Magento 2 Customer Segmentation
What is Customer Segmentation?
Customer segmentation is the practice of splitting a customer base into different groups of individuals that are similar in particular ways related to marketing, such as gender, age, interests, and shopping habits.
Customer segmentation definition
The main idea is that every customer is different and that their marketing efforts would be served excellently if they target smaller and specific groups with messages that those consumers would find suitable and lead them to purchase something. Businesses also hope to obtain a deeper understanding of their customers’ needs and preferences with the idea of learning what each segment finds most valuable to more tailor marketing materials accurately toward that segment.
Types of Customer Segmentation
Once you’ve acquired enough knowledge about your customers, use it to divide your prospects and customers into segments. Let’s dive into further analysis of the four types of customer segmentationthat we have just mentioned.
1 Demographic Segmentation
Demographic segmentation is defined as a market segmentation method based on variables such as age, gender, income, etc. This segmentation helps organizations understand consumer behavior accurately that in turn, helps them perform better.
More than 60% of marketers admit that audience segmentation is very valuable in contributing to a great customer experience. And one of the most popular types of customer segmentation is to use demographic customer segmentation data.
2 Geographic Segmentation
Geographic segmentation means grouping customers by region, country, state, market size, or even climate. You need to customize your messages to different geographic segments having in mind the local weather or culture.
For example Porsche offers various kinds of product mixes with reference to the geographic region they cater to. Convertibles are offered more in the warmer south or southwest regions of the US than the north. As you can see, adjusting your offerings and marketing communications for diverse geographic segments provides higher value to consumers and inspires them to buy.
3 Behavioral Segmentation
Behavioral segmentation means segmenting customers predicated on the way they interact with your business.
Maybe you can build a segment for consumers who have added products to carts but did not finish the checkout. Or people who didn’t even add any products to their carts but simply window-shopped. Also, you can group them by the products or services they showed interest in or already bought.
Here are some common variables that determine behavior segmentation:
- Occasion:Segmentation based on purchases for a specific occasion such as Christmas, Weddings, or Halloween.
- Usage: Segmentation based on the repetition of their purchases.
Thinking Process: Segmentation based on the drive behind their purchase decisions.
4 Customer Journey Segmentation
Customers segmentation allow you to dynamically display content and promotions to specific customers, based on various properties. Some examples are customer address, order history, and shopping cart contents. You can optimize marketing initiatives based on targeted segments with shopping cart price rules.
Other than understanding buyer interests and preferences, you also need to understand which step of the buying process they are in. This type of customer segmentation is named customer journey or lifecycle-based segmentation.
Customer Segmentation Benefits in eCommerce
Here are some of the key customer segmentation benefits to online retailers when being incorporate it into the marketing tactics:
1 Higher Conversion Rates
Customers are more inclined to buy if your marketing messages are connected to their circumstances and interests. Therefore, it is easier for them to convert and make actual purchases in the near future.
2 Long-term Revenue from Customers
Acquiring new customers is more pricey than retaining the ones you already hold – concentrating on raising the lifetime value of each customer as much as possible by making your marketing contextual is a fundamental factor of long-term profitability. By identifying products your customers buy over their time, their Customer Lifetime Value (CLV) could be measured and proper retention tactics could be completed for every segment.
3 Better Insight into your customer base
Analyzing the performance of specific customer segments contributes important insight into the health of your customer base, allowing you to find out trends and patterns in what’s working and what isn’t. Segmenting customers by the products could produce deeper insights into the shopping behavior.
4 Helps in Acquiring Customers
When it comes to the effectiveness of acquiring new customers, segmenting customers can:
- Identify high-value and low-value segments and tailor your acquisition marketing respectively.
- Efficiently manage limited resources by concentrating efforts on the customers who are more inclined to buy your product.
5 Improve Customer Satisfaction and Retention
Customer segmentation eCommerce offer various advantages that improves customer satisfaction:
- Make customers believe they are special and are always getting a good deal.
- Tailor and improve existing products and services to satisfy the particular needs of a particular segment.
- Solve and compensate for problems and ensure complete satisfaction.
- Know your customers’ needs and accordingly base your recommendations.
- Have more efficient targeted and well-timed marketing messages.
- Increase customer loyalty and retention.
Create and delete customer segments
Create a segment:
The following steps use an example for creating a customer segment that targets female customers in Los Angeles.
Step 1: Add a customer segment
- On the Admin sidebar, go to Customers = Segments.
- In the upper-right corner, click Add Segment.
- Enter a Segment Name that identifies the customer segment when working in the Admin.
- Enter a brief Description that explains the purpose of the segment.
- Set Assigned to Website to the website where the customer segment can be used.
- Set the Status to Active or Inactive.
- Click Save and Continue Edit.
Step 2: Define the conditions
- In the left pane, click Conditions.
The default condition begins with If ALL of these conditions are TRUE: on the page.
- Create a condition that targets female customers:
- 1.Click the Add icon to display the list of conditions and select Gender.
- 2.Leave the default is condition control option.
- 3.Click … and select female.
- Create a condition that targets female customers:
- 1.Click the Add icon to display the list of conditions and select Gender.
- 2.Leave the default is condition control option.
- 3.Click … and select female.
- Create another condition that targets residents of Los Angeles:
- 1.On the next line, click the Add icon and select Customer Address.
- 2.Click the Add icon to display the list of address fields and select City.
- 3.Click is to display the condition control options and select contains.
- 4.Click … and enter Los Angeles.
- 5.On the next line, click the Add icon and select State/Province.
- 6.Leave the default is condition control option.
- 7.Click … and select United States > California. .
- Click Save and Continue Edit.
Step 3: Review the list of matched customers
- In the left pane, click Matched Customers to display all customers who match the condition.
Delete a customer segment
Conclusion:
Customer segmentation is a crucial strategy for businesses using the Magento platform. It allows businesses to identify and target specific groups of customers based on their characteristics, behaviors, and preferences. By dividing the customer base into segments, businesses can personalize their marketing efforts, improve customer experiences, and increase overall sales and customer satisfaction.
The benefits of customer segmentation in Magento are numerous. Firstly, it enables businesses to deliver targeted marketing campaigns tailored to the specific needs and preferences of each customer segment. This personalized approach increases the effectiveness of marketing efforts and improves customer engagement.
In conclusion, customer segmentation in Magento is a powerful strategy for businesses to maximize their marketing efforts, optimize product offerings, and enhance the overall customer experience. By leveraging the segmentation tools and features provided by Magento, businesses can create targeted campaigns, increase customer engagement, and drive growth and profitability in their e-commerce endeavors.