With customers valuing personalization as an essential part of their interaction with brands, ecommerce companies are increasingly leveraging segments to keep tabs on buyers’ needs.
That said, what counts as a personalized interaction? Is it enough to segment customers based on age, gender, and occupation and call it a day? Or do you need a larger focus on segmentation?
With 85% of customers favoring brands that treat them as individuals, it’s the latter — you need advanced ecommerce customer segmentation that caters to each buyer’s purchasing preferences to become popular among your target audience.
Read on to learn how to set up advanced email marketing segmentation for your brand.
Why is segmentation important in email marketing?
Email segmentation lets you send relevant content to target customers based on their interests, preferences, and behavior. Instead of sending bulk marketing messages, you create personalized strategies for each group of customers. This allows you to:
- Boost your conversion rates: By grouping customers into smaller cohorts, you can customize their interactions with your brand, which increases conversions since 56% of customers become repeat buyers after getting a personalized experience.
- Improve your reputation: With segmentation, you can remove unnecessary spam from your marketing channels. It improves engagement with the relevant audience, reduces your unsubscribe rate, and avoids penalties from email service providers.
- Increase your marketing ROI and revenue: The average return on investment for email marketing is $38 for every $1 spent, as email serves as a direct communication channel between the brand and the customer. By segmenting customers, you know just the right words each person wants to hear to increase the ROI further.
Types of customer segmentation
While there are several ways to group customers, popular segmentation models include:
- Demographic segmentation: Demographic segmentation refers to using demographics to divide the customer base into different groups. Examples include age, gender, occupation, marital status, and income.
- Psychographic segmentation: In psychographic segmentation, customers are grouped based on their psychological characteristics. Some examples are habits, interests, traits, and beliefs.
- Geographic segmentation: Geographic segmentation means grouping customers based on their location. For instance, you may group New Yorkers in a separate segment and Floridians in another.
- Behavioral segmentation: In behavioral segmentation, you can divide customers into specific groups based on their habits and behaviors. Examples include purchasing habits, browsing behavior, and website activity.
This model also includes advanced segments, like signup source, type of customer (new, loyal, or inactive), and high-value customers. - Technographic segmentation: Technographic segmentation refers to grouping customers based on how they interact with technology. Examples include users of different devices.
Advanced email ecommerce customer segmentation strategies
While standard groups help you get started, you need an advanced email customer segmentation strategy to develop dynamic segments that enhance your relationship with buyers, address their needs, and help them move along the customer lifecycle.
The best way to do so is to divide your sales funnel into 3 distinct sections — top of the funnel (TOFU), middle of the funnel (MOFU), and bottom of the funnel (BOFU) — and then use a point-based system to automate marketing messages.
1. Segment TOFU subscribers for more clicks
In TOFU, people aren’t ready to purchase. Instead, they just came into contact with your brand and are looking for more information to decide if you have something they need.
To offer a better experience to those searchers, you can segment them based on:
Demographics
Demographic segments are essential as a starting point. For instance, if you sell footwear, you must know if the lead requires men’s or women’s shoes. Besides that, age-based segmentation will help you decide between the categories you should promote.
So, group customers based on their age, gender, education, income, and other demographic characteristics.
While there are several ways to handle this, you can look at SSENSE’s opt-in form to see how to do it the easy way: Prospects decide the type of emails they want to receive, so SSENSE never has to guess based on their purchasing behavior.
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SSENSE segments ecommerce customers by gender in a newsletter opt-in form to improve the customer experience.
Like SSENSE, you can use an opt-in form to put subscribers into a couple of general groups. Alternatively, if you serve several major customer segments, you can go the Zara way by offering more than 2 options:
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Zara’s newsletter signup lets new customers provide their customer data and choose to receive updates on multiple product categories.
Since people looking for furniture won’t necessarily be interested in Zara’s beauty products, this segmentation helps the brand avoid spamming its potential customers.
Once you have the demographic data, you’ll have to qualify leads by assigning them different scores to identify whom you want to encourage to move down the customer journey.
While the qualifying process for demographics varies from business to business, here’s what it’ll look like for a U.S. beauty ecommerce business that serves young adults and doesn’t ship overseas:
- Gender:
- Women: 20 points
- Men: 5 points
- Age:
- 18-30: 15 points
- 31-50: 7 points
- 51-99: 0 points
- Location:
- United States: 10 points
- All other locations: -50 points
By integrating these scores into its marketing campaigns, the beauty store can automatically get the leads who are most interested in its products.
Signup source
While demographics serve as a great jumping-off point, you must also consider the circumstances in which the customer signed up for your newsletter.
