Target Audience Segmentation: Why It's Useful For Ecommerce
December 2, 2022
Target audience segmentation: why it's useful for eCommerce
Any owner of an eCommerce project must create a unique product that will meet customers' real needs. It is possible to create an effective sales tool when the entrepreneur is objectively informed about the behavioral portrait of the target audience. This approach will allow a detailed study of the end consumers and their needs.
Benefits of the target audience segmentation
Segmenting your online store’s target audience—dividing it into parts based on common characteristics—has a primary goal: to shape and tailor a specific offer to each segment of your target audience to increase conversions. To accomplish this task, you'll need to:
- analyze consumer demand;
- analyze the sales market;
- develop a marketing strategy.
The total number of potential buyers should be divided into subgroups with similar behavior. There are a lot of parameters for segmentation—from gender, age, and geographic location to lifestyle and psychological motives of purchase.
Once you identify the optimal segment, you have a real chance to form the right position in the minds of potential customers regarding your products.
In a competitive environment, such differentiation is crucial and brings undeniable advantages for business:
- Development of a unique personalized advertising campaign based on reliable data about the characteristics of different target groups.
- Understanding specific problems and desires of different segments allow you to solve and satisfy them.
- Obtaining maximum conversions by fine-tuning of targeting for each group separately.
- Creation of offers for different groups of buyers with an optimal range of products based on their requirements and needs.
- Significant reduction of time and financial expenses for business development and promotion of your online store since products will be offered exclusively to those interested in them.
- Substantial reduction of commercial risks due to target audience segmentation, as your company will be able to handle your "field" with maximum efficiency, avoiding irrational and risky development of doubtful territories.
- Discovery of new market niches, which were not obvious but provided excellent opportunities for additional income.
The combination of these advantages creates (and, with a meticulous approach, almost guarantees) the construction of a more successful advertising campaign than those entrepreneurs who did not bother to segment the target audience of an online store and still squandering resources. You have a decisive competitive advantage in your hands, allowing your business to become more profitable and fully realize its potential.
How to properly segment the audience
Segmentation of the target audience can be based on entirely different factors, including deep motives and consumer insights, but the traditional division is based on the following criteria:
- Demographic. Segmentation by this criterion is extremely widespread, as it allows the unambiguous identification of potential customers. Consumers are divided into groups by age, gender, income level, marital status, nationality, religion, and life cycle stage.
- Geographic. The audience (with an eye to the scale of the business project) is divided by countries, regions, cities, or city districts. It is one of the simple elementary forms of segmentation. It allows a company to implement different products for different geographic markets and apply other marketing strategies to attract customers from separate locations.
- Psychographic. Operates on types of activities, a spectrum of interests, and peculiarities of the lifestyle of customers. For example, a person's professional activity, social status, and income level greatly impact buying behavior. By studying the psychological aspects of customer behavior, you will gather a lot of information about their problems and how to solve them. You can also consider the audience's cultural values and attitudes shaped by lifestyle.
- Behavioral. This factor allows you to distinguish consumer groups based on their behavior and reactions. Examples are one-time purchases, purchases based on active product use, orders due to loyalty to the service provider, etc.
There are several ways to collect data for segmentation. You can reach your audience through social media surveys, a special form on your eCommerce website, or an email newsletter. You can also use analytics from Google Analytics.
Collecting information from thematic forums, monitoring various groups with a common theme, reading the reviews of similar products of your competitors, and analyzing their actions are very informative, though quite time-consuming.
After you have done all this work and divided the target audience into segments, you should do some testing, confirming the correctness of your actions:
- You clearly understand each group of customers and know what they want;
- All customers from the same segment respond to your offer in roughly the same way;
- Personalized advertising increases your success in managing group behavior (Open Rate and Click-through Rate are significantly higher than for general mailing).
Quality audience segmentation in internet marketing involves a lot of work using many analytical tools and specialized services. Make sure that the number of potential customers in the segment justifies the investment in a customized approach.
Effective tools for analysis
The deployed research is conducted after dividing the target audience into small groups. For reception of the actual information, the following toolkit is involved:
- Questionnaires. The survey is conducted directly on the website or in groups on social media. You can get real data about clients' target transitions, ages, and preferences. All data are accumulated and systematized in charts and tables.
- Systematic surveys of the potential audience. Special programs can be organized on third-party websites.
- Using analytics data for user segmentation.
- The mechanism of marketing agencies.
The possibilities of Mark Sherrington's "5W" methodology should not be ignored either. The process of market segmentation consists of the application of 5 queries:
The results are the finishing touch when segmenting the market. The methodology allows for effective advertising and presentation of the business model. Commercial activities should be based on the principles of customer orientation.
The bottom line
A deep understanding of your customer's interests will allow you to develop an attractive, clear, unique selling proposition and bring more audiences for your eCommerce project. Analysis of their problems and fears will give you the best ways to deal with objections (the work will be ahead of the curve). You will be able to formulate not a theoretical but a real promotion strategy, take a strong position in the market, expand your existing business and cover new areas of influence.