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Customer Segmentation strategies for e-commerce SMEs

Customer segmentation enables an e-commerce retail business to tailor its offering to ensure it is more compelling for a specific cluster of customers. But how do you translate data into segmentation, into clear actions that ultimately increase sales? Having a clear set of customer segmentation strategies is crucial. A retailer needs to have a clear vision of what it hopes to achieve with each segment in order to know how to build the segmentation and what data to use.

Customer segmentation strategies for e-commerce SMEs: have a clear vision of how you want to use the segmentation

Although the idea behind customer segmentation is fairly straightforward, a business still needs to know why it is generating the data, and what it will be used for. Retailers need to do a bit of forward-planning before instilling any form of customer segmentation. For example, will the data be used to determine the overall customer communication strategy? Or will it be used for more tactical means, such as determining which customers receive what level of discount in any upcoming promotions? Knowing this information beforehand will ensure that a business knows what data to look out for, and how to use this effectively moving forwards.

Don’t rely solely on a single Customer Segmentation

Determining a customer segmentation strategy will improve a retail business’s sales funnel, but it’s important that a retailer is also able to use other methods to determine a customer’s behaviour. Segmentation is generally built around a customer’s behaviours, attitudes, age and gender (like Mosaic, Define and Acorn. While a segmentation like this might provide some useful contextual information, it doesn’t necessarily tell you why a customer chose your business in the first place. For example, two customers who sit in the same segment may respond to marketing messages in completely different ways. One may prefer e-mail messages, while the other may prefer messages via social media. Building a granular profile of individual customers allows a business to be more flexible and effective when converting customers.

Track the performance of your segments

Segmentation can deliver a lot of data to a retailer about its customers. But it’s important that a retailer knows how it will track the performance of the segments it creates. In the first instance, a retail business should have a very specific idea of what it wants each segment to do. Once a business knows what it expects from each segment, it should then use this information to drive its KPI strategy. This will allow a business to measure the success of any marketing to the segments, against any projections. Keeping track of sales conversions based on segments will allow a retailer to track successful promotions, while pinpointing any problems within other segments should they arise.

Having the right kind of marketing segmentation strategy should be paramount for any business that sells online. But it’s also important that the business knows how to use this information moving forward. Many businesses will have customers that behave in completely different ways. So while one strategy may work for one particular business, it may not necessarily work for another. Ensure your customer segmentation strategies are right for your business, and how your business will use the information generated by each segment moving forwards.