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Audience Segmentation for Ecommerce… Made Simple

May 14, 2022

Audience segmentation is arguably the most important step to a digital marketing strategy. According to a study by Epsilon, 80% of customers expect a personalized experience, and the best way to deliver that is by building a proper audience segmentation strategy. 

But what does audience segmentation actually mean? And how do you go about it? This complete guide provides all the answers – so you can get started right away! By the time you finish reading, you’ll understand how to target your audience, build personas, and how to use segments to tailor your marketing to each stage of the buyer’s journey.

What Is Audience Segmentation?

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Audience segmentation is the process of dividing your target audience into more manageable groups, or subgroups. By understanding and targeting specific audience segments, you can create a more personalized and effective marketing strategy. 

There are many different ways to segment an audience. The most common methods include:

• Demographic information like age, gender, location, ethnicity etc.
• Psychographic information like interests, lifestyle, values, etc.
• Behavioral information like purchase history, website activity, etc.

Breaking your audience into different groups will allow you to tailor your messaging to the unique needs of each group. This leads to improved sales and higher levels of customer satisfaction.

You’ll also save time and money by focusing on the audience segments that are most likely to convert. Did you know that 77% of the returns generated by email marketing campaigns can be traced back to audience segmentation? That’s the power of data-backed marketing! 

4 Major Types Of Audience Segmentation

So, we know that audience segmentation is the process of dividing up your target market into smaller, more manageable groups. But exactly how do you create those groups, and what data do you need to do it?

The most common approach is to segment your audience based on demographic, psychographic, or behavioral criteria. 

1. Demographic Audience Segmentation

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Demographic segmentation is the process of dividing your target audience into groups based on observable, people-based demographic traits. This includes things like: 

• Age
• Gender
• Financial Level
• Marital Status

For example, let’s say you are advertising an engagement ring. You could segment your audience based on age and marital status in order to target unmarried couples. By further segmenting the audience based on financial level and buying power you could advertise a specific ring within their budget. According to a study by McKinsey, targeting your marketing in this way will increase your returns by 3-5%.

2. Geographic Audience Segmentation

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Geographic audience segmentation refers to dividing your audience based on their geographic location. This can be done by region, country, city, or even neighborhood. By segmenting your audience according to where they live, you can incorporate current events or cultural practices into your marketing strategy.

There are many different factors that you can use to segment your geographic audience. Some common ones include: 

• Region: North America, South America, Europe, Asia, etc. 
• Country: United States, Canada, Mexico, Brazil, etc. 
• City: New York City, Los Angeles, Chicago, Houston, etc. 
• Neighborhood: Chinatown, Upper West Side, Downtown, etc. 

You can also segment your audience by their distance from your business or event. For example, you might target people who live within a certain radius of your store or who are traveling to your city for a specific event.

3. Behavioral Audience Segmentation

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Behavioral audience segmentation targets audiences based on their individual behavior. This can be done by looking at factors such as purchase history, online activity, and even social media interactions.

Behavioral segmentation is often used by businesses to better understand their customers and tailor their marketing efforts accordingly, particularly for remarketing. For example, if you were building a cart abandonment campaign, you would use behavioral segmentation to target customers based on their purchasing behavior. 

Some other common behavioral factors used are:

• Product Preferences
• Brand Loyalty
• Methods of Purchase
• Item Use

4. Psychographic Audience Segmentation

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Psychological audience segmentation is a technique used to identify and target groups of people based on shared psychological traits. This can be done by assessing things like:

• Hobbies
• Life Routine
• Music Preference
• Political Ideology

It can be easy to confuse psychological and behavioral audience factors, but behavioral segmentation focuses on shared behavior patterns, while psychological segmentation targets how we think. 

So why choose one over the other? Well, it really depends on your goals. If you’re looking to target ads or content to a specific group of people based on how they think or feel about something, then psychological audience segmentation is probably your best bet. But if you’re more interested in targeting people based on what they do, then behavioral audience segmentation is probably a better fit. 

Specific Audience Segmentation Styles

Beyond the four main audience segments, you can also dive deeper and create hyper-specific audience segments. This includes segmenting different audiences based on important life events, order purchase values, or whether they require B2B or B2C products and services.

For example, an eCommerce business can build segmented email lists based on customers’ cart values or purchase frequency in order to improve cart abandonment rates. Major life milestones, like having a baby, can also be used to segment audiences since these people are likely to need new products and services. 

Let’s take a look at some more specific audience segmentation strategies you can use:

• Device Type (Mobile, Desktop): To get the best results out of your marketing content, you need to segment audiences based on the device they use to access content. Design your ads and digital content in a way that is optimized for all devices – from desktop computers to smartphones.
• Firmographic (B2B Segmentation): Refers to dividing up your target market by organizational characteristics. This can help B2B businesses improve the ROI of their marketing efforts by allowing them to focus on specific groups that are more likely to be interested in their products or services. 
• Cart Abandonment (eCommerce): When it comes to recovering lost sales, hyper-targeted cart abandonment emails are much more effective than generalized email campaigns. This is because you can use the unique customer data you have, like the products within the abandoned carts, to personalize your marketing and build segmented email lists. 
• Generation Placement (Gen X, Gen Z): Divides a target market into groups based on age. For example, Baby Boomers (born between 1946 and 1964) are more likely to respond to marketing messages that focus on family, security, and tradition, while Millennials (born between 1981 and 1996) are more likely to be drawn to messages that emphasize experiences, social responsibility, and technology.
• Seasonal Segmentation (Fall, Winter): Involves targeting customers based on the time of year. This can be done by offering products or services that are popular during certain times of the year, or by running promotions that coincide with holidays or other special occasions. 
• Life Events (Retirement, Engagements): Important life milestones can also be used to target audiences. For example, if you’re selling engagement rings, you’ll want to target people who are recently engaged or about to be engaged. This is a group of people who are likely in the market for a ring, so they’re more likely to convert.

