Post by nurnobisorker14 on Oct 30, 2024 5:04:46 GMT -5
Online store customer segmentation (also known as market segmentation) is the marketing practice of dividing a customer base into subgroups. It can be based on geographic, demographic, psychographic, behavioral, and other characteristics. The key to effective segmentation is dividing customers into groups based on the prediction of their value to the business. Each individual group is then targeted with different strategies to extract maximum value from both high- and low-profit customers.
Contents hide
1) Why is customer segmentation necessary?
2) Customer segmentation criteria
3) Basic methods of segmentation
3.1) Analysis and reports are useful for segmentation
4) Segmentation errors
5) Conclusion
Why is customer segmentation necessary?
When using a one-size-fits-all approach to marketing, even the smartest strategy may not yield the desired results. No matter how effective your marketing efforts are for some, they may fail for others. This is where customer segmentation comes into play. When done correctly, it can bring many benefits to a business:
More effective marketing campaigns
Segmenting online store customers allows companies to create more targeted marketing strategies that target specific segments. According to a study by a qualified bulk email campaigns research center, campaigns segmented by customer interests have an average of 74% higher click-through rates. This is compared to non-segmented campaigns.
Improved offers
Having a clear understanding of who your customers are and what they want from your products/services allows you to fine-tune and optimize your offerings. This will allow you to meet your customers’ needs and expectations, which will further increase customer satisfaction.
Extensibility
Divide potential and existing customers into specific subgroups (TA). As a result, companies can better understand what customers might be interested in. This, in turn, facilitates the expansion of new products and services relevant to their target audience.
More customer retention
Customer segmentation can help companies develop more targeted customer retention strategies by identifying the company's most paying customers so they can create personalized offers or re-engage those who have not purchased in a while.
Price optimization
Determine the social and financial status of customers. This helps companies to easily set appropriate prices for products/services that their customers consider reasonable.
Increase in income
Spend less time, resources, and marketing efforts on less profitable customer segments and more on the most successful customer segments. The result is increased revenue, profitability, and a lower cost of sales.
Increase your sales with Mokka
Customer Segmentation Criteria
There are many different criteria by which you can segment your online store customers. Here are some of the most common criteria, also known as customer segmentation types:
Demographic segmentation
One of the simplest ways to segment customers is by their demographic characteristics. This includes factors such as age, gender, income, location, etc.
For example, you can segment your customers by age groups such as 18-24, 25-34, 35-44, 45-54, and 55+. Or you can segment them by income level such as $0-30K, $30K-60K.
Psychographic segmentation
In addition to demographic segmentation, you can also segment your customers based on their psychographic characteristics. This includes factors such as lifestyle, personality, values, and interests.
For example, you can segment your customers by lifestyle, such as health conscious, eco-friendly, or trend setters. Or you can segment them by personality type, such as introverts or extroverts.
Segmentation by past purchases
Another effective way to segment customers is by their past purchase history on your eCommerce store. This could include factors such as what they have purchased, how often they purchase, how much they spend, and other similar data.
For example, you can segment your customers by their frequency of purchase, such as one-time buyers, occasional buyers, and repeat buyers. Or you can segment them by the type of products they typically buy, such as essentials, luxury items, or seasonal items.
Segmentation by traffic source
You can also segment them by the traffic source they come from. This could include factors such as referring sites, organic keywords, paid advertising, or social media. This way, you can better understand which marketing channels are most effective in reaching your target market.
For example, you can segment your customers by the site they refer to, such as Google, Facebook, or Pinterest. Or you can segment them by the organic keyword they used to find your site, such as “men's shoes” or “women's clothing.”
Segmentation by visitor type
First-time customers are not the same as repeat customers. And prospects are not the same as leads. That’s why it can be helpful to segment your visitors by type.
Basic methods of segmentation
Segmenting your online store customers should involve four steps to find out which customers are buying from your store. These steps are:
Primary research – this can be done on a representative group of customers or on all customers. The more customers tell you about their shopping experience in your store, the more data you will get, and this is the key to your success. Primary survey is designed to collect information about motives, attitudes and buying behavior. This research will tell us why the customer came to us and what made him buy a product from us. During these interviews or surveys, we will receive a questionnaire with an assessment of individual product characteristics, service, product-related activities, etc. These surveys provide a lot of information about the sales process, delivery, price and even marketing strategy;
Interview analysis is the second important stage of segmentation. The analysis is carried out using one of the selected quantitative methods. The corresponding “sifting” of the data allows us to group all our respondents.