Did the customers offer their contact details to enter a competition and win prizes? Or did they do so to get a discount or receive updates about an upcoming product? If it’s the former, you’ll get many leads who are more interested in freebies than your products. On the other hand, customers looking for discounts or updates are genuinely interested in your offerings.
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H&M offers a 10% discount on the first purchase after signing up for its newsletter.
As a result, you need to group those leads separately and prioritize customers who are looking at your products in your marketing strategies.
Besides social media contests and discounts, buyers may sign up for content assets — like gift guides, shopping lists, and curated recommendations. Such buyers often seek extra information to consider a specific brand, so you must also prioritize them.
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The Essential Man encourages readers to sign up for its newsletter to get a bonus shopping list.
To properly benefit from signup source segmentation and prioritize high-quality leads, you may configure a scoring pattern like the following example in your marketing automation platform:
- Signed up for a discount: 20 points
- Signed up for updates on new products: 15 points
- Signed up for a content asset: 10 points
- Signed up to enter a competition: 5 points
Since people signing up for a discount or updates on new products are more likely to buy from you, they’re higher on the priority list.
Engagement
Getting leads on your email list is a start. But you’ll need to track how leads interact with your brand to move potential customers down the sales pipeline into the middle of the funnel.
The most effective way to do that? Measure subscriber engagement. See how many emails customers open. Check if they click the links in the emails. Track how long they spend on product pages after clicking the links.
Beyond that, you can keep tabs on their actions, including downloading specification sheets, visiting contact pages, or checking your refund policy.
To prioritize quality leads in engagement-based segmentation, consider configuring a scoring mechanism like the one below in your email marketing tool:
- Downloads a content update for a specific product: 20 points
- Clicks through in the last 3 emails: 10 points
- Visits your contact page: 10 points
Since all these methods track engagement, you can use them to zero in on engaged customers and encourage them to purchase. For instance, if someone accumulates 100 points, you can use automation to send them relevant messaging to offer a discount or point them to more information about your products.
2. Grouping MOFU subscribers to turn them into customers
Customers who enter the MOFU stage are well aware of your brand and know what it offers. However, they’re still considering their options before they’re ready to purchase.
You can consider their interests, recommend relevant products, and keep them connected with your brand.
Let’s see how to do so via advanced segmentation:
Interests and preferences
A customer interested in sundresses isn’t ready to buy warm parkas from your online store. So, identify users’ preferences to know which products they want.
A great way to learn what users want is to let them tell you via a wishlist. Enable buyers to save their preferred items on a list so they can return later to purchase them.
You can use the wishlist to pinpoint what customers are interested in and send them personalized offers whenever an item on their list is on sale. For example, see how Daz 3D informs customers of on-sale wishlist items:
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Daz 3D lets customers know about on-sale wishlist items to enhance customer satisfaction.
Besides segmenting customers based on their interests, you can qualify leads based on the items they’re interested in. If they’re looking for high-value items, you can get a higher ROI chasing after them than if they’re on the lookout for cheaper products.
While the exact lead qualification would vary from business to business, here’s how that looks for a furniture store:
- Interested in sofas: 20 points
- Interested in tables: 15 points
- Interested in chairs: 7 points
- Interested in lamps: 5 points
- Interested in vases: 2 points
Product recommendations
Personalized product recommendations remain the second most-wanted feature among ecommerce shoppers after frictionless payments. By recommending products customers are likely interested in, you can help reduce their time spent searching for individual products.
IKEA is one of the best examples of how to offer personalized recommendations. It analyzes recently viewed products to showcase the possible looks a customer can achieve by buying a bunch of items together:
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IKEA recommends products based on recently viewed items.
While going the IKEA way might require a significant effort, you can draw inspiration from Amazon, which recommends individual items based on the user’s prior interactions:
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Amazon recommends top picks based on a customer’s browsing history and purchases.
What’s more? You can leverage AI-based product recommendations to display the products customers are more likely to buy to encourage conversions.
Or, you can go the H&M route and recommend products that shoppers with similar profiles bought:
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H&M recommends products that similar shoppers bought.
That said, you also need to monitor how buyers interact with your recommendations. If they check out your suggestions, they’re interested. If not, you might be overwhelming them.
So, consider qualifying MOFU leads by assigning the following scores in your marketing automation tool:
- Clicked a recommended product: 10 points
- Clicked more than 1 recommended product in the same session: 15 points
- Didn’t click any recommended products: -5 points
- Clicked a recommended product and added it to the cart but didn’t buy: 20 points
Cart abandonment
According to the Baymard Institute, 70% of people abandon their carts during their ecommerce shopping journeys. If you can get even a portion of those lost sales back, you’ll significantly increase your revenue.
