6 Ways Segmenting Your Users Can Impact Sales and Increase Customer Value

segmentation Apr 30, 2019

Are you segmenting your users? If you're still putting all your users in one group, it may be hindering growth and preventing your business from experiencing full profitability. Consider these key benefits of segmenting your users:

1. Segmentation Lets You View Your Website Through the Eyes of New Users

Imagine that Ashley, a runner, is visiting a website for the first time. She's eager to find a pair of shoes that comfortably fit her feet while she's running--ideally, something that will provide extra cushion for her feet after an injury.

Finally, her searching pays off! At last, she finds a website that seems to offer exactly the shoes she wants--or so she thinks. They offer several of the features she wants from her shoes. Unfortunately, she can't find any information about sizing. Do they run big or small? If she buys the wrong size, can she return them? Is the website reputable, or is she looking at a sham? Because the information she needs isn't readily available, she quickly clicks away from the website and ends up buying her shoes from a competitor.

Louis, on the other hand, is an experienced running shoe buyer, and he buys them from this website all the time. When he visits, he goes straight to the page he wants and knows exactly what size to order. He's familiar with the brand, so he doesn't have to worry about answering those difficult questions.

Do you have people like Ashley coming to your website, getting confused by the way you've arranged information or by your services? If you want to bring in new customers, you need to segment your data so that you can see exactly how different types of visitors respond to your website. This might include segmenting your data according to:

  • Types of visitors (first-time versus returning)
  • What brought users to the website
  • What contacts the visitor has had with your website (your blog posts, for example)

When you segment your data, you can get a better look at how different types of customers respond to your website design--and, as a result, you can make changes to help it appeal to different types of users. You might discover, for example, that your website fails to convert new visitors, while repeat customers find it easier to use your website. On the other hand, you might discover that new customers are more likely to make a purchase than repeat customers, which means you may need to make other changes to your website's structure.

2. Segmentation Helps You Focus on Precisely What Users Want

DMA found that marketers see a 760% increase in revenue from email campaigns when they segmented their email lists. That's a huge increase--and with good reason! Segmented email campaigns allow you to deliver precisely the content that each user is looking for.

Imagine, for example, that Ashley is still looking for running shoes. She's joined the mailing list for a website that offers shoes and other athletic gear, hoping she'll get a welcome code or other discount as incentive. She quickly starts receiving emails from the company, but they seem to be focused on marketing their football pads and cleats, not on running shoes. That's not at all what Ashley is interested in!

On the other hand, another company discovers that Ashley is looking for running shoes, so they send her emails specifically about shoes. They share information about choosing the right shoes for her feet, including testing her stride to learn whether her foot rolls in or out and how her foot strikes the pavement when she's running. Each email they send her, even if it isn't promotional, contains genuinely useful content. When they market other materials, it's things that actually interest Ashley: running shorts, special lights for running in the dark, and belts that will help hold all her supplies, for example.

Which company is Ashley going to be most likely to buy from? Ashley might be intrigued by offers that the other company sends her, but at the end of the day, she's going to choose shoes from the company that's built up her trust. Once she's made her shoe purchase, she might be more likely to branch out and consider other options--like the belt or the light--but she wants to choose her shoes first. Segmented email marketing allowed the shoe company to provide her with the materials she really needed to make a buying decision.

3. Segmentation Helps Prevent Unnecessary Emails

It's not just about the emails you do send. It's also about the emails that you don't. Many customers join your mailing list primarily to get discounts or specific information about the products they use from your company. Unfortunately, only about 9% of sales emails actually get opened. Customers will decide within the first couple of emails whether they want to continue opening emails from your company. If you regularly send out information that they find neither interesting nor useful, they may stop opening and reading your emails very quickly. In some cases, excessive emails may get you sent straight to the customer's spam box--or they might just unsubscribe altogether.

4. Return Shoppers Buy More Than New Customers

Repeat customers make up only about 8% of visitors to most websites, but they deliver around 40% of your revenue. When a repeat customer checks out your products, you have a 60-70% chance of selling to them, while a new visitor has only about a 5-20% chance of making a purchase, depending on your industry and your products.

This makes customer retention a critical part of your marketing efforts.

Ultimately, a new customer has the potential to be worth 10 times their initial purchase to your company, but in order to take advantage of that, you must focus on keeping those customers and bringing them back. The good news is, the longer a customer is with your business, the better you can get to know them. You can learn about their buying habits: the types of purchases they want, the things that intrigue them, the promotions that are likely to bring them to check out your site. Then, you can segment your users according to those behaviors so that you can focus your campaign on providing the content that most interests each type of customer.

5. New Customers are Less Expensive than Repeat Customers

It costs seven times as much in terms of advertising dollars to acquire a new customer than it does to keep a repeat customer. Repeat customers already know your business and what you have to offer. You know what they want to purchase and how they prefer to connect with your brand. As a result, it costs less to keep those repeat customers--but you need to segment your lists to focus on those customers' needs.

6. Personal Customer Experiences Increase Sales Value

Let's take another look at Ashley's shoe-buying experience for a moment. Ashley has finally found a place to buy her shoes, which she replaces on a regular basis. She has a standing order, and she places it whenever her shoes start to wear out, but that's often the extent of her interaction with that store.

One day, she finds a new shoe store. This shoe store is eager to attract him as a new customer, so they send her a great discount for her first order--maybe even a discount on the brand of shoes she's already using. Even if it's a new brand, she's intrigued enough to make the switch. Ashley gets the shoes and discovers that they work just fine for her needs. Then, she starts receiving emails and other advertisements from the new shoe store. They seem to really know her: exactly the kind of shoe she likes, where she's located, and how her running is going. When Ashley decides to train for a race, the new store sends her training tips--and advertises some new, cool race gear that she can't wait to try out. When she's spending most of her time crunching data behind her desk during a difficult season at work, she gets content about how to stretch at the end of the day, and walking workouts that won't take up too much of her time.

Ashley is now loyal to the new shoe company. Not only that, when they send her specialized, targeted information about other products they offer, she's eager to try them out. She trusts the company and wants to see what else they offer--unlike her first company, which she used only for shoes. The difference? Simply a personalized customer experience.

Developing a Personal Experience for Your Customers

Like Ashley, your customers want a personalized experience. They want to feel as though your company relates to and understands them. By segmenting your email campaigns, you can create a more personalized experience for every customer, which in turn will increase their value to your company.

User segmentation can provide you with a more solid look at your customers' activities as well as an ongoing understanding of exactly what they need. If you want to increase your sales, segmentation is one of the most effective strategies in your arsenal, both for marketing well to existing customers and to increasing your appeal to new customers.