Marketing
Sep 7, 2021

How Benefit Segmentation Can Elevate Your Ecommerce Business

Benefit segmentation is an excellent option for ecommerce stores to engage their customer bases. We explore what benefit segmentation is, why it's helpful, and how to apply it in a marketing strategy.

James Uzzalino

Segmenting audiences is a tried-and-true method for developing an effective marketing strategy. Oftentimes, that segmentation focuses on the attributes of the customers. While this is a great way to approach segmentation, it’s not the only option.

Benefit segmentation is a unique method that focuses not only on customers’ needs, but also on the value of the products you offer. Including benefit segmentation in your ecommerce marketing approach will help you elevate your messaging and help you meet your sales goals.

In this post, you’ll learn what makes benefit segmentation unique, why it’s important for ecommerce marketing strategies, how real-world ecommerce businesses utilize it, and how to apply it to your own business.

What is Benefit Segmentation?

Benefit segmentation is the practice of categorizing customers by the value, or benefit, they get from a product. The value of a product comes in many forms, including quality, special features, performance, or even elements like customer service and prestige.

Segmenting audiences by benefit helps businesses identify the customers who would get the most value out of their product, which in turn improves conversion rates, retention rates, and customer success stories.

Unlike other segmentation methods, benefit segmentation requires a thorough understanding of the product itself rather than specific attributes of customers. This makes benefit segmentation a unique approach that pairs well with other segmentation methods like behavioral and psychographic segmentation.

Why Benefit Segmentation is Important (Especially in Ecommerce)

Segmenting audiences by the benefit they receive from your products is a unique and worthwhile approach that helps ecommerce companies reach their business goals. Applying benefit segmentation to your eCommerce marketing approach:

...maximizes retention

There’s nothing like good old-fashioned honesty when it comes to product marketing. Approaching customers based on the benefits they’ll get from your product increases likelihood of repeat purchases because they receive the value promised. Customers know exactly what to expect from your products, making your business a reliable brand worthy of returning to.

Additionally, benefit segmentation provides an opportunity to reduce churn, which is a proven method to build retention rates. If you know a customer is at risk of churning, like with Apteo’s automatic segmentation feature, you can retarget your messaging so they understand the full value of your product before they drop.

...increases conversion rates

By utilizing benefit segmentation in your marketing strategy, your campaigns will be tailored to prospects who will get the most out of your product. Messaging informed by benefit segmentation will present specific value to particular segments, making the message more likely to resonate, and the audience will be likely to convert.

...improves customer satisfaction

The most basic definition of customer satisfaction is when a customer understands the benefit of a product and receives it. This is exactly what benefit segmentation sets out to do: Communicate the value of a product and deliver it efficiently. 

However, an ambitious ecommerce store owner knows that satisfaction is a minimum requirement for success. By increasing customer satisfaction, benefit segmentation opens opportunities to extend the customer journey by turning customers into advocates for your brand.

...makes products more competitive

A well-researched benefit segmentation strategy maps out all of the benefits that can be received from a given product and then hones in on the qualities that resonate most with specific audiences. 

The result of this process is an increase in the competitiveness of your products. Nailing down your products’ benefits means there are fewer value gaps where competitors can emerge, maximizing your competitiveness and profitability.

...simplifies marketing messaging

While emotional connections with customers are valuable to establish, they take time and a trial-and-error approach that adds risk to a marketing strategy. Benefit segmentation is simpler in nature: Your business presents the demonstrated value of your products to audiences who have needs that can be met by your product. This makes benefit segmentation easier to implement, especially for fledgling ecommerce brands.

...opens opportunities for product development

Understanding the relationship between your product and your audience will provide valuable insight for your product development process. This goes for both existing products and new products. With benefit segmentation, you’ll find ways to tweak best selling products to meet the needs of untapped markets and discover new types of products to fill any value gaps.

3 Real-World eCommerce Benefit Segmentation Examples

Spotify

Spotify, a household name for music streaming, regularly applies benefit segmentation as it promotes and develops its subscription-based platform.

