What is customer segmentation and why should all businesses be using it?
Customer segmentation – in basic – is a marketing strategy where you group your online visitors based on common characteristics. These customer segments are typically based on customer data taken straight from the analytics of your website, although you can also supplement with market research.
You may have heard of market segmentation before which focuses on grouping customers into a market segment based on what they have purchased previously whether this be a product or service. Whereas, marketers use customer segmentation to build deeper connections, by creating targeted content specific for the needs and wants of that group of customers in real-time, which in turn increases conversion, online revenue, customer loyalty, and allows for a better customer experience.
For instance, a highly common customer segment is targeting ‘first time visitors’, these, after all, are new potential customers. I am sure that when you have been browsing a new site you have come across – let’s say – a marketing message via a popup that asks you to enter your email address to receive 20% off your first order. The reason you are seeing this campaign is because you fit the criteria of their segment conditions ‘first time visitor’. And let’s face it, a great campaign with an even better incentive works more often than not!
What’s the importance of customer segmentation?
As we know customers’ expectations have accelerated since the pandemic, meaning that they don’t want to see content that isn’t relevant to them and they want a seamless customer journey from start to finish. That’s where customer segmentation comes into play. It is changing the ecommerce landscape, by allowing online businesses the opportunity to listen to their customers, learn from them, and then implement the right campaigns to the right people.
A better customer experience equates to happy customers, which means a higher amount of online sales, a larger customer base, and a healthy ecommerce business. Marketers that group their customers into audience segments see seven times higher revenue than those that don’t, according to HubSpot’s 2021 Marketing Statistics – that’s a fact we cannot ignore!
5 types of customer segmentation
The customer segmentation process can be as simple or complex as you like depending on your ecommerce goal. Let’s take a look at 5 of the most popular customer segmentation models.
Types most commonly used (but not limited to) are:
1. Behavioural segmentation
Here you are segmenting your target audience based on their actions when they are on your site. So we are looking at things like what each subset they are viewing, products they are interacting with, and how long for etc. This type can sometimes overlap with market segmentation in terms of what customers are purchasing.
2. Geographic segmentation
This type of customer segment is where marketers focus on people’s geographical location – a nice, simple one. This could be based on their country or more specifically their country.
3. Demographic segmentation
This segment is used to target people based on demographic data such as (but not limited to); their age, gender, marital status, income, education, family size and occupation.
4. Psychographic segmentation
Here you are focusing on data and information offsite. This is the kind of data that crawlers can track such as the customers interests, likes and dislikes, beliefs, hobbies, and habits.
5. Persona-based customer segmentation
This type of customer segmentation involves creating an ideal customer persona (ICP). Customer personas are fictional characters that represent your target customer, to better understand and visualise who you are targeting.
How to use PureClarity’s customer segments
Our ecommerce personalisation solution includes built-in segmentation. It allows you to create specific groups of customers based on demographics, geographic, behavioral, psychographic, and persona-based variables. The great thing about it is you can apply as many customer segmentation conditions as you wish to each segment – giving you the ability to be as specific as you wish with your groups.
Let’s begin by introducing you to our segment explorer:
Build a clear segmentation strategy with help from our segment explorer tool
Segment explorer allows you to gain insight into what segments will be most beneficial to create based on your audience’s current and past interactions with your site.
You can begin by choosing from some of our most popular segments:
- Visited once,
- Visited more than once,
- Ordered at least twice,
- Or create your own.
Once you have chosen your conditions for the segments, PureClarity will then show you customer data based on the conditions you selected.
For instance, if you clicked on a segment for first time visitors you will be presented with the reach, conversion rate, orders, revenue, and average order value data over a time range (today, last 30 days, custom etc.) of that customer segment condition. Collectively, this allows you to determine whether or not this would be a good segment to assign to a targeted campaign.
Unfortunately, the tool can’t predict the future, but it can give you more insight into what has the potential of converting more sales, boosting customer retention to combat churn, increasing average order, and growing your customer base. It is also useful for reducing marketing efforts, resource and cost.
Your success is our success. We pride ourselves on our excellent customer support – meaning that if you want help on how to do this or advice on which marketing campaigns to run we are just a call away!
