Demystifying online customers – One segment at a time

  • 28 Jan 2016
  • Posted by Sashindar Rajas...
  • 0 Comments

If you run an ecommerce store or connected to its money making even in the remotest way, then you know that your customers are your lifeblood. Now keeping your customers engaged and happy with your site are never-ending challenges. You’re perennially at risk from competitors, constantly changing product lines and of course, the highly fickle nature of customers who are ready to abandon your store at the drop of a hat (or cart in this case).

But where do you start if you want to acquire their eternal commitment and shopping dollars? How do you even begin to comprehend what’s needed to keep them interested? Do you even know that the guy who bought last season’s ‘Game of Thrones’ DVD set from your store is going to come back this season? There are a lot of questions to ponder over.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So let’s talk segmentation. Yes, we’ve all read the numerous posts that talk about what segmentation is and how it’s the foundation of successful data driven marketing. And they’re not wrong. We’re also pretty sure that you’ve combed through everything from Quora questions to WikiHow posts on the numerous ways to segment your customers. And those are right too.

But this time let’s turn a different way and define some of those segments. What we have here is a ‘customer segments’ (not segmentation) for beginners’ post - we shall refrain from using the word ‘Dummies’ here.

Before we begin to define segments, let’s set things straight with some obligatory disclaimers.

  1. Segments are a lovechild of art and science. There are literally innumerable ways to segment a customer base, and to attempt to cover every single one of them is quite frankly, a wild goose chase. What we are attempting to do in the following post is to produce broad definitions of certain segments which we believe can theoretically cover the entire typical landscape of online customers
  2. Different segments mean different things for different stores. A loyal customer for a small, self-run handicrafts store may be seen in a totally different light by a big box retailer of all things such as Amazon or eBay. Hence it is totally up to you as a store owner to define how and which segment a particular customer should figure in.

Now that’s out of the way, let’s get to the segments.

Potential Customer

“A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want” – Dr. Philip Kotler

Philip Kotler’s definition is marketing gold. But let’s breakdown and magnify this statement.  Kotler emphasizes how potential customers all possess a particular want or need as the underlying commonality. This is exactly why visitors find themselves on your site in the first place. Every single view and every single click is that of a potential customer. Regardless of whether they’re only on the homepage or on the last stage of a checkout, every visitor is a potential customer. And yes, this includes the pariahs who abandoned their baskets.  So how would you classify potential customers in an online shopping context? Simply put, its every one of your site’s visitors excluding those who had completed a purchase in the same session. And yes that number is ridiculously high.

Nascent Customer

Not all your customers go all in when they buy from your store the first time. They tend to test the waters with small purchases and based on their experiences then decide their loyalty to you. It is these ‘nascent’ customers that you need to nurture and create a long lasting relationship. Speaking from personal experience, a great first time engagement does pave the way for repeated trips in the future. And how do you recognize such customers? Look at how recency and monetary values for a start. Such customers might have had 1 or 2 low profile visits culminating in purchases of relatively (usually but not always) low basket values. Hit the right notes with them and you’ve got them hooked.

Loyal Customer

This is an easy one. And without question the most highly sought after segment among marketers. Loyal customers are like old friends- Great to get along with and easy to speak to. But also that’s exactly what makes it so difficult to keep them constantly engaged and attracted to your online store. Become complacent in your communications and they’re gone; faster than a mouse click. The challenge of holding on to them is very much real and losing them to your competition costs in more ways than one. To identify who your loyal customers are, their purchase frequency is a great place to start. As always, create your own criteria as to ‘how frequent’ should your loyal customers be and take it from there. In fact, you can go a step further and create sub-segments based on different purchase frequency ranges and take up segmentation to the moon and beyond.

Hibernators

If you have customers in this segment, then it’s time you paid them a little attention. Customer engagement tends to drop off for many reasons. And it’s impossible to know why. But what we do know is that keeping them engaged all through the lull is vital. Otherwise you stand the risk of being easily forgotten.

Hibernators pose a slightly different challenge. Maybe they’re just busy, or maybe they’ve gotten their fill of shopping for now. And when the need is minimal or even nonexistent, no amount of offers or promotions is going to entice them back.

Instead use this is an opportunity to educate yourself of what their history was like. Analyze their behavior and estimate when (or if) they’re most likely to return. But push customers too much and you’ll literally annoy them out of their loyalty. Use the sedentary period to plan informative content marketing strategies. Not everything needs to convert right now, but keeping your store on the top of their minds is a win too.

The above is a hypothetical example of why customers go into hibernation. As mentioned earlier the reasons could be aplenty. Invest in establishing a 360 degree view of your customers and arrive at solid conclusions before taking the next marketing steps. Take a look at historical visit, purchase and engagement recency and frequencies that are tapering to identify such customers.

Vanishers

These customers, just plain don’t like you. Somewhere, something went wrong which has repelled them from your site for good. It could have been a bad product experience, a headache inducing service call or even a subpar delivery. The damage has been done and they want nothing to do with you. And to make things worse, they’ve most likely turned to one of your numerous competitors for comfort.

It’s easy to spot such customers in your data. They’re the ones who haven’t shown up on your site in ages or those who redirected your emails right to the bin. The writing’s on the wall and things look bleak. You need to do conjure up something truly special to win them back and that right there is your challenge.

Leaving you with...

As for the above segments, they are more akin to broad brushstrokes than a magnificent Monet. Use the above segments as a guide to know where to begin and create your own masterpiece. Remember that keeping an ecommerce site in the black requires a combined effort covering multiple departments, suppliers and partners. And while it most definitely is a high pressure activity, it could also be the stage of your biggest success.