3 Best Practices To Maximize Segmentation Effectivity

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There’s no one-size-fits-all solution when it comes to audience segmentation. However, there are some best practices that can help you more effectively target potential customers and engage your audience members. 

Some potential questions to consider when segmenting your audience include: 

• Who are my potential customers? 
• What needs do they have that my product or service can address? 
• What are their buying habits? 
• How can I reach them?

Answering these questions can help you better understand your potential customers and develop targeted marketing and sales strategies. Additionally, consider using market research to gather data on your potential customers. This information can be used to create detailed customer profiles, which can be helpful in developing targeted marketing messages.

Let’s take a closer look at the top three best practices that you should never ignore when building your audience segmentation strategy:

1. Prioritize Your Business Goals

When segmenting your audience, it’s important to stick to your fundamental business goals and values. Remember, the entire point of segmenting your customer base is to achieve your business goals, and you can’t please everyone. Focus on building customer segments that lead to a higher ROI and profitability for your business. This will ensure that you’re targeting the right people with your message.

2. Collect In-Depth Analytics

To segment your audience effectively, you need to collect a wealth of data points, because the more data you have, the more accurate your segments will be. Many businesses invest in audience segmentation tools that collect real-time data on their customers. Even better are tools that introduce automations, in-depth analytics dashboards, and A/B testing, like CartStack.  

3. Avoid Segmentation Bias

Finally, avoid segmentation bias when creating your segments. This is when you let personal biases influence who you target. For example, if you’re trying to sell a new product, you might be tempted to segment people who have bought from you in the past. However, this segment might not be interested in your new product, and you could end up wasting time. Focus on building customer segments that lead to a higher ROI and profitability for your business. This will ensure that you’re targeting the right people with your message.

3 Tools To Segment Your Audience The Right Way

As anyone who’s ever tried to segment their audience knows, it’s not always easy to get it right. There are a lot of factors to consider, and if you don’t have the right tools, it can be tough to get the results you want.

That’s why investing in audience segmentation software is so important. These high-tech tools come loaded with pre-built templates, campaign managers and other features that support website optimization.  With the right tool, you can streamline and automate your marketing campaigns, and be sure that you are sending specifically tailored messages to your target audience.

Before we let you loose out there, let’s take a look at our favorite tools for building well-segmented marketing campaigns.

I. Mailchimp

Mailchimp is a marketing platform with a wide range of features, making it perfect for those wanting to segment their audience. With Mailchimp you can view and manage your audience data, marketing channels and insights in one platform. It also offers advanced demographic data prediction that can be used to create subgroups and different segments. Additionally, Mailchimp has many resources and guides available, making it easy to use for first-time users.

II. CartStack

Cartstack is designed to help eCommerce businesses and hotels with customer retention, and includes many features that help with segmenting customers and tailoring messages to them across multiple channels.

Cartstack’s reporting and analytics feature is also top-notch. This is important because it allows eCommerce businesses to see what’s working and what isn’t in their customer retention campaigns. A/B test campaigns can also be set up in just a few clicks, which is perfect for narrowing down your segmentation criteria. On top of that, on-site real-time data capture allows you to collect in-depth information on your customers purchasing behavior. Overall, we recommend Cartstack for businesses that are looking for a reliable way to keep their customers coming back — and never lose them.

CartStack is also a great choice if you’re particularly struggling with a high cart abandonment rate. Luckily, not only can you sign up for a free 14-day trial, but you can also read through the  Ultimate Guide to Cart Abandonment Emails that we wrote just for you!

III. Google Analytics 

Google Analytics is an essential tool for data collection and audience segmentation. It can be used to track website traffic, conversion rates, and other key metrics that businesses rely on to gauge their success. The best thing about Google Analytics is that it is free, which if you’re a small business trying to save on costs. However, it is important to learn how to properly use Google Analytics in order to take full advantage of its potential. 

Luckily, the internet has no shortage of guides and resources that beginners can use to become a Google Analytics expert. Any guesses of where to start your search? If you can’t figure it out…Google it!

Conclusion

Audience segmentation is key for all businesses, no matter what size. By breaking your audience into manageable groups, you can better tailor your marketing communications to their specific needs and wants. This not only increases the chances that they’ll respond to your message, but it also leads to a more personalized experience for them.

Remember, to understand your audience you need to get personal. We know properly personalizing your messaging can be tricky, so we’ve put together a blog post on eCommerce personalization that dives into the topic in-depth. 
If you want help implementing these strategies or need a tool to help collect data on your customers, CartStack has you covered. We’re experts when it comes to understanding customer behavior and using that data to create targeted marketing campaigns. Shoot us an email anytime — we love connecting with our audience!