PureClarity’s custom segments
Now let’s get down to the nitty gritty of it. Customer segmentation can be used on multiple features. Currently, you can use them on campaigns (i.e. product recommendations, banners, or carousels), popups, and live chat messaging.
To begin with we have pre-built segments that you can choose from, to get inspiration from, or use as they are. The list has been built based off of the most common segments we see our clients using on a daily basis that can be implemented across most ecommerce stores:
- Made One Purchase: The condition attached to this would be ‘customer has ordered once, at any point in time’. A campaign for this could be to capture their email address to enroll them onto your mailing list.
- VIP Customer: The conditions for this one that are currently present are ‘average order value, at any point in time, is more than 47.50’ and ‘customer has ordered more than 5 times, at any point in time’. These conditions are saying that someone that is a frequent customer that spends over X is a VIP and therefore eligible for a reward or loyalty program.
- First Time Visitor: Self explanatory – ‘visitors first visit’ – so the first time they have visited the store. This could be used in a multitude of ways, but a great way is to entice them in with your most popular products or great discount code.
- Multi-time Customer: This one focuses on customers that have ‘ordered more than 5 times, at any point’. Similar to the VIP Customer, you could target them with a campaign to sign them up to your loyalty program, or try targeting them with more product recommenders based on their previous visits (‘We thought you would love’).
- Off the Grid: Conditions set are: ‘Customer has ordered at least once, at any point in time’ and ‘Customer has ordered equal to 0 times, in the last 6 months’. Here we are targeting customers who have ordered previously at least once, but haven’t ordered in the last 6 months. Now we could try attaching this segment to a targeted personalised email campaign, that shows customers product recommenders based on their previous order, to make direct contact and entice them back in.
Create your own customer segments
Customer segments are becoming an increasingly crucial part of a marketing strategy. Once you have mapped out which customer segments are going to be the most valuable, you can begin creating your own custom segments in PureClarity. If you click on ‘add segment’ in the admin you will be able to then name your segment something memorable, choose the conditions, and attach it to a campaign (if you have one you could already use).
In this section we touch upon all the different segment conditions that you can apply to segment your campaigns. Note that more than one condition can be applied to each segment.
- Visits: If you remember earlier we used Visitors First Visit in our pre-built segments. This condition can be applied when you want to target customers based on how many times they have visited your store.
For example, if you selected the condition ‘Visits’ and then the ‘Behaviour’ ‘Visitor’s most recent visit’ you could then apply ‘was more than X months ago’ and then send out a targeted email reaching out to them to convince them to re-engage.
- Viewed: This condition can be used when you want to target your audiences based on what they have previously viewed. It allows you to segment based on viewing behaviour of products, categories, and brands in a current or past session.
An example of this would be targeting a 50% off all shoes popup to visitors who have viewed products in this category in their current session. Another one could be the same campaign in the form of an email highlighting a reduced price, targeting people who meet the criteria of: have viewed products in the shoe category, in the last 6 months, at least once.
- Bought: Here we look at visitors buying behaviours over various time periods for products, categories, and brands.
Let’s target customers based on what the customer has ordered (once) in the last 6 months. So say that they have ordered a style of cushion recently, you could create personalised product recommendations for complementary products next time they are on the site.
- Abandonment: This condition can be used when we want to target a customer based on their abandonment history.
Here we can select the duration of how long we want to wait until we launch this campaign at this audience. For example, we could target customers with a marketing campaign based on basket abandonment. This could be an email campaign reminding them that they still have products waiting for them in their basket or an exit-intent popup.
- Searches: Search applies to visitors’ search behaviour in current or past sessions. This can be separated into ‘visitor has searched for’ and ‘visitors last search was for’. Both then give you options to manually input search terms.
If you selected ‘visitor has searched for’ you could create a product carousel for said search term – let’s use flip flops – and showcase your flip flops and sandals in a nice carousel on the homepage.
- Cart*: This condition targets your customers based on their current cart activity and contents. You can choose from the behaviours: carts contains, cart does not contain, last item added was, average product value, total cart value, total number SKUs in cart, number of SKUs in cart, total number of items in cart, and number of items in cart.