An abandoned cart email is a great way to remind customers of their incomplete purchases. For instance, if someone forgot to check out because of a distraction, an email within the first hour would bring them back to the sales pipeline.
You can use customers’ interactions with the cart to qualify your MOFU leads:
- Adds an item to their cart: 30 points
- Abandons their cart: -5 points
- Opens an abandoned cart email: 5 points
- Clicks through to their cart in an abandoned cart email: 15 points
3. Segmenting BOFU leads to increase customer loyalty and revenue
Customers in the BOFU stage have already bought from you. And now, the goal is to encourage them to become repeat customers — or increase customer retention.
Purchase history
If someone buys a specific product, recommend related items to increase their customer lifetime value. For example, Harney & Sons includes purchase-based recommendations as part of its post-purchase thank-you emails.
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Harney & Sons recommends items to its loyal customers based on their purchases.
Similarly, you can also create ecommerce segments to recommend products based on customers’:
- Favorite brands
- Viewed products
- Wishlist items
Besides that, you’ll need to qualify BOFU leads using their purchase activity to determine how often you should send them personalized recommendations via email campaigns:
- Purchased 2-3 products within 2 months: 15 points
- Purchased more than 3 products within 2 months: 20 points
- Hasn’t purchased in 6 months: -10 points
- Has purchased more than 2 high-profit products within 3 months: 20 points
Purchase amount
If someone wants to buy sale items, they require a different approach than a customer who buys premium items.
For instance, check out how Huckberry promoted a new style of travel boots. It built a story with a cool graphic to position the boots as separate from run-of-the-mill items. Plus, it specifically targeted its adventurers audience segment by rolling up the shoe, mentioning “weekender,” and calling it “The perfect travel boot”:
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How Huckberry markets its higher-value items.
On the other hand, Huckberry aims to get the attention of discount shoppers by focusing on the sale:
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Huckberry alerts bargain-focused customers to a clearance sale.
To ensure your emails fit your audience, you must segment customers based on their purchase amounts.
Besides that, since the customers buying higher-value items bring in more revenue, you must prioritize them in your marketing efforts by configuring the following scores in your automation tool:
- Purchase amount is $100+: 15 points
- Purchase amount is $51-99: 10 points
- Purchase amount is $21-50: 7 points
- Purchase amount is $20 or less: 5 points
Inactive customers
Don’t forget your inactive customers. If you keep sending them emails and they keep ignoring you, you risk negatively affecting your email reputation.
Instead, try re-engaging inactive customers by sending them prominent guides or podcasts to see if they’re interested. For example, Snow Peak, a camping gear brand, shared a guide on tying knots:
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Snow Peak shares a knot-tying guide.
And if you don’t see much promise, you can go the Animoto way and encourage customers to update their email preferences.
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Animoto asks recipients to update their email preferences.
That said, before taking a bigger step, consider understanding their reasons for inactivity. Try different CTAs via A/B testing to see if one direction is more successful. Additionally, consider changing your copy.
To track inactive customers in your email list, you can go for the following scoring:
- Hasn’t visited website in the past 6 months: -20 points
- Hasn’t opened any of your last 10 emails: -5 points
And if a particular customer accumulates a large negative score, like -100 or -500 points, remove them from the list.
Ecommerce customer segmentation: Mistakes to avoid
While different customer segments let you leverage buyer behavior to offer a personalized experience, you’ll still need to avoid these common pitfalls:
- Working with insufficient data: You’ll get shaky results if you don’t have sufficient demographic information or depend on irrelevant data. Instead of offering customers what they want, you’ll alienate them.
- Solely relying on past behavior: Just because customers liked a particular marketing tactic a year ago doesn’t mean you’ll get a similar response now. So, track customer behavior metrics and optimize your marketing campaigns accordingly.
- Nonalignment of business goals and segmentation: Create customer segments according to your goals. If you’re targeting value-focused buyers, you need to market features instead of crafting stories that luxury shoppers like.
Boost sales with highly relevant ecommerce customer segments
With advanced email marketing segmentation, you get to separate your exact target audience from the general public.
That said, to qualify all these leads without the help of a developer, you’ll need a marketing automation tool that enables your team to create lead filters, automation workflows, and relevant messages.
If you’re on the lookout for such a tool, consider GetResponse MAX. It comes with intelligent workflows, personalized recommendations, and existing engagement metrics.