The key to a successful online business is the recruitment and retention of valuable consumers. While every company relies on its own strategies to accomplish this goal, organizations frequently share one method: list segmentation.
This practice enables leaders to separate their database of customer contacts into various groupings. As a result, businesses can better tailor their marketing to specific audience members and improve not only their profits, but their credibility. SFG details five ways ecommerce companies can segment their client base for success:
1. Unengaged customers
Although it's important for online retailers to market to new consumers, it's actually more worthwhile – and less expensive – to focus on current clients. According to Invesp, it can cost up to five times more to attract customers than to simply retain those who have already made a purchase.
Therefore, ecommerce organizations should set their sights on turning inactive customers into engaged ones. Looking at their database, businesses can separate people who consistently make purchases from those who completed one transaction?and haven't returned since. These dormant-revenue opportunities are a great source of feedback and insight into why clients may not be as engaged as they once were. Online companies should not only send intriguing promotions to their group after segmentation, but request comments and criticism to improve interest in the future, according to Practical Ecommerce. Offers such as free shipping or a complimentary gift can encourage these inactive shoppers to return, but online companies should ensure these consumers know the deal is a one-time only promotion.
"Geographic information helps online retailers understand what products and services are important to their customers."
2. By location
One of the main draws of ecommerce businesses is that customers from across the country – and around the world – have access to the products and services being sold. Since so many people can purchase these items, online companies often contend with hefty databases. A smart way to sift through these contact lists and segment the audience is by location. Retailers can separate by country, state, county, city and more to improve their outreach efforts to customers.
Using geographic segmentation enables ecommerce organizations to divide their consumers and promote offers that will be beneficial for them due to where they live or tend to shop. Every location will yield different preferences from seasonal products to food and beyond, according to The Houston Chronicle.
3. By age and gender
Segmentation can be as easy or as difficult as online retailers want it to be. For those companies less familiar with the process, splitting databases up by age and gender is a good place to start. It's obvious that certain products and services will be better suited for either men or women, but what about consumers in different age ranges?
The amount of disposable income a person has varies with age – something ecommerce businesses need to take into consideration when sending out promotional offers. Those with less money to spend would benefit from a deal giving them a high percentage off of their purchase. On the other hand, more established shoppers may be more willing to add on multiple products to reach a level where free shipping is an option. Since age and factor can affect purchasing decisions, it's crucial for online retailers to take this segmentation information into consideration in their efforts to increase engagement.
4. Consistent shoppers
It's not uncommon for consumers to frequently purchase the same products, especially through ecommerce organizations that offer subscription services. Companies can segment their audience this way as well, separating consistent shoppers from those that purchase less often.
With this division, outreach can be tailored to suggest that people increase their spend via cross- or up-selling opportunities, according to Marketing Donut. Say, for example, that a company that sells men's shaving tools as their primary product began offering women's razors and shaving creams for an additional price. Marketers could frame the promotion as a spectacular deal for couples, while also asking for an extra investment from customers. By combining multiple products into one order and foreseeing consumer needs, online businesses can improve the level of engagement with their brand as well as their profits.
5. Using psychographics
Although utilizing geographics and demographics are a smart strategy for splitting up target audiences, online companies can learn a lot from dividing their consumers by psychographics – which can tell companies why consumers make certain purchases – as well. To complete this type of segmentation, ecommerce retailers should segregate consumers based on the following, according to Hubspot:
Psychographics give ecommerce businesses more well-rounded insights into their consumer base. Companies can achieve this level of understanding by including a interview-based question on outreach sent to existing clientele. Asking consumers more about themselves will not only make them feel valued, but will yield helpful information online companies can then use to their benefit.
Segmentation, while an important and worthwhile practice, can be difficult for online businesses to complete on their own. Luckily, they don't have to. SFG offers a wide variety of analytics assistance – including database management and list segmentation – ecommerce companies can utilize to better understand their audience.