In the E-commerce world, around 80% of worldwide consumers try online shopping at least once, it is the greatest opportunity for E-commerce businesses to build a promising relationship with their existing customers.
But how can you understand your customers better?
With customer segmentation, it divides customer data into groups that share the same behavior and characteristics such as gender, taste or shopping patterns, interests, and more.
Today, In my blog, I will share the best practices for customer segmentation that retailers are using lately.
Customer segmentation Examples for Ecommerce Excellence
A&F segment by gender (Women and Men) has a uniform jeans campaign.
It’s important to remember that only segmentation by demographic with the same campaign for both genders will not do wonders.
So what you can incorporate from the A & F campaign is that they have hopped into their customer profiles to see what trends appeal to their female customers such as vintage jeans and what appeals to their male customers such as fitted jeans when it comes to selling denim.
For Age, we have H&M who has done customer segmentation properly. It has ads that target back-to-school, primary school, and university students.
This above shared is sent to their student target base. With the promise of a discount, this works well for the budget-friendly university student.
The Email campaign of Nasty Gal has a fine target segment: the young working-class professional waiting for payday.
Nasty Gal frequently targets millennials, but here they go one step ahead and target millennials by their socio-economic status to boost the email’s relevance.
As an outcome, it works really nicely because they speak the language of their target-demographic whilst offering a sale that goes hand in hand with the idea of payday
Religion segmentation is crucial as it connects with the sentiments of the Audience. Harvey Nichols is famously a British store and has a wide international presence because of customer segmentation. The above-shared print ad is an example of how they segment by religion by using Ramadan to target their Muslim demographic.
Understanding and appreciating who your customers are, what products they like, and what they believe are key pillars to becoming more relevant within different market segment
Demographic segmentation based on occupation is a smart way to see what jobs your customers have, and then deliver them with hyper-targeted campaigns.
For example, Loft takes a similar discount approach that usually reels in students, but here target teachers instead.
If you want to target a specific job function, you should keep in mind seasonality, and what will actually grab the attention of those specific customers. This Loft discount is for the Autumn holiday period when teachers are off work.
This goes a long way with their customers, who end up leaving positive reviews on the website
Birthdays are the most favorite days for the audience in the entire 365 days.
So you can gain a huge following if you can segment your audience by their birthdays, and then send them personalized emails. Sephora leverages this segmentation pretty well to boost revenue but to make this work you should offer your customers the option to create an account so you can gather their birthday data.
Copy Sephora and give incentives or rewards for signing up (on birthdays or otherwise).
In psychographic segmentation we have lifestyle, and based on this you can segment your audience. For example, North Face has different lifestyle segments like, “explorer”, “traveler”, “hiker”, “extreme athlete” etc., with relevant products that they then push to each segment.
For example, the above ad targets the segment: “traveler/explorer”. Psychographic segmentation can define your overall brand personality in line with your customers’ lifestyle.
Segmenting by new customers is the first step in dividing your shoppers according to their lifecycle stages, Here you can take the example of ThredUp.
To create segments-within-segment of your customer lifecycle data, there are few questions you should be asking:
Are they one-time customers?
Do they have a high potential to make more purchases?
Did they subscribe/sign-up with you?
Did they use discount codes to complete their first purchases?
By replacing your behavioral data with demographics you could already start recommending relevant products or personalizing your welcome emails.
For example, David Jones pushes this welcome email to the multi-variable segment we’ve just discussed and thus increases their relevancy.
Now we have Repeat customers who have already purchased with you before and have come back.
Within this segment, you could create micro-segments based on your buyers’ behavior that looks at repeat customers who have come twice or repeat customers who haven’t been back in a while.
Those who haven’t come back in a while are your “at-risk” customers and can be grouped into the segment so that you know to further engage them to get them hooked again.
If we talk about Loyal customers, they are just like repeat customers but way more active. They regularly connect with your brand, campaigns, and offers to purchase from your store.
Depending on your loyalty strategy, sometimes these customers are members of a program or collecting points. That means that loyal low spenders are different from loyal high spenders – but each segment should be equally nurtured.
For example, DSW segments their loyal members, and then targets them with this email campaign, showing how much they need to spend to earn $10.
Loyal customers are those shoppers that could be brand evangelists. They can even refer to friends, which means you should look to reward this behavior. Give early access to certain products, identify tiers of loyalty within this segment, and then find creative ways to keep this segment happy and involved.
The major issue brands are facing is how to recover their cart abandonment. So in this segmentation, you can track behavior and segment by analyzing which customer has left products in their carts without checking out.
Once segmented a friendly reminder as an email to drive customers back to your checkout page can do wonders for your stores.
For example, Bonobos do this well by delivering their abandoned cart segment with such email.
Occasion Based Purchasing
Now, another way to carry out behavioral segmentation is to segment your campaigns into occasion purchasing ads. This will help target relevant customers.
For example, Starbucks targets the morning customer looking for breakfast in this ad above. But of course, every Starbucks campaign is occasion-based from their Pumpkin Spiced Lattes that are associated with Autumn.
Price Conscious Shopper Segment
Shopping personas are also easier to find if you have a clever customer segmentation strategy with you. Price-conscious shoppers can be originated by tracking on-site behavior.
For example, imagine you have a customer who:
Browses for discounted products
Has been brought back to your webshop with a discount code
Sorts the product lister page from Low-to-High price
Such shopping behavior is easy to track and such customers can be segmented and grouped to “price-conscious” shopper segments.
Source and Device
Now after segmenting your customers based on their lifecycle stages, you should be thinking out of the box I.e looking beyond your store site:
Where are these customers coming from?
It is essential because if a lot of customers have been directed to your website shop from social media, you should optimize your ads or even having a custom landing page.
Maybe your customer segmentation shows that there’s a popular, formal source that’s directing most of your customers to your store. This kind of segmentation can provide you with necessary information on how shopping behavior differs for people coming from social media vs. search engines vs. paid ads.
You can also additionally create segments within the “source” of people coming from Google vs. Yahoo, or LinkedIn vs. Facebook, as you may find that behavior differs from search engine to search engine, with similar attributes still clustered together.
According to a study, 50% of consumers shop more on mobile than in-store. This means that the other 50% are shopping on other devices
So knowing from which device(desktop, mobile, Tablet) your customers are accessing your online store is significant.
Customer segmentation is the simplest yet the most effective strategy. You should make it your “must-plan” strategy and delight your customers by segmenting according to their demographic, psychographics, and purchasing behavior.
With the use of statistics and analytics, it divides large customers’ data into smaller subgroups in order to better target their needs.
Customer segmentation should be a living mechanism rapidly adapting to changes in customer portfolio, business models, and data sources.