Segmentation is the division of customer groups into parts to target marketing actions. In practice, it is a means for companies of all sizes to understand the needs of consumers and different target groups and to respond to them.
Segmentation is essential for the success of any business and for increasing conversions (sales) in e-commerce.
In order for a company's marketing to be effectively targeted at the right individuals and to serve customers in the best possible way, online retailers should and must also utilize customer segmentation.
Why is customer segmentation done?
Here are listed some benefits that segmentation brings to e-commerce.
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Targeting Marketing. After segmentation, marketing resources can be directed to the right place and the right people. An increasingly smaller portion of resources is used on the wrong people who do not belong to any of the online store's target groups and are not intending to buy. You can build more effective marketing automations that facilitate selling.
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Increasing Customer Lifetime Value. Through segmentation, more and more customers can be encouraged to make repeat purchases, thereby increasing revenue per customer (customer lifetime value increases). It is well known that increasing revenue from an existing customer is significantly more cost-effective than acquiring new customers.
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Improved customer loyalty. Through segmentation, the purchasing experiences of different customer groups can be personalized, thereby demonstrably increasing satisfaction with the online store's service and customer commitment to the company.
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Deepening Customer Understanding. By utilizing segmentation and purchasing behavior data, information about customers' purchasing habits and trends can be obtained. This helps to respond in a timely manner to changes in customer preferences and behavior, as well as to improve the online shopping experience, products, and the overall company strategy, thereby staying one step ahead of competitors.
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More efficient e-commerce. As already mentioned, segmentation helps to develop the implementation, product range, and service of the online store according to the needs of the customers and to ensure that these areas meet them.
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Increasing Awareness. Through segmentation, online store customers are reached on a more personal level, which enhances the company's memorability, builds brand identity, and increases awareness.
In addition, the data obtained from segmentation can be effectively utilized in other digital marketing channels, such as advertising campaigns and email marketing.
How to Implement Customer Segmentation in E-commerce
Segmentation is most commonly done based on demographic (age, gender, etc.), geographic (location), and psychographic (hobbies, values, etc.) information.
Although this information plays an important role in mapping customer needs and preferences, in e-commerce, segmentation should definitely also be based on real-time data obtained from purchasing behavior.
The most beneficial strategy for an online store is to define segments based on customer purchasing behavior and use this information to enhance and personalize the shopping experience. This way, the online store can generate conversions as efficiently as possible and simultaneously meet the needs of multiple target groups.
The end result is a personalized e-commerce experience, where the customer encounters exactly those products and offers that are most likely to appeal to their segment.
Customer segments can be created in the online store based on the following criteria, for example:
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Purchase History
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Viewed products
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Browsing habits
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Time spent in the online store
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Using offers
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Customer loyalty
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Interests and Needs
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Personal preferences (e.g., brands and models)
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Age
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Gender
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Geographical location
Information related to purchasing behavior, such as these, can be tracked using tools like Google Analytics.
Growly assists in customer segmentation and e-commerce digital marketing
Customer segmentation is necessary in every online store, as it is a critical part of every company's strategy and the success of the online store.
The journey from segmentation to improving the e-commerce experience and growing the business can, however, be long and arduous if one does not know what needs to be done.
If you need assistance with the matter, our digital agency can help. Growly has extensive experience and proven results in segmenting companies and online stores across various industries. We help find the strategy that suits your needs.
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