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eCommerce Marketing Blog

How Better Customer Segmentation Will Improve Your Email Marketing

Posted by Paul Kaye on Apr 23, 2015 12:00:00 PM

ecommerceEvery retailer knows that customer browse-abandonment and cart-abandonment pose both a problem and a huge opportunity. On one hand, it’s problematic that customers view products but don’t purchase them. That is certainly something every retailer should make an effort to understand and to solve.

However, browse and cart abandonment also pose a great opportunity to recapture customers, because they represent low-hanging fruit: it’s easier to make a sale from someone who was just on your website and even went to the extent of adding a product to their shopping cart, than it is to sell something to someone who has never been to your website. And generally, the latter often means just giving more money to Google.

Retailers have a great opportunity to reconnect with browse & cart abandonment shoppers with targeted, personalized emails that offer incentive for coming back and completing orders. It’ll save on marketing expenses and increase sales.

How to Achieve This?

Communicating with customers en masse via email marketing has always been an easy and cost-efficient way to increase sales. Most retailers should expect about a 10-20% revenue contribution through a standard email communication. However, there are ways to leverage the value of email much more, and to extract as high as 25% of total revenue from the email channel.

The answer lies in customer segmentation.

Most online retailers know about segmentation and that it can be a valuable addition to the marketing arsenal, but they may not understand how powerful it can be or how to take advantage of it. So, they continue to send the same daily sales notifications about the same products to their entire lists every day. The result is completely non-optimized sales results from these campaigns. And for some retailers, that’s fine – they see a positive ROI from their email marketing investment, and are happy enough with that. However, they can really boost that ROI with just a little added effort, and be a marketing hero at their company.

First of all, it’s important to understand what is customer segmentation?

Customer segmentation allows a retailer to separate and then target specific groups of customers and then to allocate marketing resources directed to those specific groups to best effect. Classic customer segmentation is based on identifying groups of customer by gender or location. Good segmentation today can go much further, and allow marketers to create groups of shoppers who share similar purchasing habits.

5 of the most valuable customer segments:

Segment #1: Shopping Cart Abandonment Shoppers

This is one of the most commonly leveraged segments today. Basically, abandoned cart segments find customers who have added products to their cart but failed to check out or purchase them. It is very effective as a sales recovery tactic. Statistics show that once these segments are isolated and communication begins with them, sales from the email channel can increase net 8%.

As mentioned, it’s really important that retailers understand why customers are abandoning their carts in the first place. Reasons are varied: payment process was too difficult, the website jammed up, customer lost interest, etc.

Segment #2: Browse Abandonment Shoppers

Certain retail channels, such as those in the luxury goods or travel categories, have a specific type of customer, who usually takes longer to make purchasing decisions. During decision time – which can last for months – isn’t it a good idea to communicate with these people from time to time? During times of lengthy product consideration, there are several devices that a retailer can use to lure customers back to their website to complete orders. Coupons, time-sensitive discounts, and other incentives can certainly help. But it’s also likely that simply putting the item in front of the customer again and reminding her about the item that she was looking at could be all it takes to push her to purchase.

The primary idea is to segment customers who have visited a product during a specific timeframe a certain number of times, but have not yet purchased, then communicate with them.

Segment #3: Best Customers

“Best customers” is the simplest segment, and could certainly be one of the most important. Statistic show that customers who purchase often are willing to spend more in a brief period of time. As such, it is (a.) essential to know who these customers are and (b.) establish rewards for their loyalty. While every retailer is in the business of finding new customers, they cannot forget about those who got them to where they are today. These customers should be appreciated and rewarded.

Segment #4. Recurrent Category Shoppers

Most often, groups of customers are likely to buy the same types of products over and over, and they don’t have to have the same sort of demographic background as each other in order to fall into the same segment. An example of this multiple-persona would be the PlayStation 4 video game enthusiast: This person could be a 13-year old boy who shops only for video games when he is online shopping, a 35-year-old female lawyer who buys lots of video games – as well as everything else -- online, or a 71-year old male retiree, who has bought only 2 video games online in the past year. What we know, however, is they all share a fondness for PS 4 video games, so that is a segment worth creating and communicating with about new games that are about to launch.

Segment #5: The MIA

Would it be useful to you to isolate customers who meet all of these criteria?

  • Made at least 2 orders in the past 12 months
  • Spent more than $250 in those 2 or more orders
  • Have visited the website more than 2 times in the past 4 months
  • Have spent $0 in the last 4 months

Wouldn’t you like to reach these customers? Good segmentation tools will allow you to do that. In fact, good segmentation will allow you to break down your customer lists many different ways so that you are able to isolate the customers most valuable to you at any given time, and to whom you want to reestablish a 1:1 marketing relationship.

Learn more about how Strands Retail can help you make the most of your audience segmentation.

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Topics: Ecommerce Marketing

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