Engaging a reader or a customer is no easy task. I, as a writer know this. And you, as an online store owner in the constantly growing and changing world of e-commerce, know it too.
In online retail brands often communicate in an impersonal way with their customers. This so-called brand spam is not only irrelevant but often annoying. And when you think about it those unread emails are the ones the customers have initially selected to receive. But these emails became irrelevant by the time they reached the individual’s inbox. Thus, impersonal marketing communication is not only a wasted effort but also a lost opportunity.
It goes without saying, that you must create a bond between yourself and the people on the other side of the screen. You must engage them in a way that resonates with them and goes beyond common practices. You have to personalize everything – from the description of your products, to the content you share and the email campaigns you send.
Otherwise, about 74% of your audience – the online shoppers, – will be frustrated (via MarketingProfs).
The days of universal marketing strategies are long gone. But can you really afford to communicate with your customers one-to-one?
We believe that there is a better way to make your marketing communication personal and highly effective. And this is through customer segmentation.
Customer segmentation is the process of dividing your customers into groups based on common traits they share.
The traits are known as segment criteria and the groups are called customer segments.
To create a customer segment you can use one or more segment criteria, such as “all customers who visited your website in the last month” or “all customers who did not buy from you in the last month” or even a combination of the two.
The possibilities are endless. Still, there are few well-known segments that work well for e-commerce.
In this article, we will present 5 essential customer segments that every online retailer should consider implementing in their strategy:
- Prospect buyers
- Cart abandoners
- Idle customers
- Coupon lovers
- The hesitant bunch
Keep in mind that you can:
- Combine 28+ predefined behavioral and purchase segment criteria with “and” and “or” segment rules.
- Choose between our prepackaged segments.
- Apply any custom date range to meet the goals of your business.
Now, let’s dig a little deeper into each of the customer segments listed above.
These are people who have shown interest in your brand: they may have visited or registered at your online store, subscribed to your newsletter or commented on your blog posts. However, they haven’t made an order yet.
You can further segment them into smaller groups:
- Customers who registered a short time ago, let’s say a month, and have no orders.
- Customers who registered a long time ago, let’s say 3 or 4 months, and have no orders.
The most significant difference between the two sub-segments is how likely a customer is to engage with your brand. A customer who has registered at your store a month ago is more likely to have vivid interest in your product or service, whereas the ones who have registered a few months ago might need a little more persuasion to actually make an order.
Remember, your prospect buyers are potential customers and it’s essential that you approach them properly. Here are some tips on how you can do this:
- Explain why you have an edge over your competitors – point out the benefits of your products and the characteristics that distinguish them from your competitors’ products.
- List your unique selling points and make your customer service stand out.
- Send newsletters with new products your prospect buyers might be interested in based on their historical data.
- Send newsletters with information about current sales.
- Offer a small discount on their first order – for example, 5% to the customers who registered a month ago and 10 or 15% to the ones who registered more than a few months ago.
- Offer free delivery for their first purchase.
When addressing your prospects, you should focus on two things:
- Understand why they haven’t made an order yet and if there is a problem, act on it.
- Send them a relevant offer – an incentive they could easily take advantage of.
With Storakle you can track each individual customer, regardless of whether they are registered or not. You can see a detailed timeline of every customer session (on-site activity & purchase behavior). You can learn from this historical data to gain better understanding of your customers individual interests and shopping habits. Thus, you can personalize your offers to them and increase your sales.
Abandoned carts are the bane of online retail. As of August 2017, the cart abandonment rate in retail is 77.3% (via SaleCycle).
The average abandoned cart email wins back between 5 and 11% of your customers (via Shopify).
Now, let’s talk numbers:
If 77.3% of your customers abandon their carts, this means that approximately only 1 in 5 people finalizes their order. If you have 100 orders a day, on average, this means you are missing on 400 additional sales each day. Let’s say the average total of each order is $50, this means that you are:
- Earning $5.000 per day
- Losing $20.000 per day
Best case scenario, if you are able to recover 11% of your lost sales, i.e. abandoned carts, you will be able to win back $2.200 per day.
This means that on a monthly basis, your revenue could increase with $66.000, and yearly – with $792.000.
Here are some tips on how to decrease your cart abandonment rates:
- With Storakle, for example, you can use cart abandonment as a trigger event for an automated email campaign – every time it occurs in your customers’ timeline they will receive an email reminding them they have left something in their cart.
- You can offer your cart abandoners a small discount – for example, 5 or 10% – if they finalize their order in the next 24 hours: setting a time frame will create a sense of urgency and add a touch of exclusivity to the offer.
- You can also offer free shipping – shipping costs are considered to be the number one reason for cart abandonment. By offering to take care of the delivery fees, you will increase your average order value and your conversion rate. Remember that with Storakle you can see a detailed timeline of each customer’s purchase and visit behavior on your website. So what you can do is study the behavior of your cart abandoners. For example, see if they have visited your shipping policy page. Did they visit it during the same session when they abandoned their cart? Have they visited it more than once? For how long have they stayed on this page? This will give you some idea whether your shipping cost or policy is stopping them from buying. Then you can act accordingly.
