E-commerce: Market segmentation strategies can grow your sales

Originally Published: 2/27/2017
Updated: 5/15/2018

Before you can create a great digital experience, you need to know who you’re building it for, and the more intimately you understand your audience archetypes, the better you’ll be able to communicate with them.

Here at Gravitate, we start the conversation about creating digital experiences to drive e-commerce web sales with a discussion about target audiences and personas, but beyond understanding personas, we follow another method to learn more about your audience and personalize their experience: segmentation.

Segmentation means dividing your audience into subgroups based on a characteristic or behavior. There’s no end to this process: your customer database can be sliced and diced every which way, but your best segments will be unique, stable, and large enough to to be measurable.

A segmentation strategy should be unique to your company’s goals and audience types, so don’t consider the list below a one-size-fits-all segmentation plan. It may, however, start your motor and get you thinking about your target personas and the opportunities available to you.

To put it simply, a segment should matter. Below are four segments you can use to split your audience into groups and improve your communication with them through email marketing, social media or paid search.

Brick-and-mortar versus digital-only

If you have a brick-and-mortar shop, you might encourage your customers to take action: attend an in-store event, donate to a cause, follow you on social media, visit your website or subscribe to your email newsletter.

It’s 2017, though, and your business exists far beyond this brick-and-mortar shop. There’s a whole world of potential customers within your reach, and the customers who live 3,000 miles away may require a different marketing message than the ones who wander in with a cup of coffee on Saturday morning.

This digital-only audience might share key similarities with your in-store audience (that’s where a Facebook lookalike audience might come into play). The message itself, however, should differ.

By segmenting brick-and-mortar versus digital-only customers, you’ll start to learn what specifically resonates with each audience subgroup.

Engaged versus unengaged

The only guarantee about your customers and potential customers is that their habits will be unpredictable.

A few might faithfully open every email newsletter you send. A few others might consistently ignore every email you send. Others will fall in between, across the wide spectrum of user consumption habit.

MailChimp, to use a common example, gives you a number of segmentation options, including the ability to create segments of subscribers who have:

• opened any or all of the last five campaigns
• not opened any or all of the last five campaigns
• not clicked any of the last five campaigns

Using the second option above, your next campaign can target unengaged customers, and you can move forward confidently knowing that they didn’t consume any of the previous content you shared with them.

One-off versus repeat customers

When you track the frequency with which your customers shop with you, you can segment them into one-off, repeat, or loyal customers, as well as non-customers.

In doing so, you can measure the efficacy of your content against each one of those segments, learn from the data, and apply it to future marketing efforts.

If a piece of content in your next email campaign produces a higher-than-expected click rate from non-customers, then you can use this content elsewhere to drive engagement from other potential customers.

Product versus product

You sell different products so you can appeal to different types of people.

If you sold your own watercolor paintings, you wouldn’t just paint Mount Hood and leave it at that. You’d paint other mountains, rivers, and landmarks in Oregon, too, and then you might start to paint scenic places in Washington State, California, and Hawaii—all in an attempt to appeal to different people who may cherish different places.

With segmentation, you can create groups of people based on their interest in products.

Armed with knowledge of their interest in Hawaii-themed paintings, you can send them more Hawaii-related content in email marketing efforts, retarget them on AdWords, or sponsor a Hawaii-related post on Facebook so you reach them again with content you know will resonate with them.

Segmenting your audiences by product interest will make you more likely to succeed when your content reaches a potential customer a second, third or fourth time.

Bottom line: market segmentation allows you to better personalize your message. A study from Gartner predicts companies excelling in personalization will outsell companies that don’t by 20 percent by 2018, and segmentation goes hand-in-hand.

There’s no shortage of marketing technology out there to help you segment and personalize your message, but your strategy doesn’t have to be expensive. Start by using your existing customer database and marketing platforms (i.e., MailChimp, AdWords, Facebook Ads Manager) to do basic segmentation today, and you’ll start seeing better results in your e-commerce sales.