For example, say you selected ‘total cart value’ then ‘more than X’ we could create a popup campaign that appears wherever they are on the site, giving customers that have a total value of more than £49.99 in their cart a 10% discount voucher with an expiration date of 24 hours. This incentivises them to purchase the products in their cart. *New and improved – new conditions added.
- Pages: This refers to any pages that they have or landed on during their current session.
This customer segment is good for if you want to push a certain campaign. For example, say you are in the furniture industry and want to push your mattress sale. You could create a segment based on the landing page that they come in on, by selecting the behaviour url containing the values ‘beds’, ‘mattress’ and ‘bedding’, then assign a dynamic banner campaign to highlight a buy one get one half price offer you have on your mattresses at the moment.
- UTM: This condition refers to the UTM details of the link that brought the visitor to the site. Options for this include: utm_campaign containing, utm_content containing, utm_ source containing, utm_term containing, utm_campaign not containing, utm_content not containing, utm_ source not containing and utm_term not containing.
For example, if we looked at the campaign we could see specifically it was the “Spring and Summer” version. Beyond this we could look at “Spring and Summer” from an email or from another medium such as social media.
- Device: The condition for this one is based on the device the user is using. This includes mobile, desktop or tablet devices.
Let’s say you know that a high percentage of your target customers – from PureClarity’s analytics and the segment explorer – are mobile visitors. You could run a mobile friendly popup campaign. And then separate ones designed for desktop and tablet.
- Location: This involves geographic segmentation. It targets visitors based on their location. There’s an option to target based on the country or more specifically the city. This is based on their current session.
Looking at your analytics you can determine where your customers are based. If you know that a lot of your custom comes from the USA, then you could target people living in the USA. For example, you could target them with personalised content around a national holiday such as Thanksgiving.
- Time of Day: The time of day at a visitor’s location. This condition allows you to specify a particular time session (e.g. between X and Y).
Let’s say you are in the beauty industry. You could include a segment on your homepage to show a carousel of morning skin care products between the hours of 06:00am and 01:00pm and then create another one that highlights your nighttime skin care products between the hours of 04:00pm and 12:00am.
- Weather & Season: Information about a visitor’s weather condition or season based on their location.
This customer segment is great if you have products that are weather or season related. For instance, picture you in the pets industry. You could create a segment where the weather is sunny in the visitors location (or that the season is summer) and then showcase your pet cooling toys, mats and beds through product recommenders labelled ‘Great to keep your furry friends cool’.
- PureClarity: Here we are looking at creating an audience segment based on an inbound visitor engaging with PureClarity outside of the website (e.g. email campaign). So in this instance the behaviour would be ‘clicked on email campaign X’.
For instance, if you have created an email campaign that includes X, Y, and Z product recommenders, and this customer has then interacted with this on the email, you could then set a campaign that targets those visitors with a banner advertising 10% discount on their next purchase.
- Source: This segment condition can be used when you want to segment your audiences based on the source that they have entered the site (e.g. Facebook, Google Ads, direct etc.)
For example, you might be running a seasonal campaign around Christmas time that is distributed across all your social media and digital platforms. It is useful to segment the audiences that come onto your site using this campaign so that the content on the site mirrors that campaign – reducing bounce rate, increasing conversion, and customer satisfaction. The content and messaging around this could be a seasonal banner and product recommendations highlighting ‘what’s hot this season’.
- Customer: Demographics about the user. Here you can select a segment based on age, gender, where they live etc.
For example, say you have a business that sells underwear and lingerie you could run a campaign targeting gender. One for males and one for females. This could be a popup that appears when the customer first enters the site, to get them quickly looking at the right content.
- Company Date: This condition can be used when you want to segment an audience based on their company timezone.
This could be of use in the scenario that a company who due to their timezone and culture do not work Fridays, so they could activate this segment to notify visitors when they visit their site on Friday’s that they are out of office, through a popup, and will be back in touch the next day etc. It would also work to feed into an ordered ‘Friday Deliver Monday’ campaign.
Start creating effective and valuable customer segments today!
If you aren’t already using automation to segment your audience then the bottom line is you must start. Personalised experiences are a proven way to win the hearts of your customers, build stronger customer relationships, and gain a competitive edge over other ecommerce businesses.
Start segmenting your audiences today. Get in touch – book a free discovery call!