No matter who you are or how big your company is, you can’t reach to everyone (not even Amazon). The good news is, you don’t want to. A better strategy is to identify key audiences and focusing your marketing efforts on them. You may talk to a smaller percentage, but more of those people want your product or service. This time-tested strategy is market segmentation.

By separating customers into segments, you can reach them with content specific to their preferences. Each segment will have different characteristics that will help you speak to them. These include age, gender, income, location, shopping habits, and much more.

Market segmentation is relatively new in eCommerce but has already gained a lot of traction. In contrast to the traditional brick-and-mortar or contractual transaction, an eCommerce transaction is faster, easier and saves time and effort for both parties. This means that market segmentation is even more prominent in eCommerce.

Why market segmentation is important

Because physical distance does not matter in eCommerce, other – more personal – characteristics are more important for influencing sales. This where market segmentation simplifies things and helps eCommerce marketers focus on high ROI customers.

As data improves, it becomes possible and necessary to identify who is most interested in your products. Once you know who they are, you can create content to reach them. One company that has leveraged data and market segmentation for incredible success is Amazon.com. One strategy Amazon uses is on-page personalization. They show people what data tells Amazon those customers want to see! It is a simple concept, but requires a lot of effort and planning to execute well.

How you can improve more than sales

Besides boosting sales, market segmentation can also teach you a lot about your business. By tracking performance and connecting with customers, you can learn valuable lessons about your products and services. When you think like the customer and deliver content that meets their needs, they will respond. The best way to do this is to keep a growing database of customer information. Such a database will enable you to provide the most suitable content to customers at each interaction.

Wes Rangel, director of business development at DotcomWeavers, says, “market segmentation creates a cycle where you study data, improve marketing tactics by segment, earn more sales, get better information, improve tactics again, and so on.”

eCommerce stores provide a unique opportunity to reach every customer on an individual level. The more personal you make the shopping experience, the greater the ROI. To that end, every online store should create an environment through on-page content, prompt customer service, social media, and follow up emails where you ask customers to leave feedback. This information is even more valuable than the revenue generated by sales, as it will help you improve over time.

By understanding user behavior and how people think about your content you can create more effective market segments.

Beginning market segmentation strategies

Whether you are an established business or a startup, you’d better know who your target audience is. Start with a broad demographic and then drill down into segments. Use criteria such as location, income, gender, age, marital status, etc. Create a grid that outlines what each segment wants. Remember to look at the data. Build a content strategy that reaches the right people at the right time with the right content. Once you’ve identified your market segments, try these strategies to win more customers.

Get people talking to each other about your business. Many experts report that reviews and ratings from real customers exert the biggest influence on other buyers. This means that it’s more effective to get others to create a ‘buzz’ around your business. Offer the option to post reviews. Ask for testimonials and publish them on your site. Encourage discussion on social media.

Use past purchases to drive new ones. Many online customers report satisfaction when a business suggests a new product that they might enjoy. Look for connections between products. If a customer bought an anthropology book, there’s a good chance they might like history. Check their browsing behavior as well. A targeted email might be the impetus they need buy.

Target repeat customers in your market segments. It’s cheaper and more profitable to service an existing customer than create a new one. Every sale tells you more about customer preferences. Do everything you can to connect with existing customers and treat them well. This promotes trust and loyalty. It also increases the chances they will spread the word about your business.

Know customer activity habits. Some customers check every email you send, while others will only open one if the subject line features a discount. Some may only visit your website on a mobile device. Create new market segments based on user behavior. This means your content will be more likely to reach specific customers at the most effective times.

For more information about market segmentation or to get started on your next eCommerce project, please contact us today.