- It might also be a good idea to remind your cart abandoners about your store return policy. Keep in mind that many cart abandoners are simply not sure about the product and whether they will like it. Thus, if they know that they could return it without any hassle and get their money back, they might be more likely to buy it or at least give it a try. However, this is a balancing game – it would depend on how much the potential benefit from additional sales outweighs the cost of potential returns.
- You can use retargeting offers as relevant reminders which will be shown to your cart abandoners when they browse around other websites or different social media channels.
You can further segment your cart abandoners into smaller groups in order to make them more personalized offers, such as:
- A higher discount if they have abandoned a substantial purchase.
- Or, if they have abandoned a product from a specific category, you can suggest them similar products from the same category.
With Storakle, not only you can craft your automated email campaigns and tailor your marketing messages in the best possible way, but you can also be sure that your offer will land in the right inbox at the best possible moment.
How? You can schedule your emails and choose between different sending options for mailing day and time:
- As soon as possible
- Send at specific time
- Only send between a specific time period (e.g. 4p.m.-6p.m.)
The possibilities are endless – you can combine any day or days of the week with any time frame or specific time. For more information, please, check our documentation.
When it comes to cart abandonment, perfect timing is essential. We would recommend sending your automated email campaigns as soon as a customer abandons an item, i.e. choose the as soon as possible option because if the customer has abandoned their cart a short time ago they are more likely to consider finalizing their order. Thus, if you approach them with a highly personalized offer, you are more likely to turn their hesitation into an actual sale.
In case they do not come back to your website, you could send them a second email after, let’s say, 72 hours. You should be careful not to send it too soon, because it might start feeling like spam and you might lose the customer for good.
Idle customers have made at least one purchase in the past but haven’t bought anything from your store in a while. This “silent” period of time, however, is not clearly defined, i.e. it could be different for any online store. For example, it could be 3 months, 6 months or even а year.
However, even though your idle customers are not active, chances are, they are still interested in your brand and what you have to say. All you need to do is fine tune your marketing messages and spice them up with a good offer. Show them products they might be interested in, suc as:
- Similar products to the ones they have bought.
- Updated versions of the ones they already have.
- Complimentary products or accessories.
- Products from the same brand.
Offer them discounts on all these products. You can use their historical data and offer them discounts on other products they have shown interest in during their “silent” period. Offer them free delivery for their next order.
You should make it clear that you haven’t forgotten them. Re-engaging them with a good offer could turn them into loyal customers.
However, there is something else you should consider when it comes to your idle customers – their shopping habits.
Keep in mind that they might simply be thrifty people, which means they may prefer to buy bigger quantities to last them for longer.
Let’s say you sell laundry detergents online. Some of your customers might prefer buying enough washing powder to last them 7 or 8 months, for example. If you see that this is the case, act now, just setup an automated campaign which will go out at precisely the right moment and remind them they need more washing powder.
Coupon lovers, indeed, don’t like to pay the full price for a product. However, this does not mean they never do.
A coupon lover can also be qualified as a person who:
- Is more likely to make an order when they know the delivery will be free.
- Only makes a purchase when they know they will receive complimentary products or accessories.
This means that offering discounts is not the only way to win a coupon lover’s heart. Sometimes, offering a small incentive will do the trick.
Here are some specific examples:
- If you have an online store for shoes, you could offer an extra set of shoelaces in a different color.
- If you sell headphones, you could offer a small free case for them.
It could be a great idea to frequently offer the coupon lovers practical accessories that add value to your products.
However, this doesn’t mean you should never have sales campaigns. Keep in mind that your coupon lovers might be lovers of your products as well and the reason they don’t buy them full price might be because they cannot afford them.
All in all, you simply need to find the balance between the incentives you offer and your profit. This way, you will get the most of your relationship with your coupon lovers and you will increase your revenue.
THE HESITANT BUNCH
These are the customers who have visited your website more than a few times, maybe have viewed a certain category or a product multiple times but still have not made a purchase.
What you can do here is find out why they didn’t make an order – you can study their timeline on your website, go through their visit behavior and then you can approach them in the same way you will approach your cart abandoners or your prospect buyers: understand their pain points and act on whatever is keeping them from finalizing their order.
Another thing you could do, is send them a newsletter when you add new products to the category they are interested in. Maybe the reason they didn’t buy anything is not because there was something wrong but because they didn’t find the product they were looking for. Maybe some of your new products are what they need.
So, it might be a good idea to approach this segment by:
- Asking for feedback and being attentive to their needs.
- Offering them something new and see if it is what they were expecting to find when they came to your store in the first place.
IN A NUTSHELL
Rather than trying to address all your customers with the same marketing messages and expect results, you should find a common ground you can segment them on – traits they all share, be they behavioral or purchase related, – and send them highly relevant offers they cannot say no to.
We think the best thing you could do, is simply understand your existing customers, find out what they need and expect from you, and act accordingly. Customer segmentation allows you to do precisely that. And, with Storakle, you can do it with utmost precision.
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We hope that this information will come in handy! What is the one thing you learned from this article that can improve your strategy?
Do leave us a note! We would love to know!
Stay tuned for part II of the article – there are 5 more essential customer segments we want to share with you!