Why customer segmentation is the best strategy to grow a WooCommerce store
For a long time, marketers believed that the best marketing strategy was maximum outreach. The louder your voice was, the better. Just capture the attention of as many people as possible and hopefully some of them will become customers. To some extent, this approach worked, however, there was still plenty of wasted effort and resources. Only a small fraction of those people were converted to customers because most of them found the product irrelevant to their needs. To fix this problem, something new was born: highly targeted marketing. And the backbone of this new strategy is “customer segmentation.” This is the opposite of the “one-size-fits-all” approach. It clusters customers into meaningful groups and addresses each with a more relevant message, thus reducing the waste of budget. In this post, we address why using customer segmentation is the best strategy to grow a WooCommerce store.
What is customer segmentation?
Customer segmentation is the practice of categorizing your customer base into smaller groups based on certain factors such as demographics, behavior, loyalty, etc. When you have multiple groups of customers instead of one giant group, you can target each group with a more relevant message and pitch. This can possibly increase the chance of conversion and ultimately make your entire marketing campaigns more efficient.
Customer segmentation is quite popular these days. Research based on a survey of more than 1,000 marketing, digital and e-commerce professionals indicates that customer segmentation is the topmost priority, with 72% of those surveyed having used customer data and segmentation.
Moreover, one of the key benefits of customer segmentation is that it enables businesses to personalize their customer’s experience. In fact, 59% of shoppers believe that personalization has a noticeable influence on their decision making.
Common segmentation factors
There are many customer segmentation strategies a business can follow. Every business owns a customer base with specific traits and personas that can be used to categorize the customers. Here are the most common ones:
Demographic: This refers to the customer’s personal information such as age, gender, company and much more.
Geographic: This refers to the location of customers including their country, city, neighborhood, etc.
Behavioral: This refers to the customer’s behavioral pattern and how they interact with your online business. This segmentation is particularly important where you want to identify your customers based on key variables such as engagement, loyalty, etc.
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Why customer segmentation is important
The main advantage of using customer segmentation to grow a WooCommerce store is that it reduces the waste of your marketing campaigns. Your campaigns will become more targeted and therefore costing less and increasing the performance. Some of its key benefits include:
This is definitely one of the most important reasons for customer segmentation. The ultimate goal of every business is to build a relationship with its customers. But how would that be possible without first properly identifying those customers? Customer segmentation gives you the intel you need just to do that.
HubSpot analyzed over 330,000 calls-to-action and their performance, and it found out that personalized calls-to-action perform 202% better than basic ones. In general, personalization contributes a great deal to your customer experience. Based on this research, 80% of customers said the customer experience a company provides is as important as its products and services.
More effective upselling and cross-selling
I’m not sure about you, but I can say personally that I don’t like being marketed to. Especially when it comes to blind marketing. But it feels different when what they are marketing for is actually something related to the item that I just bought. Something that enriches my experience with the primary product. For example, an Airpod with an iPhone or spicy fries with a burger. I’m much more prone to spend my money on those related products.
As long as you have access to your customer’s behaviors and activities – including their shopping traits – you can brainstorm dozens of ways to make an irresistible side offer. This is only possible if you have an accurate set of customer segments.
Growmatik is capable of running upselling and cross-selling campaigns using a fully automated process. For example, imagine you want to send an email to whoever buys a smartphone to upsell a wireless earphone. Just go to the People page and create a new segment that is based on a customer’s purchase history. Just filter for Purchase item and select a product then save the segment. Now click on Send email to segment button on the same page.
When a new dialog is open, you’ll see that your new segment is assigned to a condition. Now all you have to do is to select Send email as the action and create the rule.
More efficient marketing and better ROI
Nick Besbeas, the former CMO of LinkedIn, once said, “Today it’s important to be present, be relevant and add value.” Indeed, marketing is a game of relevance. When you reach out to the right customer with the right offer – as opposed to sending out a generic message to a broader audience – you’ll have a much better chance of success.
This is because your message could be irrelevant to those users or they have no interest in what you offer. Doing so will also damage your reputation and customer loyalty when your customers are being bombarded by irrelevant messages at all times.
Instead, if you segment your customers using demographic or behavioral factors, you can focus on each segment with a more appropriate message and more relevant offer.
For example, you can reach out to your loyal customer segment with an appreciation email thanking them for their business and offer them a free branded swag as a reward. At the same time, you can send emails to your inactive customers offering discount coupons to reactivate them.
Better customer retention
As mentioned above, customer segmentation will help you learn more about your customers, which means you can address their needs more efficiently. When using customer segmentation to grow your WooCommerce store, your relationship with them will improve overtime. This is because you’re using more relevant and personalized language to communicate with them.
Most businesses still send periodic newsletter emails to their subscribers. The content of these newsletters is the same for every reader. But what if they could somehow curate the content of the newsletter for each reader? Address the audience by their names and personalize the content based on their behavior? Wouldn’t that be more rewarding?
Discover new market opportunities
Segmentation, as a tool to better understand your audiences, can be extremely helpful to determine your best target market and adjusting your resources accordingly. Christoph Janz, in this brilliant article, breaks it down pretty perfectly. A fictional brand seems to be declining as we are looking at sales charts. However, you will be surprised if you segment the customers and then divide sales per segment. One segment can be declining but another segment grows steadily.
Now with this new knowledge, the respective brand should allocate most of its resources and focuses on the growing segment than the failing one. Doing so will gradually improve overall sales and help adjust yourself to your new market fit.
Most important customer segments for WooCommerce
Here are just a few categories of customer segmentation to grow a WooCommerce store:
- High-value customers
- Cart abandoners
- Likely to purchase with coupons
- Inactive customers
- Loyal customers
- Indecisive customers
- Newsletter readers
In the next article, I’ll explain how to create these segments and possibly use them to send emails or personalize your website.
Customer segmentation, if done right, can be the key to growing your business by building long-term relationships with your customers. It also helps you deliver an exceptional customer experience by delivering more personalized content to every individual customer. In fact, 67% of customers are ready to pay more for a great user experience.
By nature, segmentation deals with a high amount of data and must be done with segmentation software. Growmatik does exactly that and beyond. You can categorize your users using dozens of filters and then personalize the content of your website and emails based on those segments.
What is your own experience with customer segmentation? Have you ever created a customer segment that generated remarkable results?