What is audience segmentation in eCommerce?

Audience segmentation in eCommerce is the process of dividing a large customer base into smaller, more defined groups (segments) based on shared characteristics such as demographics, behaviours, and psychographics. This strategy allows businesses to tailor their marketing efforts more accurately, offering personalised experiences that can lead to higher engagement rates and increased conversions.

How does advanced audience segmentation improve marketing effectiveness?

Advanced audience segmentation enhances marketing effectiveness by using detailed, real-time data to deliver hyper-personalised experiences to different customer groups. Techniques like behavioural data analysis, predictive analytics, and the use of customer data platforms (CDPs) provide a dynamic understanding of customer preferences and behaviours, improving campaign targeting, optimising resource allocation, and potentially boosting conversion rates.

Why is engagement-based segmentation critical for eCommerce growth?

Engagement-based segmentation categorises customers based on their interaction levels with the brand, such as website visits, social media activity, or email responsiveness. This method is critical as it helps businesses identify which customers are most active and likely to convert, allowing for more focused and resource-efficient marketing efforts. Additionally, it identifies less engaged customers who may need more attention or different strategies to increase their activity levels, helping to optimise overall marketing ROI and drive sustainable eCommerce growth.

Why use advanced segmentation tactics?

Advanced segmentation tactics—using real-time behavioural insights, predictive analytics, and integrated customer data platforms—provide a more comprehensive and dynamic understanding of customer segments. By using these strategies, you can: - Deliver hyper-personalised experiences that resonate with each individual customer - Optimise your marketing campaigns and resource allocation based on segment-specific behaviours and profitability - Anticipate your customer's needs and preferences so you can stay one step ahead of the competition - Continuously test and refine your segmentation approach to drive ongoing improvements

Advanced audience segmentation tactics to drive eCommerce growth

Have you ever wondered how the most successful eCommerce brands are able to connect with their customers on such a deep level? The secret lies in advanced audience segmentation.

Just check out these eye-opening stats:

Companies that leverage personalised marketing experiences see an average conversion rate increase of 20%. (Monetate) Can you imagine what a 20% boost could do for your bottom line?
80% of consumers are more likely to buy from a company that offers personalised experiences. (Epsilon) Clearly, customers crave that personal touch.
60% of consumers say that they will likely become repeat buyers after a personalised shopping experience with a particular company. (Segment) Building that loyal customer base is key for sustainable growth.
78% of consumers have chosen, recommended, or paid more for a brand that provides a personalised service or experience. (M cKinsey) Personalisation isn't just nice to have - it can give you a serious competitive edge.

The true power of segmentation lies in its ability to tailor your messaging, offers, and experiences to the specific needs of different customer groups. No more of that outdated "one-size-fits-all" approach - it's time to deliver the level of personalisation your customers are looking for.

In this blog post, we'll share advanced audience segmentation tactics that you can implement to take your customer segmentation strategy to new heights. We’ll explore leveraging behavioural data, predictive analytics, customer data platforms, and more. By the end, you'll have a toolbox of strategies to help you connect with your customers on a deeper level and drive serious business growth.

The foundation of audience segmentation

Okay, let's start by breaking down what audience segmentation is all about. In simple terms, it's the process of dividing your larger customer base into smaller, more manageable groups or "segments" based on shared characteristics. These segments can be defined by all sorts of factors - from demographics and geography to behavioural patterns and psychographics.

As mentioned, the primary goal of audience segmentation is to enable more personalised and targeted marketing efforts. By understanding the unique needs, preferences, and pain points of each segment, you can craft tailored messaging, products, and experiences that resonate more effectively with their customers. This, in turn, can lead to higher engagement, increased conversions, and greater customer lifetime value.

Traditional segmentation methods

Traditionally, eCommerce businesses have relied on several well-established segmentation methods such as:

Demographic segmentation: Dividing customers based on characteristics such as age, gender, income, job role, and education level. For example, a clothing retailer might target products at women aged 20-30 who are college-educated.
Geographic segmentation: Grouping customers according to their location, whether it's by country, region, city, or even neighbourhood. This type of segmentation is crucial for businesses whose products or services may appeal differently depending on location.
Psychographic segmentation: Segmenting customers based on their attitudes, values, interests, lifestyles, and personality traits. This can be particularly useful for businesses looking to market products that align with certain personal identities or values.

Now, I know what you're probably thinking - "Yeah, yeah, I've heard all about traditional segmentation methods before." Fair point. Demographic, geographic, and psychographic - these are all well-established approaches that eCommerce businesses have been using for years, and each of these methods has its strengths and can be highly effective. But let's be real - traditional segmentation methods just don't cut it anymore.

Your customers are unique individuals with their own specific needs, preferences, and pain points. And if you really want to connect with them on a deep level, you need to go beyond those basic segmentation tactics. This brings us nicely to the need for more advanced tactics.

The need for advanced tactics

Advanced segmentation tactics—using real-time behavioural insights, predictive analytics, and integrated customer data platforms—provide a more comprehensive and dynamic understanding of customer segments.

By using these strategies, you can:

Deliver hyper-personalised experiences that resonate with each individual customer
Optimise your marketing campaigns and resource allocation based on segment-specific behaviours and profitability
Anticipate your customer's needs and preferences so you can stay one step ahead of the competition
Continuously test and refine your segmentation approach to drive ongoing improvements

So, let's dive into the tactics!

Advanced Segmentation Tactics

Customer Data Platforms (CDPs)

The first tactic is the use of customer data platforms or CDPs for short. CDPs are a game-changer when it comes to maximising the potential of all the other tactics we're about to cover.

