How to boost online conversions with customer segmentation
If you’re looking to build a successful ecommerce business, the best place to start is by segmenting your customer base. Here’s a stat for you: marketers who segment their customers into groups see more than seven times higher revenue from email campaigns than those who don’t.
Customer segmentation means, in short, to identify certain characteristics about each customer (more on this later), put people with similar characteristics into groups, then target each group with different messaging based on what’s most relevant to them and their buying habits.
Customer segmentation isn’t just about email campaigns; done right, it can take every element of your ecommerce strategy to the next level.
Customer segmentation boosts your revenues and reduces costs
In 2021, a one-size-fits-all approach to digital marketing doesn’t cut it any more. In fact, as many as 80% of customers now expect a personalised online experience . If you don’t give your customers a hyper-personalised experience, you risk increasing your bounce rate, where they leave your site without clicking on anything, and missing out on opportunities for conversions. Segmentation is key; it takes all the guesswork out of the equation.
There are lots of ways it can boost your bottom line:
- Higher average order values: Segmenting your customers can identify which products each group are most likely to be interested in, so you can show them the ideal promotion for them – opening up new opportunities for cross selling and upselling. And that means they could be taking a heavier basket to the checkout. More on this here.
- Increased loyalty and retention: You can also use your insights on different customer groups to offer a deeper level of customer service, tailoring their entire experience to them to be more helpful at every touchpoint – from one-to-one dialogue in live chats to advice in follow-up emails and blogs. On this, more here.
- Improved customer engagement: Everyone likes to communicate with retailers in their own way. Some customers prefer email, others the phone, and still others, social media. By segmenting your customers, you can meet them where they are – reaching out on the channel that’s best for them.
- Increased website traffic: Segmentation is also effective in drawing more visitors to your site in the first place. By tailor-making promotions, development and marketing strategies for specific audiences, you’re giving them a better reason to click through to your site from Google or wherever else they’ve found you.
- Lower customer retention & acquisition costs: Customersegmentation minimises the risk of spending time and money on generic campaigns that don’t speak to your target market – and don’t work. If you already know what motivates each customer group to make a purchase, you’re less likely to go straight over their heads.
- A competitive advantage: Grouping similar customers together may well uncover trends in customer buying habits that your competitors haven’t identified. Let’s say you sell university textbooks. One of your customer segments will be students. And if, for example, one of them has told you through your customer service channels that it’s dissertation season right now, you could target all your student customers with products or helpful tips to help them de-stress or study more productively.
Six ways to segment your customers into groups
So, what does customer segmentation look like in practice? There’s no one size that fits all. Depending on your products and your marketing strategy, there are several different ways you might want to group your customers together.
1. Demographic segmentation
This one’s all about who your customers are as individuals; primarily, their age group and gender. More detailed demographic segmentation might also include their income, education, family size and occupation.
Demographic segmentation is what makes Facebook ads so effective (and how they make so much money!); their algorithms take information you’ve already given them, like your birthday, and use it to show you more relevant ads to you.
2. Geographic segmentation
This one’s fairly self-explanatory; you’re grouping your customers based on where they are in the world. You might break it down by country, by region (like Yorkshire & the Humber or the U.S. Midwest), by city or even, sometimes, by postcode. It’s easy to segment website visitors geographically; their IP address, the unique number assigned to any device connected to a WiFi or data network, tells you everything you need to know.
3. Behavioural segmentation
In behavioural segmentation, we’re looking at what people do on your site and when. Maybe they’re here for the third time in as many days, and they’ve clicked on the same product each time – getting as far as checkout yesterday, then changing their mind at the last moment. Or maybe they’re a first time visitor, and they’re viewing lots of different products, all discounted in your Summer sale.
Whatever they’re doing, they’re showing you what they’re interested in and what might motivate them to buy (the person browsing your Sale items, for example, is clearly most interested in price). That gives you another way to group them, based on their individual behaviours.
4. Psychographic segmentation
Here, we’re thinking about what else might be motivating different customers to buy different things. Psychographic segmentation takes our interests, beliefs, personality traits and habits into account.
If, say, you’re a sportswear retailer, you could segment your customers based on the activities they do, and how often (exercise junkie or reluctant first-timer?). You might also be interested in why they’re buying sportswear in the first place (Weight loss? Competition? The post-match social?). The answers to either of these questions could indicate which product they’re most likely to buy.
5. Value-based segmentation
This is an important one for retailers selling big ticket items; you want to know who can afford/is likely to spend on your high end product lines. Marketers call this a customer’s ‘economic value’.
Value-based segmentation allows you to adapt your prices for different customer groups; you can increase them for those you know are happy to pay more, and reduce them for those who need the lowest possible price to motivate them to make a purchase.
6. Persona-based segmentation
This kind of segmentation could be based on any, or all, of the variables we’ve looked at above. Customer personas are fictional characters who represent your target customers. A very basic persona might be something like (“Joe, aged 31, keen swimmer, lives in Newcastle, earns £34,999-£44,999 a year).
The idea is to imagine the specific people you’re targeting, so you can give them the messaging, products and offers that are right for them. We know, for example, that Joe loves swimming and earns above the average annual salary in his region, so he’s likely to spend a little more on his hobby that others might do – perhaps on waterproof earphones, or an expensive pair of goggles.
How PureClarity’s AI helps clients segment their customers instantly
PureClarity’s intelligent ecommerce personalisation platform makes customer segmentation easy. It works using cookies, the snippets of code embedded into web pages which monitor how you’re navigating around the site.
First, you can choose how you’d like to segment your customers, based on your own marketing goals. Segments could include:
- Visits – how often and when
- Views: products, categories and brands
- What they’ve bought: which items and when
- Abandonment: when they’ve abandoned their basket, and what they had in it
- Searches: what they’ve searched for today, and in the past
- Basket: what’s currently in their basket
- Pages: which ones they’ve been on today, like product pages or your contact page
- Location, time of day & weather: where they’re browsing from, and their time of day right now
- Device: what they’re browsing on, like an Android phone or Desktop PC
- Source: where they came from – like a Facebook link, Google search page or entering your URL directly
- Customer: their gender and age
There’s no effort needed on your part to collect this information; it’s all done in milliseconds by the AI.
Then, it’s time to put these insights to good use. You can show each and every segment – and there might be hundreds of them – a different marketing message personalised to them, in on-page campaigns like banners and product recommendations, in pop-ups, in email campaigns and in live chat.
Here’s how that helped Cutwel, a PureClarity client, increased their overall conversion rate by 35.7% through adopting PureClarity’s automated personalization technology, presenting each customer with recommendations that are relevant to them.
Ready to try it for yourself?
Then let’s get started. PureClarity helps ecommerce businesses like yours to be better than Amazon. With affordable, easy to implement personalisation software, we can help you to segment your customers, be more effective in your marketing campaigns and grow your business.