19 Customer Segmentation Examples Your eCommerce Business Needs
What is Customer Segmentation?
Customer segmentation is the method of breaking a target market down into segments using specific variables such as demographics, behavioral, psychographic, benefits sought, geographical, etc.
To be exact:
Customer segmentation, also known as consumer segmentation helps identify the particular needs of each segment, discovering the best fit for a product, ultimately serving the segment better.
To create an irresistible product or service, one needs to know who they are selling to.
Through customer segmentation analysis, marketers can come up with the right messages, using the right words, to promote their products.
Meanwhile, ongoing refinement of the market and its segments inform the design of the product or service itself; by figuring out more about each segment and how they use the product, businesses can bring some characteristics forward and drop others.
A Short Back Story
Back in the day, after the end of my Master’s first semester exams, I was waiting for the results of Marketing 101. I was certain I had aced the exam, so I was pretty much waiting to be crowned prom queen without further ado.
The joke was on me.
I got 65%, which, considering my hard work, felt like I was Coyote and my plans for Road Runner had failed again.
I went to see the Professor. He went through my paper quickly, stumbled across this exercise and then said “Oh, yes, right here, your entire campaign is addressed to everyone. That’s what cost you.”
The question was about the STP methodology (: Segmentation-Targeting-Positioning) of a company selling paint.
I had thought that, since everyone needs to paint their walls every now and then, and saw no other group prevailing, the entire market was their potential market. (Spoiler alert: I was wrong)
Hence the 65%, well-deserved, I must say.
On my way home I kept telling myself that I will make the most out of this mistake, getting back what it deprived me of at the time (a high grade on a course I had studied so hard, done every optional assignment, etc.).
And I can tell you, to this day, never have I ever had to argue in favor of a marketing method more than I’ve had for this: segmentation.
Not getting your S-factor straight, you might as well kiss your six-digit marketing budget goodbye already.
If you should remember one thing from this section let it be this: You can’t be all things to all people. Kotler quote.
Wondering what the correct answer to the exam question was?
19 Customer Segmentation Examples You and Your Business Needs
1. Segment your eCommerce store Visitors on the Fly
Getting hold of users flocking to your eshop is of primary importance.
What better time to segment them than in real time, based on how they behave?
Your marketing team has already done the hard work and brought over to your website users. How did they get there?
Existing users came over to the site through a newsletter, a Facebook ad, an affiliate link, or your Website Notifications.
New users got to you through an influencer, a Linkedin ad, Google ads, an SEO search, an online coupon, or word of mouth.
As a result, you probably agree that these two categories can be further divided as follows:
Based on the frequency of their visiting:
Frequent users are those who seem unable to refrain from checking back to your website every once in a while.
By “frequent users” we do not necessarily mean frequent shoppers, so this customer segment could be further divided into those who are highly engaged and those who are not.
As a result, we need to devise ways to maintain the same level of excitement across the users who support us most consistently.
Meanwhile, we need to come up with ways to increase the engagement on the part of those who need an extra push.
Based on their loyalty:
Returning users are engaged enough to come back, keep our eshop as a top-of-mind option (which is major, I’m not arguing with that), but with whom we nevertheless need to maintain or increase their number of interactions.
Based on their level of engagement:
Engaged users can always use a reminder through a newsletter of a Facebook post/Facebook ad, but as a rule of thumb, they will come to you before you need to go to them.
Now, building on the theory of positive reinforcement, by rewarding someone for their behavior, you encourage them to repeat it.
As a result, coming up with actions designed for each of these segments, will increase your revenue.
Let’s consider the case of engaged users – Suppose you have an eshop selling coffee:
Establish a normal frequency for your eshop per day, week or month, depending on your product or service, eg. Ordering coffee 3 times a week.
Someone who orders coffee 5 times a week is a frequent, engaged customer.
If your established frequency is on a weekly basis, set up a pop-up window to appear to those who have visited more than 3 times (i.e. the avg. number) at the beginning of every week. If they have, show them a message similar to this:
“Hi, You are one of our most loyal customers! Thanks for that! How can we help you today?”.
