Customer Segmentation in E-Commerce
Today, customers are more than ever at the centre of e-commerce. Whereas in the past it was still important to present the product as skilfully as possible, in times of high competition, long-term customer loyalty as well as the development and maintenance of customer relationships have top priority. But how exactly does this work when every customer ultimately has different needs of a company?
This is where customer segmentation comes into play. With the help of customer segmentation, it is possible to divide customers into congruent customer segments, with the aim of addressing the customer groups more precisely and precisely where they are. In the following, we will look at customer segmentation in e-commerce. We take a look at the advantages of forming different customer groups and which customer groups actually exist.
What exactly does customer segmentation mean?
Customer segmentation is a method of dividing certain customers, to whom the same characteristics and attributes are assigned, into groups or customer segments. When segmenting customers, it is assumed that the groups formed have the same or almost identical needs and demands and consequently also react positively to the same marketing efforts. So if customer groups are defined, it is possible to develop a custom-fit and personalised marketing strategy for each of the individual segments. The following rule applies: the smaller the customer segment, the more personalised the marketing.
Why is customer segmentation so important?
Customer segmentation allows a much better overview of the different customers, so that the target group-specific approach can be implemented more efficiently. On the one hand, this prevents wastage and, on the other, ensures strong customer loyalty.
More and more online shops are becoming aware that an “onesizefit strategy” is hardly target-oriented and successful today. According to a study by PwC, 31% of respondents clearly prefer to see personalised rather than non-personalised advertising. Experts point out that younger target groups in particular understand personalised advertising as a service. However, it is important not to be intrusive and not to disrupt the user’s shopping experience.
Customers are exposed to an immense flood of information every day. As a result, they increasingly want a tailored shopping experience that starts with advertising and continues along the customer journey well beyond checkout. The price, if the needs are fulfilled, often recedes into the background and is no longer a primary decision criterion.
By grouping customer groups in e-commerce in such a way that they share the same interests, desires and behaviours, more targeted and cost-efficient marketing measures are possible that give customers the feeling that they are the focus of attention.
New technologies in online marketing make customer segmentation much easier: products, services and marketing are adapted to the needs and requirements of the customer segment during customer segmentation and each customer from the group is treated accordingly.
How to define customer segments?
The basis for customer segmentation is market research data. Here, it is primarily a matter of recording the needs and ideas as well as wishes and goals of the customers with regard to an offer, a product or a service. Once the foundation has been laid from the collected information, customer segments are formed that include customers with similar characteristics. These characteristics can be differentiated into customer segmentation in B2C and B2B.
Examples of customer segmentation in B2C:
- Age
- Occupation
- Sex, gender
- Residential location
- Motivations
- Lifestyle
- Values
- Activity level
- Media usage
Example of customer segmentation in B2B:
- Industry
- Company size
- Company structure
- Locations
- Customer groups
- Products and services
- Order volume
- Turnover
- Orientation
- Philosophy
Different types of buyers
In e-commerce, different customers with different interests, intentions and perceptions are constantly bustling about. For effective customer segmentation, it is important to know the different types of buyers. With such a customer segmentation model, different types of customers can be identified on the basis of individual needs and used accordingly for the segmentation of customer groups. Below is an example of a customer segmentation model for e-commerce.
The goal-oriented customer
The determined customer knows what he is looking for and what he wants. Usually he has already informed himself about a product or service through various sources and is now looking for the right offer. Since he already knows what he wants, he proceeds quickly in his research. The first impression is enough for him. If this matches his ideas, he goes to the checkout without hesitation and buys the product.
Conversion possibilities of the customer group:
- Clearly communicated USPs
- Appealing product images
- Accessible web store
- Uncomplicated checkout
The hesitant customer
In contrast to the determined customer, the hesitant customer initially only allows himself to be inspired and informed. They like to browse websites to get an overview of new trends and possibilities. They are less direct, but spend much longer on websites. He is interested in the latest products and offers, attaches importance to recommendations and orients himself to the best-selling products, for example. At the same time, they are more volatile and much more indecisive.
Converting customer groups:
- Show latest and most popular products
- Get in touch with customers via uptain newsletter popups
- Product recommendations
- Detailed information about products and services
The informing customer
The informing customer spends a lot of time researching, but usually already has a clear idea about the product. At the time of the website visit, they may have just started, be the middle of, or already about to make a purchase. As a rule, this customer will look around on different pages. An important basis for this customer to decide in favour of an online shop is trust. This is gained, for example, by offering comprehensive and detailed advice, for which the customer service should take sufficient time. The focus here is equally on self-services, such as detailed product descriptions, a blog, videos, downloads such as white papers or checklists.