Contents hide
1) Why is customer segmentation necessary?
2) Customer segmentation criteria
3) Basic methods of segmentation
3.1) Analysis and reports are useful for segmentation
4) Segmentation errors
5) Conclusion
Why is customer segmentation necessary?
When using a one-size-fits-all approach to marketing, even the smartest strategy may not yield the desired results. No matter how effective your marketing efforts are for some, they may fail for others. This is where customer segmentation comes into play. When done correctly, it can bring many benefits to a business:
More effective marketing campaigns
Segmenting online store customers allows companies to create more targeted marketing strategies that target specific segments. According to a study by a qualified bulk email campaigns research center, campaigns segmented by customer interests have an average of 74% higher click-through rates. This is compared to non-segmented campaigns.
Improved offers
Having a clear understanding of who your customers are and what they want from your products/services allows you to fine-tune and optimize your offerings. This will allow you to meet your customers’ needs and expectations, which will further increase customer satisfaction.
Extensibility
Divide potential and existing customers into specific subgroups (TA). As a result, companies can better understand what customers might be interested in. This, in turn, facilitates the expansion of new products and services relevant to their target audience.
More customer retention
Customer segmentation can help companies develop more targeted customer retention strategies by identifying the company's most paying customers so they can create personalized offers or re-engage those who have not purchased in a while.
Price optimization
Determine the social and financial status of customers. This helps companies to easily set appropriate prices for products/services that their customers consider reasonable.
Increase in income
Spend less time, resources, and marketing efforts on less profitable customer segments and more on the most successful customer segments. The result is increased revenue, profitability, and a lower cost of sales.
Increase your sales with Mokka
Customer Segmentation Criteria
There are many different criteria by which you can segment your online store customers. Here are some of the most common criteria, also known as customer segmentation types:
Demographic segmentation
One of the simplest ways to segment customers is by their demographic characteristics. This includes factors such as age, gender, income, location, etc.
For example, you can segment your customers by age groups such as 18-24, 25-34, 35-44, 45-54, and 55+. Or you can segment them by income level such as $0-30K, $30K-60K.
Psychographic segmentation
In addition to demographic segmentation, you can also segment your customers based on their psychographic characteristics. This includes factors such as lifestyle, personality, values, and interests.
For example, you can segment your customers by lifestyle, such as health conscious, eco-friendly, or trend setters. Or you can segment them by personality type, such as introverts or extroverts.
Segmentation by past purchases
Another effective way to segment customers is by their past purchase history on your eCommerce store. This could include factors such as what they have purchased, how often they purchase, how much they spend, and other similar data.
For example, you can segment your customers by their frequency of purchase, such as one-time buyers, occasional buyers, and repeat buyers. Or you can segment them by the type of products they typically buy, such as essentials, luxury items, or seasonal items.
Segmentation by traffic source
You can also segment them by the traffic source they come from. This could include factors such as referring sites, organic keywords, paid advertising, or social media. This way, you can better understand which marketing channels are most effective in reaching your target market.
For example, you can segment your customers by the site they refer to, such as Google, Facebook, or Pinterest. Or you can segment them by the organic keyword they used to find your site, such as “men's shoes” or “women's clothing.”
Segmentation by visitor type
First-time customers are not the same as repeat customers. And prospects are not the same as leads. That’s why it can be helpful to segment your visitors by type.
Basic methods of segmentation
Segmenting your online store customers should involve four steps to find out which customers are buying from your store. These steps are:
Primary research – this can be done on a representative group of customers or on all customers. The more customers tell you about their shopping experience in your store, the more data you will get, and this is the key to your success. Primary survey is designed to collect information about motives, attitudes and buying behavior. This research will tell us why the customer came to us and what made him buy a product from us. During these interviews or surveys, we will receive a questionnaire with an assessment of individual product characteristics, service, product-related activities, etc. These surveys provide a lot of information about the sales process, delivery, price and even marketing strategy;
Interview analysis is the second important stage of segmentation. The analysis is carried out using one of the selected quantitative methods. The corresponding “sifting” of the data allows us to group all our respondents.