From there, two buttons will be leading to your eshop and the other to your latest news, such as a new coffee blend you brought over, etc.
Always remind users to log in, or sign up if they haven’t.
Their doing so will help you craft more personalized messages and give them a far better, user experience, resembling closely real life.
For that reason, you should encourage them by rewarding for taking the time to do that: give them a 10% discount for their next order, or one coffee for free as soon as they have ordered two times from you, and so on.
This could look like this:
“Hey, stranger! Let’s not call each other stranger anymore! Want to be friends? Sign up and get a free cuppa and more!”
Based on their purchase behavior:
Let’s stick to the example of an online eshop.
Say that one of our customers signs in every day or so and places large orders in the morning and in the evening!
Maybe he/she places these orders on behalf of the department they work in. They should get different treatment. Create a segment with all your big spenders.
- Send them special greetings through popups when they visit.
- Send them special offers for, say, $30 orders or more.
- If you are doing any special pies or tarts, ping them with a special offer the week before so that they can plan their diet ahead, and so on.
Break down your website traffic into logged users and guest users, very frequent users, returning customers, one-off visitors, and so on.
2. Nudge users who have (or have not) completed an order in the last 30 days
It’s all fun and games while users are under your spell, but what happens when they don’t drop by your eshop any more?
What if they are no longer impressed by your popups or offers?
Email customer segmentation comes to the rescue once again:
Create a segment (be careful what you name the segment, as it might show): go for a cute name like “Getting back together”, “We missed those guys”, etc.
Establish the frequency that is considered normal for your eshop. Set up the automation to go off when someone has not been around for 30 days, for example.
Then serve them your email along with a new treat: “It’s been a month, [Josh]! Grab this fair trade chocolate with your next purchase – it’s on us!”
Users will get an email like:
“Hey, it’s been a while since we locked eyes over the coffee counter! We have new coffee blends!”
This is how you bring the real-life experience digitally!
3. Boost Sales with your Top Purchasers
Have you heard of the Pareto principle?
20% of your users bring in 80% of your revenue. And 80% of your revenue is what’s keeping you in business. So you gotta be on your best behavior with that 20%.
Create marketing automation flows for the top 20% users on your website:
Every month, your top20% users could receive an automated email giving them a special voucher or discount code to use in that month.
This will be leading these users further down the loyalty funnel- how cool is that?
And it only gets better with Moosend’s subscription plans giving you unlimited campaigns for every subscriber.
So, essentially, this automation doesn’t cost you anything and bring back so much money that would have gone to waste/would be left on the table otherwise.
4. Laser-target Specific Locations
Does your eshop serve multiple locations? In that case, how about we send your customers a virtual “hi”, only this time, a photo of the local branch and employees appears?
Imagine how insanely personable this would make a brand/eshop.
All of this through the magic of adding a custom field for Location to your subscription form! This will allow you to do location-based marketing on a whole new level.
Another idea is to set up weather-based product recommendations (FREE on Moosend – sign up here) so that users residing at a specific location will be prompted to make purchases depending on the weather, in real time.
5. Optimize your Messages for Specific Device Types
Is there a strong preference among your users/subscribers for the device type they choose to visit your website?
Smartphones and Tablets:
Is your eshop optimized for all devices? Is your web design mobile responsive?
iOS/Android/Windows: What does the operating system of your user’s devices tell you about them?
For one thing, it could help inform their income level (see iOS, iPhone, high-end customers, compared to Android users).
In fact, most apps for iOS are more expensive than for Android, because marketers use this as evidence of their income. Same would go for computers VS Mac VS Linux, etc.
6. Hold on to Personalized Data
This is going to be THE ULTIMATE CUSTOMER SEGMENTATION example. This segment is a breathing one because it changes as your users’ profiles change when they update their bios and change custom fields.
According to the industry you are in, you’ll want to set this segment up:
- If you are in fashion, a segment created off of the subscribers’ gender (based on what they entered when they signed up with you), marital status (if they have children you can notify them about sales in the Children’s department), etc.
- Are you in the home decoration industry? A user’s/subscriber’s taste in decoration items or particular brands might reveal a lot about what they identify with, either in terms of brand, or in terms of aesthetics, or even income. This way, if website tracking spots a particular preference for one brand over the rest, it could send out automatically generated product recommendation emails.
