8 Customer Segmentation Tips to Personalize Ecommerce Marketing
One size fits all ecommerce marketing is now a thing of the past. One of the best marketing strategies is customer segmentation. But why?
Customer segmentation works by breaking up your customer base into smaller segments based on who they are. This gets rid of the guesswork involved and helps you to understand what sort of marketing works best with them. Allowing you to automate your targeted ecommerce marketing while still being personalized. It also allows your marketing automation services and customer engagement services to exist and perform virtually – an absolute necessity in this day and age. Whether you’re engaging with customers by a virtual phone service via video, or using mobile apps.
Segmenting customers works by categorizing your customers into smaller groups of people with similar interests. Personalizing your marketing to these specific groups based on their actions throughout the customer journey allows you to be relevant to them and respond more specifically to their wants and needs.
How do you do this? Read on for our eight top tips to personalize ecommerce marketing.
Table of Contents
- Understand the models you can use to segment your customers
- Define your customer segmentation goals
- Identify your targeted segmented groups
- Set principles around collecting and sorting your data
- Recognize what special things you can do to keep them engaged
- Don’t confuse segmentation with anti-personalization
- Automation Software
Understand the models you can use to segment your customers
It’s important to understand the background and techniques when segmenting your customers. This will allow you to approach the practice with the understanding you’ll need, not only to segment your customers, but also to personalize your resulting ecommerce marketing.
There are seven main models that you can use to segregate your customers. You can use each of these models to break down your customer base into subgroups. This will allow you to target your preferred audience and personalize your ecommerce marketing.
The list below doesn’t cover all types of customer segregation but does give you a starting point for organizing your customers.
- Demographic segmentation: age, gender, income, education, marital status
- Geographic segmentation: country, state, city, town
- Psychographic segmentation: Personality, attitude, values, interests
- Technographic segmentation: mobile, desktop, apps, software
- Behavioral segmentation: tendencies and frequent actions, features or products use and habits
- Needs-Based segmentation: product or service must-haves and needs of specific customer groups
- Values-Based segmentation: Economic value of specific customer groups to the business.
Define your customer segmentation goals
Think about the end game here. Why are you spending valuable time creating a customer segmentation strategy? What do you hope to achieve with the process?
To do this, you will need to think about the reasons to segment your customers in the first place:
- Tailoring content to customer’s needs
- Targeting marketing campaigns to resonate with customers
- Defining the best time to send emails to different customer types
- Improving your understanding and preparing for the challenges customers may experience
- Increasing brand loyalty
- Understanding your most valuable customers
- Communicating via the most effective channel
- Identifying new prospects for products, support, and efficiency
- Using targeted referral marketing
You’ll then need to determine which outcomes you’re specifically looking to achieve, so you can create a strategy designed to accomplish them. The reasons listed above can be built upon and you may even think of different or more personalized ones. It’s so important to remember that you’re building this strategy around your business and your customers – so it is going to be unique to you. Segmenting customers isn’t a one-size-fits-all process.
An example of this is looking at how many goals you will be setting. The number of goals you define will be unique to your business type, size, industry, and customer base. They may also be cross-team or focused on one department specifically.
This is especially important when thinking about all the touch points customers have with your business. Communication for things like promos needs to be uniform across your teams. If a customer was to call your call center and you have a multi line phone system, for example, anyone they get through to will be singing from the same hymn sheet. So, when looking at your goals, keep your business’ specific needs and brand image front and center in your mind.
Identify your targeted segmented groups
Once you’ve defined your goals, it’s time to identify and target your segmented groups. First, you’ll need to decide how to segment your customers. Refer back to the customer segmentation models and types, and match these to your specific goals. As always, the way in which you do this will be unique to your business – there’s no right or wrong answer. It will be dependent on your specific business, customers, and the goals you set.
For example, you want to run a targeted marketing campaign geared towards women making purchases for Fathers’ Day, in hopes of increasing sales for your menswear. You can demographically segment your customers by gender, age, and marital status. This will give you a more narrow audience to which to personalize your ecommerce marketing, and allow you to communicate and reach them more effectively.
Set principles around collecting and sorting your data
Data is the most important part of any ecommerce marketing strategy these days. All companies have the ability to gather and analyze data for their customers and potential customers. The best companies know how to use it.