Spotify’s advertising campaigns are aimed at audiences who are seeking specific solutions. For example, their “For the Ride” campaign targets commuters who are looking for entertainment during their daily drives. Spotify also demonstrates their unique end-of-year recap feature, Spotify Wrapped, in a campaign that draws users who like to see their personal listening trends.

Better product development is another perk of benefit segmentation, and Spotify applies it well. Recently the platform announced Spotify Duo, a new premium plan that is shared by two users  instead of the three to six users that can use their Family Plan. Introducing this product closes in on the value gap of affordable shared music streaming.

Airbnb

The eCommerce-based hospitality giant Airbnb caters to two broad markets: Guests and hosts. Each of these markets seek different benefits from the service and Airbnb designs its messaging accordingly. 

For example, guests are seeking perks like affordability, luxury, unique experiences, or easy business accommodations. Hosts, on the other hand, respond well to messaging that emphasizes the ease of passive income from hosting an Airbnb and smooth communication and business assistance from the platform.

Sephora

Sephora has mastered the balance of eCommerce and brick-and-mortar retail spaces through strategic marketing informed by benefit segmentation. Because they offer personal care and beauty products ranging from makeup to hair care to skincare and more, Sephora must use benefit segmentation to guide customers through what would otherwise be an overwhelming array of options.

Sephora’s website is built to easily navigate product offerings based on value, allowing visitors to select benefits like anti-aging products or products that are safe for color-treated hair. Plus, Sephora has handy product quizzes that guide visitors’ searches in an engaging way.

How to Use Benefit Segmentation in Your Ecommerce Store

Understand your products’ value propositions

To design a marketing approach based on benefit segmentation, you need to have a thorough grasp on what makes your products valuable and unique. Create a list of benefits for each type of product you offer, or better yet, for each individual product. This way, you can match the value of your products to audiences who are seeking those benefits.

Create strong buyer personas

Knowing who your customers are and what draws them to your products will guide your overall strategy. Outlining types of customers with personas will help you use the lists of benefits you created by matching your personas’ needs with the benefits your products offer.

Personas will differ from business to business, but here are a few examples of potential buyer types:

  • Smart shoppers seek out deals, often searching for the best price for the most value in a product.
  • Innovators are looking for the most advanced technology in a product. They’re willing to experiment, but do thorough research before they buy.
  • Brand loyalists are looking for a reliable business to return to for the long term. They seek out great customer service and social proof from reviews and social circles.
  • Brand connectors want to find products that reflect their personal values or social image. They’re interested in attributes like sustainability or mission-driven products.

Try a product marketing approach

Benefit segmentation is unique because it allows your business to center the product in your messaging while still being customer-focused. Tailor your campaigns to emphasize the similarities between product value and value sought by audiences. If you have data prepared, combine benefit segmentation other approaches like behavior and psychographics for a holistic marketing strategy.

Emphasize benefit segmentation in your remarketing campaigns

Benefit segmentation is a powerful tool to prevent churn and to re-engage prospects who have dropped off.

If a customer is about to churn, send informational emails and provide engaging content that expresses the value of your products. Perhaps they were unaware of all of the products’ features or they need recommendations for products better suited to their needs. Either way, benefit segmentation will boost retention of customers who are at risk of churning.

Similarly, if your business notices that prospects are dropping off before converting, you can re-engage them with reminders about product benefits or recommend similar products that may be a better match for the shopper.

Apteo Helps Ecommerce Teams Use Better Benefit Segmentation

Apteo’s AI-powered platform is designed to help ecommerce teams segment their customer bases. Set up, apply, and analyze benefit segmentation for your audiences so you can tailor your marketing strategy to meet your customers’ needs. Plus, Apteo integrates seamlessly with your ecommerce store so you can get to know your customers in real time.

If you’re ready to see how benefit segmentation can boost your ecommerce business, sign up now to try Apteo free for two weeks.

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Photo by Pixabay from Pexels

About the author
James Uzzalino
Head of Growth at Apteo

James Uzzalino is the Head of Growth at Apteo, where he is responsible for engaging with customers and partners to deliver value and grow Apteo's business.