- If you are in the insurance industry, send your users what best matches their thoughts and mentality: is it insuring their car? Saving up for a new home? Leaving money aside for after they retire? Having every new contact automatically segmented into one of these groups helps you see what the majority of your users are, thus informing your buyer persona design better.
7. Re-engage With Registration that did not Order (1-month)
Whatever happened back there, we are taking the matter into our hands!
Leave no one behind; users who have not purchased from you are missing out on the sweet experience of shopping with you.
Those not shopping with you are keeping you behind getting bigger, greater, fancier, the best version of you. Not reaching your full potential is, ultimately, how you are hurting yourself.
Alternatively, you can just steal this automation we built for inactive subscriber re-engagement.
8. Reach out to Sign-ups that did not Order (3-months)
“Whoa, whoa, where’d you get my email address?”
THAT awkward moment when your subscribers signed up, (you had no onboarding email sequence set up but let’s not play put the blame on someone here), and now you are in the process of just setting everything up and you need to ring a bell or two.
Set up a segment for those customers who haven’t made a purchase from you (or checked your website at all in the meantime) for the past 3-4 months.
Subject line: “Ok, this is awkward!”
Email body: “WE’VE MET BEFORE- DON’T HIT THAT UNSUBSCRIBE BUTTON AT THE BOTTOM OF THE EMAIL!
Here’s what you’ve been missing out on this whole time, [Name]!
In the past 3 months since you visited, we:… “
…where you list what’s different about you in the last few months.
9. Boost your Revenue up to 25% with Cart Abandonment Emails
This is a chapter in itself. I’ve come up with a number of cart abandonment segments for you so choose the one you are most interested in.
For instance, if I had a B2B website, I would be more interested in cart abandoners who have carts worth $1000 or more, for example.
I could even have an automation in place to send a Webhook and have my sales team give them a call.
If I ever own a fashion eshop, I am most certainly creating segments for frequent users, top purchasers, coupon lovers.
I would see what revenue these three customer segments brought in; then spice things up with a few more segments to see whether they would be worth keeping an eye on.
If my sales eventually reached a plateau, then I would be reviewing my practices for the next quarter.
It’s all about doing, redoing, undoing, and all over again.
Here are some Cart Abandonment-specific customer segments:
Target cart abandoners who…
- are hesitant to buy and then it’s been 4 days before they know it and their carts have expired already
- are waiting for cart abandonment emails with discounts
- compare prices across sites to find the lowest order total this can be done with external software like Prisync (incl. taxes and shipping fees).
- have just 1 item in their cart
- have more than 3 items in their cart
- added items of $100 or more, but lower than $200/Cart abandoners whose carts are worth more than $250 but less than $400, and so on
10. What to do for B2B and B2C Customers
If you haven’t set up a different website for your B2B and B2C customers, then it’s high time you segmented the behavior of the two.
This would help to un-skew your analytics results.
Creating batches of bulk packages and see which ones your B2B clients they click, so you can then offer shipping fees accordingly, or give a free product.
11. Recover the Most Popular Product or Service per Customer Segment
Do you know which products/services on your site are the most popular with each of your segments? Because customer segmentation is mostly about that.
For example, 25-35-year-olds prefer product A and B, while 35-45-year-olds show a stronger preference for products C and F (missed product E there?).
By now you should know you can’t be all things to all people.
But you can be different things to different people.
Discovering your superpower for your primary target group and secondary target groups is major. If anything, you’ll know what to bring more of on your eshop.
And you will be able to create economies of scale for these items.
It’s the Pareto principle again; which are the top 5 items bringing in the most of your revenue?
Then bring in more of that instead of having to place orders of 100 different items.
The more niche you get the more you build a name for your brand and a following for your business.
12. Use Coupon Codes
It is totally acceptable that some people love coupons or discounts more than others. By running a few “test” campaigns across your mailing list, you’ll see which users buy.
These will be your segment “Coupons are Love”.
So, at any given time, when you need to give your revenue a little boost, you’ll be able to turn to this segment to do so.
