Customer Segments to Build to Drive Revenue

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Customer segmentation is a surefire way to deliver personalized messaging that unlocks revenue growth for your ecommerce business. If you are unfamiliar with the term, customer segmentation is the practice of grouping your existing customers (and email subscribers) together based on criteria that you define. You can then leverage the segment(s) that you build to deliver more personalized marketing. 

And unlike an email list, a segment is dynamic. This means that once you define the parameters of your segment, all of your current and future customers (and email subscribers) that fit that criteria will populate in that segment. For example, say you create a segment that today returns 101 customers that fit the criteria you defined. It’s entirely possible (in fact, it’s very likely) that the size of the segment will change in a few days. This is a great benefit of leveraging a customer segmentation strategy, in that once you create and save a segment, you don’t need to create it again to find customers that fit that criteria. 

It can be overwhelming to think about what types of segments you should be building, given the endless possibilities. As such, we want to suggest some core segments you can build as you get started with your customer segmentation strategy.

Segment off of how customers/subscribers have interacted with your previous emails 

Understanding and segmenting your subscribers based on how they have interacted with your brand is important as you think about who and what to send to them. You won’t want to send a 50%-off code to customers who are already engaged with your brand and likely to purchase from you without a promotional code. Here are three segments that you can create based off of email engagement:

  • Engaged subscribers. Perhaps these are subscribers who have opened or clicked an email from you within a defined period of time (i.e., 15 or 30 days). These subscribers will be more likely to make a purchase from you, so it’s important to think about what you want to communicate to them. 
  • Semi-engaged subscribers. These are subscribers who have opened or clicked an email from you within a 60- to 90-day period. Unlike “engaged” subscribers, these subscribers will not be as likely to make a purchase from your brand, so you can be a bit more aggressive with either your product’s value proposition or a promotional offer that you send to them. 
  • Unengaged subscribers. These are subscribers who may need that extra nudge to get them back into being engaged subscribers. An unengaged subscriber can be one that has not opened or clicked on your emails in the past 120 days or more. It would be a good idea to send this group a special promotional code or incentive to get them to make a purchase from you. 

Segment off of how much many times a customer/subscriber has purchased from you

Creating segments of your customers based on how many times they have ordered from your brand lets you personalize messaging to drive first-time purchases, repeat purchasers, and brand loyalty. Here are some examples of the types of segments you can create based on the number of times that customers have shopped with you:

  • VIP customers. These are customers who have purchased from you 10+ times and are your most valuable customers. You will want to make these customers feel special. Perhaps you want to give them early access to a sale or give them a gift with purchase. 
  • Customers that have purchased from you once. The key to building any sustainable business is getting repeat customers. By treating one-time purchasers differently than “the rest” of your customers, you could be more likely to convert them into repeat customers if you message them in a unique way. Cross-sell complementary products from the ones that they purchased, or offer them a special deal to get them to purchase from you again, which will put less stress on your acquisition budget.  
  • Subscribers that have never purchased from you. While it’s great to have someone subscribe to your email list, it’s even better when an email subscriber becomes a customer. Sometimes a subscriber will sign up to receive emails from your brand and may need a bit more convincing before they make a purchase from you. As such, it’s important to build a segment of subscribers that have never purchased from you. You can then send a message to these subscribers describing why your products are different from others and perhaps further incent them to make a purchase from your brand.

Segment by demographic information 

A key to any personalization strategy is customizing your messaging based on who the subscriber is. The more you are able to identify and drill down into who your customers/subscribers are, the more you are able to personalize the messaging and drive revenue. Here are some ideas as to how you can segment by demographic information: 

    • By location. Say you’re opening up a new store or have an event taking place in a particular city. It does not make sense to send out a blast email to all of your subscribers, since the store opening is not relevant to all of them. Instead, build a segment of your subscribers that are located in close proximity to that city and exclusively market to that segment.
    • By gender. Let’s say you are an apparel brand and are releasing a new men’s t-shirt. Instead of marketing the new t-shirt to all of your email subscribers, create a segment of male customers/subscribers and market the t-shirt to them exclusively. This personalized content will lead to stronger engagement.

These are all just thought starters for you to think about while you build out your customer segmentation strategy. As you get more comfortable with segmentation, you can think about combining the above example segments together. For example, you can create a segment of female subscribers who are also VIP customers and then promote an exclusive pre-sale to a new line of female sweaters for your apparel line. The more you are able to drill down and define your segment, the more tailored your messaging can be, which will likely lead to stronger sales. 

Customer Segmentation FAQ

What is meant by customer segments?

Customer segments refer to groups of customers that have similar characteristics, needs, or behaviors. These segments are created based on factors such as age, gender, location, interests, and spending habits. Companies use customer segmentation to identify and target specific customer groups with tailored products and services.

What are the 4 types of customer segmentation?

  • Demographic Segmentation: Segmenting customers based on age, gender, income, occupation, education, etc.
  • Geographic Segmentation: Segmenting customers based on location, such as country, region, city, or zip code.
  • Behavioral Segmentation: Segmenting customers based on purchase behavior, such as product usage, brand loyalty, and buying preferences.
  • Psychographic Segmentation: Segmenting customers based on lifestyle, attitude, values, and personality.