.

Segment #3 – One-timers

At some point in time, each of your customers were “one-order” miracles. So these really need your special attention – they bought once, so they are always one amazing offer away from buying again!

How to identify them?

It’s simple – filter your customers by “number of orders = 1”. 😉

Here are ideas on how to lure them back:

• Send them top-notch and relevant content so you stay top-of-mind.

• Use seasonal or holiday-related events to remind them about your products (new collections, sale, etc.)

• Ask for reviews after their first purchase. You could do this over time too.

Up-sell or cross-sell to them. Use similar or complementary products to the ones they bought or have expressed interest in.

• Offer bundles of similar or complementary products.

Segment #4 – Loyals

A.k.a the dream segment.

Your loyal customers are the essence of your business – you make lots of people’s lives better in some way. They also help you quite a bit with regular orders and feedback, they care for your brand after you have built a relationship with them.

On the business side of things, they are also your most valuable customers. They have visited your site more than others, they have bought more and more frequently than others, and have generated more revenue than others.

To identify them (in case you don’t know them yet), use a number of orders higher than the average for your store that also makes sense for your type of products.

Usually 3+ orders is considered a turning point for customer loyalty.

And precisely because they’re loyal to you, you shouldn’t just go with the flow, but need to make extra efforts to keep their interest alive.

So you could try one (preferably more) of the following:

• Reward them by setting up some sort of a loyalty program with points.

• Have unique offers only for them. Make them feel special, because after all – they are.

• If your business allows it, include them into future product creation, or ask them what they might like you to add, change, etc.

Build a community around your loyal customers.

Segment #5 – Big spenders

These people spend more than the usual customer. It’s good having them around as they tend to buy your priciest products or fill up their carts to the brim. They bring enough revenue to deserve special attention.

How do you identify them?

Looking at your AOV (average order value) and filtering customers with above-average AOV is a good start.

Using CLV (customer lifetime value) instead would yield similar results. However, you can do both, just to be sure.

You can go further and select only the top-tier, “luxury” shoppers for a more exclusive list.

You’ll have to give them VIP offers. For example:

• Exclusive early access to new products, content, services, etc.

• “Deluxe” editions of products/ services

• Express delivery

• Dedicated support

• Include surprise bonus items or services with each order

Segment #6 – The hesitant bunch

If you keep an eye on all the data your customers generate all the time, you might notice that there is a segment of people browsing your site a lot, but not buying as much (or not at all).

How do you identify them?

First, think of what number of browsing sessions qualifies a user as a frequent visitor. This could vary a lot from business to business. Then, check the average number of orders your customers make.

Now, filter your customer base to get to the people with so many sessions and so few (below-average) orders.

Those are your hesitant buyers. For some reason they find it hard to make a decision to buy something. So your job here is to guide them and help them reach a decision faster.

How?

Here are some ideas:

• More information about the product, more pictures (from more angles, better resolution, zooming options, etc.)

• Stress out important info like: shipping costs, delivery time, returns and exchanges…

• Implement wishlists

Segment #7 – Location / Demographics

I recently got an email with a few awesome 4th July deals. That’d be great and could be considered a job well done by store X if I lived in the USA, where 4th July is close and dear to the people. For me, it doesn’t mean much and this email couldn’t make me buy anything.

So if you sell to different countries, you’ll have to differentiate your marketing a bit, too, at least during holidays. There are lots of cultural (and even religious), differences between countries that you have to take into consideration.

At least, segmenting by that criteria should not be hard. You can filter customers by geographical location and tag them so they’re “ready” in your database for your future marketing materials.

Segment #8 – Registered users with NO orders

You probably have generated quite a bit of leads over time. All the people who have registered and created an account on your site can be considered your top leads.

They seem to be holding back, though, so you will need to give them an extra nudge to make their first order.

How to find them?

The easiest way would be to filter people by number of orders=0 and number of sessions greater than 4 (you could pick a number that makes more sense for your own business that would indicate interest).

How do you break the ice and make them buy for the first time?

• Give them a discount for the 1st purchase

• They’ve browsed through some of your products? Retarget them with an exclusive discount for the specific items of interest

• Create urgency, playing on FOMO. Run a campaign saying you only have a limited amount of “items of interest” left

Don’t try to change customers, adapt to their habits

In conclusion, these tactics can help you turn things around and get more sales, but be careful not to push people away trying to completely change their shopping habits.

Maybe they really can’t afford your products (that’s why they use coupons) or believe in more modest consumption of X product (and shop less often).

Respect that. More sales don’t always equal happy customers.

Instead, try and tailor your marketing to your audience’s preferences. Take their behavior as a guide and give them what they respond best to.

Their shopping experience will be better and you’ll get what you want. That’s the beauty of segmentation.

Note: The opinions expressed in this article are the views of the author, and not necessarily the views of Caphyon, its staff, or its partners.

Author: Stephan Markov

Stephan is one of Metrilo’s marketing brains. He can laugh at himself (and others), he is a vicious FIFA player and an occasional (space) traveler.

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