How to deal with the large amounts of data you have…
Establishing guiding principles will make the whole segmentation process faster and easier. It will allow you to set parameters around your goals and targeted segmented groups. And also allow you to narrow your focus on the data you need to look at.
- 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.
By aligning on these parameters, you will reach a solution more easily, and receive stakeholder buy-in across the business.
Recognize what special things you can do to keep them engaged
Once you have defined your segmented groups and narrowed down which customers fit into which, you’ll be able to target them and personalize your ecommerce marketing. You will need to analyze that group’s behavior and see how they interact with your marketing, to then find a way to capitalize on this.
Case Study - High Spenders
Arguably, your most valuable customers are those that either shop very often or make large orders. These are the customers that spend a lot more than average. They’re valuable to you because they fetch higher levels of profit than those that cost the same to acquire.
Because of this, these customers should be treated best out of all your customers. You want them to stay as long as possible! Your communication and offers for them should show appreciation and capitalize on making their shopping experience quick, easy, and pleasant.
- 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.
Don’t confuse segmentation with anti-personalization
It’s often assumed that when we’re talking about personalization in ecommerce marketing that it’s a rivalling concept to segmentation. This is a misconception. Segmentation is more of an initial, broader stage of ecommerce marketing which sets you up for true and meaningful personalization down the road. True personalization is the further optimization of segmentation.
Segmentation will only prove to enhance your personalization and client relationship management. It will allow you to show your customers how adaptable you are and move away from the days of pushing your way of working on them.
Working on your segmentation goals, principles, and process may take a little time. Once you’ve done all the hard thought work, though, you should look at the different offerings that software can provide.
Customer segmentation platforms work to gather customer intelligence, lifetime value, and potential, the easy way. The best of these will allow you to use predetermined analytics and customizable models to create unlimited segments for more targeted and engaging marketing initiatives.
Another thing to look out for with automation software is the ability for data to automatically refresh on any system engagement. It’s useful to have a system that, once you’ve defined the segments, goals, and workflow, automatically sorts customers. This could be based on the pages they visit, forms they complete, links they click, and phone calls they make. Alongside the ability to tap into any existing ecommerce tracking you’re already doing on customer engagement.
Finally, any automation software needs to be able to capture any and all meaningful data surrounding your customers, including their behavior through the targeted ecommerce marketing. And, not just capture it, but report out on it as well.
As with all things ecommerce marketing, it’s incredibly important to continually review the process, especially if it’s the first time you’re implementing it. The rate of change in today’s world is fast paced and almost all elements of the customer journey are continually changing. Either by smaller increments or bigger, more noticeable alterations. You will need to set a timeline to review every stage of the process. From the initial goals, principles, and segmentation, right through to the ecommerce marketing techniques you employ.
You’ll also need to be reviewing your results. This is what’s going to tell you if everything else in the process is working for you. If it’s not, you’ll need to go back and make some changes based on the reporting stats.
For example, you’ve identified ‘cart abandoners’ as one of your segments and target them with discounts. But you notice that none of these are being used. You will need to look through the customer journey and figure out at what point the customer is tuning out. It could be that the emails containing the discounts are never opened. In this case, you’ll need to review the source used to send and receive the discount.
Miscommunication of offers isn’t just a potential pitfall by email, either, which is why it’s important to make sure your ecommerce marketing has the buy-in of all your teams. From those working in sales, right the way through to those in your call center, or using your virtual phone service. And this is true of the whole process. Automation should help you focus on the results and review of the process by allowing more of your time to be spent on review rather than on the mechanics of the process itself.
The most important aspect of customer segmentation, and thereby personalizing your ecommerce marketing, is that you’re not trying to change your customers’ habits. These are people that are interested in your brand already and your goal is to keep them engaged without making them feel uncomfortable. Instead, you’re using what your customers, and potential customers, reveal about themselves throughout the customer journey and their shopping habits to provide an experience that serves them in the optimal way.
Segmentation is also a vital tool for other ecommerce marketing tactics. Affiliate marketers, for example, will need to know the details of your target audience and how to reach them.
This is data-driven personalized ecommerce marketing. This is the future of customer engagement. This is the secret to winning, and most importantly keeping, your loyal customers.
John Allen - RingCentral US. John Allen, Director, Global SEO at RingCentral, a global UCaaS, VoIP and omnichannel contact center solutions provider. He has over 14 years of experience and an extensive background in building and optimizing digital marketing programs. He has written for websites such as Wootric and Pandadoc.