Guide on Magento customer segmentation for grown-ups

How many times have you stumbled upon a man in the street, who was desperately trying to sell you something, be it a book or a pack of cookies? What were your emotions from such encounter? Did you buy anything? I’m pretty sure the answer is no. The disease of trying to sell everything to everyone is typical not only of street sellers, but also of many Magento stores. And there’s only one cure from it – Magento customer segmentation. Well, some might argue that it’s an advanced search that works for customer retention best. Well, yes, but to make it work properly, you need to know who you sell to and how to attract them. This makes customer segmentation the only cure indeed.

What is customer segmentation?

Customer segmentation is about telling the right things to the right people. The clue to success is to tell your customers what they want to hear, be the one who creates positive customer experience, not the one who takes it for granted. To do this, just divide all your customers into the corresponding groups in according to their buying habits, personal information and lifestyles. You will see how much easier is to manage the group of like-minders to achieve your marketing goals and make them happy with your service.

 What information do I need?

The old rule “Those who have information rule the world” works as well in online marketing. There are plenty of factors you can use as the basis for Magento customer segmentation. All of them can be divided in to three general groups:

  • Demographic

Name, gender, age, address, occupation, date of birth, social class, phone number, e-mail, etc.

  • Psychographic

Interests, values, lifestyle, culture preferences, religion, etc.

  • Behavioristic

Activities and habits of online stores usage.

The better you understand, who are the customers that buy at your store, the easier it is be for you to tailor to your customers’ needs WHAT you sell and HOW you sell it. Another useful technique is to divide all your current customers into the following 5 groups.

Magento customer segmentation - Types of customer segments

Figure out, who are the majority of those who make purchases at your store. What is important for them: Brand? Cost? Convenient shipping? It goes without saying that the aim for the majority of online stores is to attract and keep as many high-spenders as possible. But this is not the only option: you can ground your marketing strategy on attracting vast amounts of frequent cheap buyers or on preserving regular customers, who value a good balance between prices and services. But before you launch all those marketing efforts, you wouldn’t do without proper Magento customer segmentation.

Tip #1
Figuring out what customers are most important for your business model will help you to choose proper acquisition channels. E.g. convenience seekers and brand buyers are most likely to hear about your store from TV ad or direct mail, whereas bargain hunters are easy to attract with some discount coupons.

How to get information for customer segmentation?

Owners of online Magento stores have a great advantage in comparison with offline retailers, since they have a vast amount of information at their disposal. Just install a special extension that allows creating Magento custom registration forms and add as many fields for analysis as you need. How many times during the registration you were asked your marital status or date of birth. Such Magento custom fields don’t create any tension, but at the same time supply store owners with priceless information about those, who visit their stores.

Tip #2
Don’t overuse Magento extension and add too many fields to registration form. Too many lines to fill in might discourage your customers from registration. If you need more information, just make these fields optional, those who have time for that wouldn’t refuse you to tell more about them.

[pullquote]Offer a coupon code for answering 10 simple questions and you will kill two birds with one stone[/pullquote]: encourage them to visit your store and get some psychometric data for your research. Regular surveys are one of the most efficient ways to learn what is on your customers’ minds.

One more thing that shouldn’t be neglected is the way your registered customers behave at your Magento store. You can take notice of some of the following factors:

  • Percentage of abandoned/removed carts or additions to them;
  • Amount of product page views;
  • Choice of shipping rates;
  • Usage of promotional codes;
  • Preferred payment methods;
  • Onsite search.

Customer behavior at your Magento store provides you with a number of tips for enhancing shopping experience. For example, if your customer has viewed the product page of a certain product 5 times and still hasn’t bought it, why don’t you provide him with a 5% coupon code for the purchase? Coupon will also work well for the customers who had abandoned their carts, but came back to your site. Suggest them finishing the purchase with paying a little less. And don’t forget about such classic techniques as sending more coupons to frequent discount users and using onsite search statistics for demand study.

Bottom line

Magento customer segmentation is a must for those who want to achieve more with their online stores. To begin with start with gathering these 3 types of information:

1. Demographic

Take use of Magento custom registration forms and add some more questions about their address and date of birth. Use special extension for creating such forms.

2. Psychographic

Learn what is important for your customers and what they are interested in by conducting surveys once in a while.

3. Behavioristic

Check how your customers behave at your website to provide them with slight pushes towards the purchase and enhancing their customer experience.

After you know enough, divide all your customers into sections in accordance with the table above in order to figure out what acquisition channels will work best for your business model.