CDPs provide a way to centralise data from all your different touchpoints and systems, giving you a 360-degree view of each individual customer. Gone are the days of siloed data causing major headaches. With a CDP, you can get a truly holistic understanding of your customers' behaviours, preferences, and interactions across every channel.

For example, let's say you combine your eCommerce platform's purchase history data with the interaction data from your social media channels. A CDP can help you create a much more complete picture of your customer's preferences and behaviours.

Benefits of CDPs include:

Gaining that holistic, 360-degree view of each customer
Enhancing the accuracy of your audience segmentation with deeper customer insights
Having the ability to continuously update and refine your marketing strategies based on the latest data

So if you're ready to take your audience segmentation to the next level, a CDP should be one of the first tools you look into!

Behavioural and real-time segmentation

By tracking and analysing customer actions across touchpoints in real-time - such as browsing behaviour, purchase history, cart abandonment, and post-purchase engagement - you can gain in-depth insights into your audience.

This behavioural data allows you to identify patterns, predict future actions, and respond with personalised experiences precisely when needed.

Examples:

If a customer is spending a lot of time on a specific product page, real-time analytics can trigger a personalised offer for that product, significantly increasing the likelihood of conversion.
A segment of "cart abandoners" can be created, triggering a tailored email campaign offering a discount or free shipping to encourage them to complete their purchase.
Product search and browsing activity could be tracked to anticipate customer needs and proactively recommend complementary items.

The key benefit here is the ability to adapt to customer intent and context dynamically, rather than relying on static demographic profiles.

AI and Predictive Analytics

Artificial intelligence (AI) and predictive analytics are taking behavioural segmentation a step further.

These technologies can use historical data and machine learning algorithms to anticipate future behaviours, preferences, and purchase patterns. This predictive intelligence allows for the creation of highly targeted segments based on forecasted actions, rather than just past actions.

Examples:

An AI-powered model might identify a segment of customers who are likely to churn in the next 30 days based on factors like engagement levels, order frequency, and product affinity. A personalised re-engagement campaign can then be triggered to retain these high-value customers.
Saturation levels could be identified and an exclusion segment created. Avoiding overwhelming customers with unwanted communications.

However, the benefits of AI and predictive analytics go beyond just segmentation. These powerful technologies can also help enhance the accuracy of your segmentation efforts by identifying subtle patterns and relationships within the data that would be practically impossible for us to detect.

Geographical and Cultural Sensitivity

For global eCommerce businesses, the key to success is recognising that your customers' needs, preferences, and decision-making processes can vary drastically based on their geographic location and cultural context. And if you want to really connect with them on a deep level, you've got to tailor your strategies accordingly.

For example:

Promotional messages during local festivals like Diwali in India or Thanksgiving in the USA can be customised to resonate more deeply with people in those regions.
Audiences can be segmented based on cultural attitudes towards gifting and personal adornment, crafting specialised campaigns for customers in Asia versus Europe.
Product recommendations and pricing strategies tailored to align with the unique needs and spending habits of customers in different countries.

Engagement-based segmentation

This tactic analyses key metrics like website visits, email open rates, social media interactions, and purchase frequency, to create highly targeted segments based on each customer's engagement level.

For example:

High-engagement customers: Offer exclusive rewards, personalised product recommendations, and VIP experiences to nurture brand loyalty.
Moderate-engagement customers: Trigger re-engagement campaigns, such as abandoned cart reminders or win-back offers, to encourage more frequent interactions.
Low-engagement customers: Implement campaigns aimed at understanding their needs and barriers to engagement, with the goal of gradually increasing their activity.

Conclusion

By embracing these advanced segmentation tactics, you can refine your marketing strategies to achieve a higher degree of personalisation and significantly enhance ROI. Each of the tactics we’ve covered complements the others, allowing you to build a cohesive, adaptable segmentation strategy that keeps pace with the ever-evolving needs of today's consumers.

So take the time to review your current segmentation approach. Where can you start integrating some of the advanced tactics we discussed?

Whether it's leveraging AI for predictive analytics, using CDPs to consolidate customer data, or applying real-time segmentation to react swiftly to customer behaviour, each step you take can drive substantial improvements in customer engagement and business performance.

Remember, the goal is to not just reach your audience but to connect with them in meaningful ways that resonate with their individual preferences and needs.

So what are you waiting for? Start assessing which of these advanced segmentation strategies best align with your business objectives and begin building stronger relationships and driving growth.

Need help implementing these strategies?

At h2o, our team of experts specialise in helping eCommerce businesses like yours take their audience segmentation and personalisation efforts to the next level. We'll work closely with you to review your current strategy, identify areas for improvement, and then develop a customised action plan to start implementing the most impactful advanced tactics.

Find out more about our email marketing services here.

Advanced segmentation case study

Our advanced segmentation approach for Harley-Davidson®'s email marketing program demonstrates the power of geographic and cultural sensitivity.

When launching their e-commerce site across 13 markets and 6 languages, Harley-Davidson® recognised the need to tailor their email marketing to the diverse cultural contexts of their audience.

We used segmentation techniques to split the audience by market and preferred language. This allowed us to use AMPscript to customise the email language, content, product selection, and promotional messaging to resonate with the distinct cultural norms, values, and preferences of riders in each specific region.

This level of geographic and cultural sensitivity enables us to create highly personalised email experiences that continue to drive exceptional results - 831% ROI, 154% revenue growth, and a 101% increase in engagement in one year for example! By adapting the approach to match the diverse needs of Harley's customer base, we are able to foster deeper connections and maximise the impact of the email marketing efforts.

Read the full case study here.