Sep 7, 2021

Drive E-Commerce Sales with Customer Segmentation

Using customer purchase behaviors to segment customers and personalize messaging to convert marketing into sales

Shanif Dhanani

Today, getting attention from your potential customers is harder than ever. While there are a ton of channels that you can implement, and several different strategies and tactics, email is still one of the most effective ways to drive sales, and personalizing your email is one of the best ways to improve your open rates, click-through rates, and drive sales. When you tailor your message to your customer, you're able to speak more directly to what your customer cares about, incentivizing them to dive deeper and learn more about what you're offering.

One of the best ways to personalize your messaging is to target different segments of customers based on how they behave. In the post below, we'll cover two key strategies for implementing behavioral segmentation:

  1. Marketing Engagement: Segmenting customers based on how they have responded to your previous campaigns
  2. Purchase Behaviors: Segmenting customers based on their previous purchase behavior

Segmentation Based on Marketing Engagement

Every marketing channel is different, particular when it comes to customer engagement. For example, on Instagram you'll get likes and shares, but with emails you'll get opens, clicks, and you can even measure driven order value. For email marketing, there are a few straightforward ways to implement enagement-based segmentation. If you're just getting started, you can start with the simplest groups, for example:

  • Customers that received an email: While this may be a broad segment, and marketing to just this group may not move the needle, you'll know for sure that anyone in this group has a good email address and may be potential customers, so you can target them with top of the funnel messaging
  • Customers that opened an email: This means that your email was interesting enough to open to that person, and that the headline resonated with them, so you can target them with copy and messaging that is similar to what has worked for them in the past
  • Link was clicked in the email: This means that the call to action (CTA) in the email was enticing enough for the customer to click. This can help you test what discounts are getting better click through rates, or which products are getting most attention. If the customer clicked on a particular product, or the email had a discount in it, you can start to use this sort of information to craft additional, more specific emails for these customers down the line
  • Subscribed to notification list: This means that the content and offer provided value to the customer in some way, and they would like to continue receiving these emails, which is a great sign

While engagement-based segmentation is a good way to get started, if you combine it with purchase-based segmentation, you can start to really narrow in on the specific groups of people, increasing the likelihood that your messaging will lead to a purchase.

Segmentation Based on Purchase Behaviors

It's said that what someone does in the past is indicative of what they'll do in the future. That's great, maybe a bit philosophical, so you may be more familiar with this saying when applied to business: your current customers are your best customers. If you can start to segment your customers based on their purchase intent, you'll be able to drive messaging that is optimized for repeat sales and purchases, and in doing so, grow your business with a customer base that you've already acquired. It's cheaper, it's easier, and it takes less time.

In general, we find that your customers will generally follow the 80/20 rule - most of your sales will come from a small group of people. Knowing this, you can start to build segments based on things like purchase habits, purchase amounts, average order size, etc.

If you're just getting started, you might consider using some of the following segments:

  • Big spenders: Customers who purchase at least as often as the average customer, but spend significantly more than the average customer
  • Discount seekers: Customers who use discounts significantly more often than the average customer
  • Frequent purchasers: Customers who purchase significantly more often than the average customer
  • Overdue for a purchase: Customers whose purchase history indicates they should have made another purchase by now
  • Recent first time buyers: Customers who have made their first purchase within the past 7 days

When you tailor your marketing message, your results will be better and you can improve margins and lower expenses. For example, you don't want to send the same 30% discount coupon that incentivizes folks who are overdue for a purchase to the folks who are big spenders who were going to buy something regardless of whether they receive a discount or not.

Building out segments can be complicated, which is why we provide automatic, A.I.-generated segments right from the start for all of our customers. If you're interested in seeing how they could work for you, feel free to get in touch and we'll show you how segmentation could help your business. We'll also be launching on the Shopify App Store in the next few weeks, so if you’d like to be on the list please fill out this form to get notified when it’s out.


Photo by 浮萍 闪电 on Unsplash

About the author
Shanif Dhanani
Co-Founder and CEO, Apteo

Shanif Dhanani is the co-founder & CEO of Apteo. Prior to Apteo, Shanif was a data scientist and software engineer at Twitter, and prior to that he was the lead engineer and head of analytics at TapCommerce, a NYC-based ad tech startup acquired by Twitter. He has a passion for all things data and analytics, loves adventure traveling, and generally loves living in New York City.