Conversion possibilities of customer groups:
- Comprehensive product descriptions
- Easy-to-understand texts
- Testimonials
- Intelligent software solutions that recognise when a visitor needs support and offer contact to support via WhatsApp and/or Messenger Chat
- Make product comparisons possible
- Intuitive navigation
The price-oriented customer
The price-oriented customer is mostly looking for the best value for money. He is concerned with finding a good deal. If the price-oriented customer has the feeling that he can get a bargain, he is tempted to make an unplanned purchase. Nevertheless, he is often on comparison portals and rarely makes a purchase if the price is above his expectations. However, this can be overcome with special offers, coupons, discounts or newsletter vouchers.
Conversion possibilities of customer groups:
- Clearly marked offer prices
- Visibly displaying discounts and savings
- Intelligently displayed coupons with exit intent pop-ups and dropout emails from uptain
- Sales and outlet pages
Customer segmentation & targeting efficiency
Customers today want to feel that everything is geared to their needs when they enter an online shop. However, companies first have to know these needs, because not all customers are the same. With customer segmentation, you fathom your customers and divide them into customer segments with the same or similar characteristics, expectations and demands.
This makes it possible to design precise marketing measures based on the segments. Intelligent tools such as those from uptain, for example, ensure precise playout of exit intent pop-ups according to customer groups and contribute to completely automated communication with new customers, existing customers, dealers and employees. In combination with customised conversion options for customer groups, you offer all customers a unique user experience that responds precisely to their needs. This provides real added value, builds trust, strengthens loyalty and increases purchase rates.
Frequently asked questions about customer segmentation
How do you define customer segments?
Customer segments are built on market research data that records the needs, ideas, wishes and goals your customers have regarding an offer, product or service. On that foundation you form segments containing customers with similar characteristics. The criteria differ by business model, and the rule of thumb is simple: the smaller the segment, the more personalised the marketing you can build for it.
What exactly does customer segmentation mean?
Customer segmentation is a method of dividing customers who share the same characteristics and attributes into groups, or segments. The assumption is that each group has identical or near-identical needs and demands and therefore responds positively to the same marketing measures. Once the groups are defined, you can develop a custom-fit, personalised marketing strategy for every single segment.
Which criteria are used for customer segmentation in B2C and B2B?
They differ by business model. In B2C, common criteria are age, occupation, sex and gender, residential location, motivations, lifestyle, values, activity level and media usage. In B2B, segmentation usually draws on industry, company size, company structure, locations, customer groups, products and services, order volume, turnover, orientation and philosophy. All of them are derived from market research data.
How do online shops use customer segments in their marketing?
Segments allow precise marketing measures tailored to each group’s characteristics, expectations and demands. Intelligent tools play out exit intent pop-ups according to customer group and automate communication with new customers, existing customers, dealers and employees. Combined with conversion options matched to each group, this creates a user experience that responds to actual needs, builds trust, strengthens loyalty and increases purchase rates.
Which types of buyers exist in e-commerce?
A common segmentation model distinguishes four. The goal-oriented customer knows exactly what they want and buys quickly if the first impression fits. The hesitant customer browses for inspiration, stays longer and relies on recommendations and bestsellers. The informing customer researches extensively and needs trust, detailed advice and comparisons. The price-oriented customer looks for the best value and responds to offers and discounts.
How can online shops convince price-oriented customers?
Price-oriented shoppers look for the best value for money and rarely buy above their price expectation, but the feeling of a bargain can trigger an unplanned purchase. Mark offer prices clearly, display discounts and savings visibly, and set up sales and outlet pages. Coupons shown intelligently through exit intent pop-ups and abandonment emails address exactly this group at the decisive moment.
Why is customer segmentation so important?
Segmentation gives a much better overview of different customers, so a target-group-specific approach can be implemented more efficiently: it prevents wastage and secures strong customer loyalty. A one-size-fits-all strategy is barely target-oriented today, since customers face a flood of information and want a tailored shopping experience. According to a PwC study, 31% of respondents clearly prefer personalised advertising to non-personalised advertising.