This is how you can give your eshop sales a quick boost.
Haven’t caught your sales goals this month? There’s still hope! Send out to your coupon lovers!
And do what you have to do to keep that segment growing: try to feed more subscribers in this list as regularly as possible.
Alternative ideas for Coupon lovers:
It doesn’t have to be random coupons, it could be free delivery (that’s hard to say no to), free samples, a bonus of some kind, and so on!
This way, you will be able to track a substantial number of consumers who will place an order when there is an added benefit involved, such as complimentary products, services, accessories.
13. The “Are you sure?” Customer Segment
Some call them Libras, others call them IFNPs, others just call them hesitant, I call her “Anastasia” cause that’s my sister right there.
The kind of consumer who has to know everyone’s opinion WITH arguments, before they make their own decision.
And simply arguing what you like and why is not enough. Nuh-uh. You must defend your thesis.
“Here’s what subject A, B, C, and D said. Why do you think you are right?” (Fine, I’ll stop here, I guess you got the picture.)
This personality type is adorable (because my sister might actually be reading this article for once), loves to ask for feedback and make educated decisions.
I guess it is a way of paying attention to their needs and making the most of the knowledge that is readily available out there.
It’s when they start overanalyzing that they paralyze.
And THAT’s what your Trojan horse is going to be; read on.
Your eshop is no longer as unique as it used to be a few years back; now, competition is fierce.
You are not just competing with the business down the road, but literally every business with an advertising budget and an international marketing plan.
What’s your USP? Literally, a-n-y-thing that goes beyond everybody else’s offering.
If you are a coffee shop, it’s cookies, if you own a fashion store, it’s accessories/Buy 2 get the 2nd half price/a very, very cool packaging, if you are in the travel industry, it’s free museum tickets/a guide with the top trending places/free train tickets or bus pass, etc.
What’s your unicorn quality?
Yes, you need to differentiate your business for every one of the segments out there that matter to you and bring you revenue.
So, in this case, to steal the “second thought”’s hearts, give them more.
Create a customer segment for the users who “have viewed a specific product/page” and filter it with “number of times” (e.g. more than twice in the past seven days), and “have not purchased yet”.
Set up a marketing automation flow for this customer segment, and remember it should be activated only once per week or so, otherwise you’d be overflowing someone’s inbox with your emails – YOU NOW KNOW.
14. Show Users Similar Products
One of the Marketing commandments is “Know thy consumer”, but this would be incomplete without “Show thy consumer thou know it, too”.
Imagine how flattered your users would feel if they got an email from your brand customized to match their previous purchases.
So, if you are really looking for ways to stand out with customer segmentation, you can segment customers with newsletters on similar products to the ones they bought.
15. Show Users Updated Versions of the Items they Already Own
Another way to bring the personal feel of offline transactions to online shopping is by sending users updates on the new versions of the items they purchased.
A good customer segmentation example would be to get a newsletter for the newest model of the camera you already own.
Suppose you have purchased a GoPro Hero 5 camera.
Now, imagine when you registered your camera online, you were segmented into a new segment for the camera after next.
This means that, as soon as GoPro Hero 7 was released, you would get a personalized newsletter saying
“Hi [your name], is it time to say Hello to Hero 7? Check out its potential:”
16. Offer Users Complementary Products or Accessories
Do you know what else would be really cool?
Segmenting users based on their purchases and then sending them offers on complementary products or accessories.
This way, if they purchased a smartphone or a camera for example, but could not afford any cases or stabilizers at the time, you can now retarget them.
If they are considering purchasing a new model but cannot afford it, chances are they will be tempted to upgrade their equipment for less!
17. Advertise to Users
If you sell many brands, like Amara for instance, you could segment users based on their favorite brands.
As a case in point, Amara could segment customers who have clicked a specific link (i.e. MISSONI home products) more than 3 unique times (in at least 3 newsletters) so, every time they want to promote new MISSONI products or offers on MISSONI products they could target them.
As a result, users would feel appreciated, understood, and would ultimately be more likely to convert.
From there, the company could segment further those who purchase most often following these emails, entering them to a “highly-engaged, “MISSONI home fans” segment.
