Customer Segmentation: Why & How Should You Do it to Scale Up Your Business

Customer Segmentation: Why & How Should You Do it to Scale Up Your Business
May 13 2020

Are your visitors not converting into customers? Your products not attracting as many customers as you expected?

Well, you may not be alone. In 2019, the average conversion rate of eCommerce websites was only 2.72%, showcasing an urgent need for businesses to reconsider their marketing strategy.

While most marketers are looking to stay ahead in the market by meeting the needs of the customers or offering better purchase value to them, they are overlooking one major factor – customer segmentation.

To stay ahead of the competition and become an online market leader, you need to know your customers. In eCommerce, dividing your customers into categories using various factors like geographic, demographic, etc. and further grouping them into subcategories can help you target and market your products better.

Critical Factors For Customer Segmentation In E-Commerce


An important aspect of customer segmentation is understanding in-depth the behavioural patterns of your customers. This includes data such as their modus operandi when shopping online, what devices they operate from, how likely are they to make a purchase, etc.


Demographic segmentation involves identifying customers based on variables such as age, gender, religion, disposable income, etc. What attracts a 21-year-old college graduate will vastly differ from what engages a 50-year-old stay-at-home mom.

3.Purchase Habits

Segmentation based on purchase habits is another vital aspect to consider. It helps you understand how different customers behave on their path to making a purchase.

  • How do different customers make a purchase decision?
  • What items do they normally purchase?
  • How long does a purchase session last?
  • Does price play an essential role in abandoning the carts?

These are all crucial facets of customer segmentation that need to be monitored regularly to understand the buying behavior of your customers.

4.Customer Personas and Psychographics

This segmentation approach includes focusing on the interests, lifestyle, and hobbies of the potential customers. Based on gathered analytics using segmentation tools and analytics, businesses can get precise and detailed insights that facilitate targeted promotions.

The Procedure for Effective Customer Segmentation

  • Initiate a project for customer data analysis. Without this, your initiative will lack the focus and direction it needs.
  • Execute data collection by developing a formula or criteria to measure the value of each customer in your customer base.
  • The next step is to analyze and validate the data you have collected based on your current customer base.
  • The last step is to incorporate feedback and implement the results into your e-commerce marketing strategy.

Benefits of Investing in Customer Segmentation in E-Commerce

Customer segmentation in E-commerce can help businesses achieve their online marketing objectives. Here are four key benefits of segmenting your customers:-

#1 Improved Rate of Conversion

When you segment your customers and offer tailor-made products and experience, they are more likely to buy from you.

#2 Better Understanding of Your Customers and Market

Segmentation, especially when based on customers’ purchase behaviors and patterns can give you an honest insight into your market position, the success or gap in your marketing strategy, and your standing amongst your online competitors.

#3 Focused Marketing Message

In addition to a better understanding of your customers and market, customer segmentation can help develop more focused marketing messages that are personalized to each customer segment, resulting in quality promotions and sales.

#4 Higher Quality Leads & Revenues

When the product is marketed based on customer segmentation, sales may have a higher churn rate. Businesses can make sure their product is promoted to the right audience by staying away from undirected or non-specific customers, leading to quality leads and an increase in revenue.

The Takeaway

With in-depth customer and data analysis, you can understand your customers and drive them to your online store by offering them products of their liking and choice. So, investing in customer segmentation can have instrumental effects on your marketing efforts and the success of your E-Commerce business.

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