Consumer segmentation has been around since email marketing began. The benefit of grouping consumers into defined segments and targeting your communications and digital marketing has been proven to generate sales, increase engagement, drive ROI and more. However, with the influx of digital feedback from online reviews and eCommerce sites; being able to get consumer segments right beyond just personalising marketing campaigns is more powerful than ever.
The most commonly used groups to divide consumer audiences are demographic and geographic segmentation, but with a shift in buyer behaviour to online (in a post-Covid-world particularly), readily available goods, short transit times and a greater reliance on eCommerce, behavioural and technographic have become prominent segments. This blog post defines four segments and why they are important to consider when developing your B2C eCommerce strategy. Where possible we’ve given examples of how food distribution giants have embraced segmentation to propel their industry and brands forward.
Demographic Segmentation - Validating an audience
Demographic segmentation refers to statistical data identifying your customers' age, gender, income, family situation, annual income, education and ethnicity. This data is commonly captured through database sign-ups or loyalty programs and is primarily used to create a foundation audience profile for your business.
Demographic segmentation enables businesses to define the make-up of their actual audience. It may differ surprisingly from the one companies originally positioned their product or service to. By capturing and analysing demographic segments you are able to customise your offer and determine the best-returning advertising channels to achieve cut-through based on audience preferences and category characteristics.
Geographic Segmentation - Ensuring ROI
Geographic segmentation divides your target audience by their location, such as postcode, city, county or a location within a certain radius. In conjunction with the demographic information you’ve collected, this enables a company to direct their advertising and business opportunities in the right areas, ensuring the best ROI. A prime example of this would be a business deciding where best to open a store/place a distribution warehouse. Publicly available demographic & geographic data plus internal eCommerce/consumer buyer behaviour data will help determine prime locations housing your demographics or the best location for efficient and cost-effective distribution.
A great example of leveraging Behavioural (we’ll come to this soon), Demographic and Geographic data to determine distribution location is the way food delivery giants such as Deliveroo (UK) and UberEats (worldwide) determine ‘dark-kitchen’ locations. With millions of users on their apps and eCommerce sites, these companies can quickly and efficiently determine audience make up through user sign up demographics and key distribution areas (through deliveries). They can also segment for certain types of cuisines via orders made to local restaurants and lastly basket size. They do this by collecting information that’s openly given by every user purchasing from these companies. They’re able to determine where best to locate a ‘dark-kitchen’, what cuisine to offer the local market and a price point that will ensure they make money.
This clever segmentation of data they are already capturing enables delivery businesses to make 100% of the profit from their foods versus a set percentage if using an established restaurant.
Geographic segmentation can also be used to gather insight into which ATL (Above The Line) marketing and advertising channels are best to use and target audiences in prime locations that they often frequent to ensure the best ROI possible.
Geographic data is best captured through online orders (postal addresses), loyalty, platform sign-ups, promotions and campaigns.
Demographic and Geographic segmentation helps to create and define your generic consumer audience, however, for B2C and eCommerce businesses where geography and demographic boundaries don’t pose a restriction, behavioural and technological segmentation provide a greater opportunity for further targeting.
Behavioural segmentation focuses on how the customer interacts with a business. This requires businesses to dive deeper into their customer data to see how their customers interact on and offline. The most common example of this is when a user becomes a paying customer. How they interact with your app, website or product, how frequently they use it and for how long, all correlate to their purchasing and spending habits - enabling you to segment groups further based on customer loyalty and user status. This allows a company to personalise their marketing efforts by targeting offers, promotions, experiences and upsells. As well as segment the audience into categories to trigger campaign events aimed at driving retention, reducing churn and retargeting lapsed customers.
For example, Uber Eats uses behavioural segmentation by using push notifications for users who haven’t opened the app for a while, email ‘bounce-back’ offers or monetary rewards to make another order. This type of remarketing helps reduce churned and lapsed users, as well as builds further awareness around what campaigns drive frequency in their product usage.
By cross-referencing this with captured demographic and geographic data, they’re able to see what offers and discounts work for different age groups, locations and user behaviours.
Technological Segmentation allows a user to analyse statistical data which is produced by a population or group, based on their ownership or usage of technology. This is a way to best understand the customer's technology stack. A company will be able to determine what devices or programs their customers are using to interact with them, whether it be Android or iPhone, or via Chrome or Explorer. Undertaking technological segmentation with your eCommerce customers, you’re able to streamline the customer journey and encourage buyer behaviour by offering a sleek, well-defined path to purchase. Too often, companies create amazing apps that have an excellent customer experience on the iPhone, yet throw bugs at every turn on an Android device. Likewise, a website that is designed for desktop use, but isn’t responsive for mobile. These glitches in the user experience can have a profound effect on purchasing decisions.
Here’s a great case study on JP Morgan Chase & Co’s app that highlights the importance of understanding technographic segmentation in customer feedback to detect issues with mobile apps.
Consumer segmentation gives businesses valuable insight into who their customers are, their needs, and buyer/purchase behaviour. Driving ROI, improving the customer experience and product offering.
Every eCommerce business collects some form of data but isn’t sure how to get the most out of it. Are you one of those businesses? Get in touch with us today, and we can show you how to use customer feedback and internal data to drive acquisition, engagement, strategy and advocacy.