Online Sales Plunging? You Might Not Be Segmenting Your Customers

So you have spent countless hours designing and creating your perfect product. You have even made a few bucks from your e-commerce store. But are your sales not taking off as as you expected?

If this is your situation, then it’s time to consider if you really know your customers. Ask yourself the following questions:

• Do I know what their fears and motivations are?

• Where do they look up for information?

• Who they trust for recommendations?

If you can’t answer these questions, then you are not even halfway to targeting your customers. Even the best product or service out there cannot remedy that. But, if you use what we call “market segmentation” (or slicing and dicing that market), you can reach your customers in the most cost-effective way.

Without understanding and targeting a niche market, even the best products can fail-but no need to fret. By using market segmentation, you can reach your most profitable customers more cost-effectively.

What is Segmentation?

In essence, segmentation is the process of dividing a large market into small groups of people who share similar characteristics.

You can imagine the process as filtering the market through a funnel that has a wide opening and narrow end. A large group goes in and only a few come out on the other end. Marketers analyze these few peoples’ shared traits to create a unique strategy to reach and influence them.

How to “Filter” Your Market:

You can segment based on customers’:

– Demographics, like age, gender, or parental status;

– Geography, such as neighborhood or country;

– Psychographics such as attitudes and beliefs;

– and behaviors, like shopping habits or product usage patterns.

This post will give you more details on each of the segmentation methods.

At this point you may be asking, “so how do I find all this information and how can they drive sales?” One of the best ways is through personal interviews and analyzing your customers’ behaviors.

The Case for Using Behavioral Segmentation

Let’s say you are selling young women’s clothes online. You have specified that your customers are 18~25 year-old females living in a city and are interested in fashion. These are demographic, geographic and psychographic traits, respectively. Yet this information is not enough to help you sell.

Why? Customers’ buying decisions can vary widely. For instance, an 18-year-old college student will shop differently than a 25-year-old who works at a corporate company. You might also want to consider their purchasing power; i.e., a working woman would have more budget for shopping than a dorm-living college student.

This is why behavioral segmentation will be most useful, especially in improving sales.

How to Use Customer Behaviors to Your Advantage:

First you need to define what your current business goals are. If you were just starting out, then your goal would be to raise brand awareness and drive customers to your store.

You can start with questions like these:

o What language do your customers speak? These are your keywords. For example if they are looking for a fitness tracker, what do they type into Google?

o When are they most likely to shop? Adjust your marketing budget based on time. For instance, if studies show online shoppers are most active around 8PM, you should probably pump out ads close to that hour.

o Where do they look for information? For example, which blogs do women frequent for outfit inspirations? Your goal is to find where they are and get yourself in front of them.

o Why did they abandon the shopping cart? Using site analytics, maybe you discovered that many customers drop off after seeing shipping costs. Use this information to rethink your operations strategy or improve your website design.

Feel free to design your own questions that align with your business. Here are the main types of behavioral segmentation you can use:

– Customer needs (e.g. are your customers more interested in comfort or functionality?)

– Occasion (e.g. sports drinks for post-workout)

– Usage rate (e.g. using face wash 2 times a day, everyday)

– Brand loyalty status (e.g. Apple fans )

– Customer life stage (e.g. college graduates vs new parents)

– and buyer readiness stage (e.g. do your customers know your brand? Do they trust you?)