Ecommerce customer segmentation is an integral part of any brand’s online strategy. It allows them to target their audience with the right messaging and products, address specific customer needs and attract new shoppers in the process. Any ecommerce retailer worth their salt deploys some form of segmentation to increase order value and drive more conversion and revenue. Most importantly, segmentation allows brands to build deeper connections with each unique shopper – and there are a number of ways that can be accomplished.
In this article, we’ll explore 4 ways that brands can deploy segmentation in the ecommerce experience to win over current and prospective customers.
1. Leverage Geo-demographic Segmentation
When selling to customers in multiple cities or countries, you can easily leverage their location to personalize the products that shown to them. This is especially useful for:
Shoppers who live in different climates:
For instance, a shopper living in sunny California wouldn’t be as interested in basic winter essentials as a shopper who lives in Finland).
Nurturing first-time visitors:
Make it easier for these shoppers to understand their shipping options.
93% of shoppers are known to make a purchase if offered free shipping!
Let’s look at an example of how to nurture first-time visitors using geo-demographic segmentation. In the example below, the brand is promoting shipping options to a new customer in North America. Once you’ve created the segment that targets this specific subset of shoppers, you can then personalize the shipping information shown to them. For example, you can display shipping information on product pages in the form of a banner above the fold. Depending on the location you’re geo-targeting, it helps to localize the banner as much as possible:
To compare, let’s look at an example of what a customer in the UK would see on the same site after creating an additional segment targeting first-time visitors in that area. Note how the banner message has now change based on shipping capabilities for UK shoppers:
2. Segment UTM campaigns
Understanding where your traffic is coming from allows you to take your personalization to a more advanced level.
Using customer segmentation, you have the ability to segment UTM campaigns and display content that your shoppers are most interested in based on a variety of sources, mediums and campaigns. For example:
- Company name
- Summer sale
- Black Friday/Cyber Monday
- Christmas sale
- Valentine’s Day sale
Best of all, this tactic can be extended to any page of your ecommerce site. A real-life example of segmentation by UTM is fashion retailer Woodhouse. By creating a segment of shoppers who visit their site via an email newsletter promoting discounted products, the brand deploys custom homepage banners that are unique to these visitors.
The examples below shows what the Woodhouse’s homepage would look like if the brand did not segment UTM parameters:
In comparison, this is what their homepage would look like after implementing the custom UTM segment:
3. Enhance Product Recommendations with Segmented Up-selling
As you may already know, up-selling is the practice of displaying higher-ticket products alongside items a shopper is already viewing with the goal of increasing revenue and order value. Many retailers already use upselling tactics to drive more sales, but an added layer of segmentation allows you to offer an even more personalized experience to steer shoppers towards the most relevant products.
Trading Depot sells many products that are part of larger systems. For example, someone who is buying a new sink bowl for their kitchen might also look for kitchen taps and drainers. The brand saw this as an opportunity to up-sell customers by recommending products they’d likely buy together.
The image below shows how Trading Depot leverages an explicit and dynamic product bundle promoting items that “complete the look”:
4. Segment Customers Based on Lifecycle Value
To expand on the earlier section on nurturing first-time visitors, segmentation based on customer lifecycle enables retailers to group customers based on how often they make a repeat purchase. This is key in identifying which customers are the most loyal to your brand and which ones are likely to lapse (i.e. lose interest or go a significant time without interacting with your products).
Creating personalized experiences based on lifecycle stage
Each lifecycle segment has a specific set of characteristics and rules which can be leveraged to move shoppers down the funnel. For example:
For first time visitors and returning visitors:
Shoppers who are not that far along in the lifecycle will not be bothered with shipping information until it becomes relevant to them. Alternatively,
For prospective shoppers:
Reduce the need to display discount coupons by better identifying the prospects who don’t need an incentive to purchase. Additionally, display shipping information to prospects who are close to purchasing but are still deliberating the practicalities of the order.
For returning/loyal customers:
Predict brand and category affinities based on past browsing behavior, then use that data to target shoppers with improved messaging and/or a clever merchandising strategy.
Two examples of improving the experience for returning/loyal customers…
Through a simple A/B test on their Cart page, Beerhawk discovered that personalized recommendations on this page increase conversion rates and average order value for both first-time customers and repeat loyal customers. The brand then replicated the test on their homepage increase visibility and learn if the page location of the recommendations impact results.
Meanwhile, True Vintage displays product views to their segment of customers who have not purchased in the last 90 days:
When striving to deliver personalized experiences for first-time customers and drive one-time buyers towards becoming loyal shoppers, analyzing repeat purchase patterns has potential to impact the bottom line. However, based on the nature of default lifecycle segments, they don’t incorporate the monetary aspect of the shopping experience – such as average order value or lifetime spend.
With Nosto, you can create sub-segments of these valuable attributes (like a segment for big spenders) within the ‘loyal’ customer group (which are, essentially, your VIP customer group).
Eager to Learn More About Ecommerce Customer Segmentation?
Using Nosto’s Segmentation & Insights, you can gain a deeper understanding of every shopper that visits your store and how they interact with your products.
- With these Insights, you can answer important questions such as:
- Which category or brands are driving the most revenue per visit?
- What are the most popular products within a specific customer segment?
- What day of the week do different types of shoppers convert best?
- When and where you should invest more in your email or paid advertising strategy?
Interested in learning more about ecommerce customer segmentation? Read more about what makes segmentation so powerful as well as one unique benefit brands gain when leveraging AI-powered segmentation.