Magento Customer Segmentation: A Useful Tool for Online Store Management

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SoftwareSuggest

Senior editor

Parul Saxena

Chief editor

Last updated: March 20, 2018

Although different marketing tactics are proven to get results, the assumption that simply everyone will be interested in buying what you are selling online is an inefficient and unprofitable strategy.

Instead of using a ‘one-size-fits-all’ technique, it is better to successfully divide your customer base into groups of individuals that have similar, specific marketing-related properties, such as age, gender, interests, spending habits, and so on. This marketing strategy is called customer segmentation and it allows online stores to target groups of customers, and effectively aim their marketing efforts at particular segments, improving their position in eCommerce.

According to the MailChimp survey, the world’s leading marketing automation platform, segmented marketing campaigns get 14.64% more opens and 59.99% more clicks than ones that are not segmented.

So firstly you need to turn to professionals to help you start your online store business, such as eCommerce website development services from Iflexion. After that, it is time to start improving your service through customer segmentation with Magento.

Magento is often considered as one of the leading eCommerce platforms. According to Datanyze, Magento is the third most popular eCommerce platform with its market share of more than 7%. For its dependability, many popular companies use it as the preferred technology for their online stores, including Huawei, Burger King and Liverpool F.C., which makes it a good and a proven choice.

Here, we will review a substantial part of Magento development specifics that make the platform a powerful marketing and sales tool.

Identifying customer segments

This is the first and most important step that you need to make if you intend to implement this marketing strategy in your online store and find your place in this fast-growing online market.

There is a number of attributes that can be used to build customer segments. For example, you can create a segment that includes customers who are between the ages of 20 and 30, live in the US, and haven’t made a purchase in the last six months. Below, you can find a list of available customer attributes:

  • Customer Address
  1. First Name
  2. Last Name
  3. Street Address
  4. City
  5. State
  6. Zip code
  7. Country
  • Customer information
  1. Date of birth
  2. Store Credit
  3. Newsletter subscription status
  4. Customer group
  • Cart
  1. Shopping cart total
  2. Cart line items
  3. Cart quantity
  4. Cart value
  • Products
  1. Products in shopping cart
  2. Products on the wish list
  3. Previously viewed products
  4. Previously ordered products
  • Orders
  1. Total number of orders
  2. Total value of orders
  3. Average number of orders
  4. Average value of orders
  5. Order status

Using these attributes, you can divide your customers based on several factors.

Customer segmentation that is based on demographic factors can be quite beneficial for online store management, especially when there is a high volume of foreign visitors on your website. For example, that tendency indicates that your website needs multiple language options. On the other hand, customers that share the same demographic segment can have totally different shopping habits.

A more efficient customer segmentation strategy is the one based on psychographic factors. You may segment your customers based on their lifestyle and interests. For example, focusing on High-Tech needs of your tech-crazed customers will help you win their respect and gain their loyalty, while not disturbing other indifferent customer segments with too many promotions that are simply irrelevant to them.

Analyzing shopping behavior of your customers will offer you a deeper insight into the buying tendencies of your customers, and thus provide you with a different approach to customer segmentation. There are different behavior aspects you can analyze – like when, why and what your customers are ready to buy, as well as their level of loyalty to the brand.

Implementing customer segmentation in Magento

When you finally decide to enhance your online store’s efficiency with targeted marketing campaigns based on the predetermined behavioral factors of your customers, you should do the following:

  •    Identify and create customer segments
  •    Outline appropriate conditions for a customer to be listed in a particular segment
  •    Look into the resulting number of customers matching your conditions
  •    Set the desired promotional rules for every segment.

Customers will start receiving automated notifications according to the promotional rule you set for that specific segment.

As you can see analyzing the customer base and planning out the segments are both vital parts of the work, while the actual implementation is not that difficult a task.

Bear in mind that a well-organized and effective marketing campaign based on customer segmentation requires regular updates. Use your access to crucial information about customer behavior, determine which promotional activities have worked out for each segment, and prepare to adjust your marketing actions accordingly.

Customer promotion strategies

Once you have built a segment, you can use different promotion strategies to motivate customers that belong to a specific group.

You can create a cart price rule or a coupon code for any customer segment that you have selected. This could be a special discount for a customer’s birthday or a reward for customers who spent a certain amount of money or made their milestone purchase. You can send a coupon as a thank-you to everyone who signed up for a newsletter or registered at your website.

There is an option to design a banner that will display on your site to your chosen segment. You can use a different homepage banner image based on where the customer lives to advertise the new discount you have created. Or you can design one that will promote a new product that is supposed to be of great interest for a specific segment.

Another way you can use segmentation to address your customers is by creating automated promotional email campaigns. You can design custom emails to specifically target customers based on segmentation that includes a special thank-you, rewards email or information depending on their location, shopping habits or other criteria.

Summing up

As you can see, a customer segmentation marketing strategy allows online stores to improve marketing efficiency, brand strategy, and distribution plans, as well as determine new market opportunities.

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