What’s more targeted (and flexibly broad) at the same time?
18. Surprise Visitors who have Viewed more than 3 Products
Here’s a cool way to discover whether certain users are looking for a present or just an excuse to spend some money!
Segment users who have viewed more than 6 products in a session.
A cool idea would be to set up an automation which segments your list based on who has viewed more than 6 products, over a specific time slot (e.g. in the past couple of days) and if they haven’t made a purchase, suggest the top 3 products based on popularity – Get a how-to here and here.
19. Visitors who have spent more than X minutes on any Product or Page
This is a segment which you can possibly come across more often, given that users can be idle on your page or just hesitant to proceed.
Your Marketing bot can pick it up from there and through predetermined questions guide the user around the site or to your Customer Support (even if you work for a small business and don’t have Customer Support, you can run it from your account!)
FAQ: Customer Segmentation VS Market Segmentation
On the one hand, market segmentation breaks a market down into separate segments using needs, interests, lifestyles or demographics as filters.
It’s concerned primarily with outlining the available social groups, etc. in the target market.
Customer segmentation helps us come up with a polished profile for our consumers.
Customer segments also serve as the basis for buyer personas.
How to do Customer Segmentation
Start with market segmentation; run market research or another type of data analysis to discover the segments your market is made up of.
As soon as you find your segment, ensure that the size or revenue potential from this segment will make your business viable.
If not, either pick a different segment (if you are still in the designing process of your product) or choose a different target market where you can find more of your ideal customers.
If you are launching your own eshop, consider the common characteristics of your cross-cultural audience and adapt your messages accordingly.
What is your ultimate goal? Align your strategy with your business goals.
For example, building upon the exam question, if your goal is to make your brand a synonym for environmentally-friendly, eco wall painting, work on manufacturing a product which is more eco-friendly than the rest in the market.
Spot weaknesses in other competing brands (if any) and use them to your advantage.
Anticipate opportunities and threats in the external environment and interpret them into actionable marketing. In other words, if they are going to pass a new law for “zero VOC” paint (an eco-friendly type, you need to make sure you have that.
Customer segmentation may serve different purposes and, as such, it can be applied in a different manner.
In Email Marketing list segmentation can be the underlying factor of underperforming email marketing campaigns.
For example, you can use customer segmentation on your existing mailing lists to recover users with specific characteristics, choosing from the following list, as seen on Moosend:
This way, you bring in data with dynamic segmentation.
With website tracking, you upgrade your analytics game as you can feed literally the entire customer journey to your favorite Email Marketing and Automation platform.
Having set up your marketing automation and top drip campaigns, you make the most of real-time segmentation, offering your new subscribers the best service, suited to their needs.
Back to the exam question:
So, if you sell wall paint, sure, everyone paints their walls, but not everyone makes decisions about this.
Who will you be targeting?
You need to break down the entire market of people who purchase paint into segments.
These could range in size or radius, for example:
- House painters,
- Young couples,
- Construction companies,
- Interior designers,
- Environmentally-conscious people,
- Male pensioners who are renovating their cottage houses or
- Female pensioners who are refreshing their home,
- Architects working in the Hospitality sector, and so on.
So, you need to pick which segment’s characteristics (size, entrance prospects, and so on) are more attractive and fitting for your product, to make your business more lucrative.
Size of the segment alone plays no major role per se as your segment could be niche, therefore you could be manufacturing a product for very few people, companies, etc, but make more money than anyone else in your industry.
Choosing your segment is followed by Targeting that segment through the right channels, using the appropriate language that will speak to their minds and hearts, and will brand your name into their perceptions as a brand personality (positioning).
And if you are looking for more inspiration around email list segmentation here are 24 additional ideas!
Consider market and customer segmentation along with its benefits as an integral part of your market research. You can’t hurry customer segmentation if you are looking to launch a profitable and sustainable business.
Start with a small selection of segments and track their performance over time. Add or remove segments along the way, depending on their performance.
Play around with segments either dynamically, or in real-time; Email Marketing, Conversational Marketing, and Website Tracking will give you the professional result you need, at a low cost.
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