Shopify Customer Segmentation is a potential strategy for optimizing, how businesses interact with customers. It is like sorting your customers into different groups based on their similarities.
Customer Segmentation helps you understand your customers better, target them with the right messages, and turn them into your lifetime buyers. It boosts sales, generates high conversions & builds strong customer relationships with your brand.
In this blog, we will learn about Shopify Customer Segmentation, how to create different customer segments, benefits of customer segmentation & apps for managing Customer segmentation tasks.
By the end of the blog, you can implement Shopify Customer Segmentation practically and generate sales by converting your audience into lifetime customers.
What is Shopify Customer Segmentation?
Shopify Customer Segmentation is a process of partitioning your customers into different groups based on their common traits, hobbies, demographics, psychographics, and purchasing patterns.
Target market segmentation enables businesses to understand the unique characteristics and behaviors of their ideal customers. These characteristics help store owners to arrange customers in segments according to their needs, and pain points.
With the help of Shopify customer segmentation, businesses can better understand their customer’s needs and requirements. They can accurately target their potential audience and turn them into permanent customers.
Customer Segmentation on Shopify can be done in two common Approaches:
1.Data-Based Customer Segmentation
Data-based customer segmentation is a process of creating target customer segments by using data information and insights. It includes detailed data on various factors including customer age, location, marital status, education, and psychography.
Let us look into detailed data-based client segmentation:
- Demographic Segmentation: This is a brief data insight into a customer’s age, gender, career, marital status, monthly income, and education level.
Ready to Learn more about Shopify Customer Demographics
Read Detailed Blog- Geographic Segmentation: The target market segmentation is based on location, local, international, city, and country.
- Behavioral Segmentation: Behavioral Segmentation is customer segmentation based on browsing routine, purchasing patterns, and marketing response.
- Psychographic Segmentation: This is client segmentation based on the values, hobbies, interests, traits, and desires of customers.
2.Value-Based Customer Segmentation
The value-based customer segmentation is based on customer value analysis. It is mainly customer market segmentation based on how valuable the customer is to the business.
It is the type of segmentation that requires complete insights, time, and a clear picture of the ideal buyers.
Let us look into the details of value-based audience customer segmentation:
- Loyal Customers: The customers who purchase frequently, have the highest average spend of your stores, and they behave as truly loyal towards your business.
- Champions: These people have recently purchased from your business, have a strong buying history from your store, and serve as the backbone of your customer base.
- Reawakening Customers: These customers purchased from your store, interested in your products but are too lazy to make frequent purchases.
- Risky Customers: These customers were once your buyers but need to be more engaged with your store at present. A strong call to action is needed to get these customers back.
How to Create Shopify Customer Segments?
E-Commerce Customer Segmentation on Shopify is a process that involves four main steps. Focusing on these steps can help businesses create a strong customer baseline which would help get success for your Shopify business.
1.Collect Customer Data
Collect and arrange relevant customer data inside your Shopify store. This data includes detailed information about your customer’s demographics, geographics, psychographics, purchasing history, browsing insights, and highly appreciated marketing strategies.
Shopify’s built-in tools can easily gather customer data after the first purchase. There are also multiple apps available to help get and organize data.
2. Analyze Customer Data
It is the second step in the process of market segmentation. Once you have gathered all the data, the next step is analyzing this data to check trends, patterns, pain points, and challenges the customer is facing.
The analysis also includes a detailed study of customer characteristics, preferences in the market, likes/dislikes, and hobbies. It will help in laying the foundation for creating effective client segmentation.
3.Finalise Segmentation Criteria
After collecting data and analyzing it, the next step is to determine the right segmenting criteria for your customer. Different customers hold unique criteria to be included in particular target market segments.
Based on the specific demographics, geographics, purchasing behavior, and product preferences, some customers might be closely related to each other. You can also assign segments based on the engagement level of the customer towards your business.
4.Create Customer Segments
The final step is creating client segments based on collected data, detailed analysis, and defined criteria. Shopify’s built-in tool is also helpful in creating segments like smart collections, customer tagging, or automated workflows.
For instance, you can create segments as “High-Spenders, First-time Buyers, Champions, or Inactive Customers” based on your collected data.
Productive Advantages of Shopify Customer Segmentation
The Shopify customer data is a very valuable asset that can change a business’ normal approach to a global level of success. When you focus on correct audience segmentation data on Shopify, it can give you huge benefits for your store.
Let us look into some potential benefits of targeting customers according to segmentation:
Efficient Customer Retention
Customer market segmentation helps increase sales by customer retention. Maintaining the existing customers is more beneficial than attaining new customers.
Client segmentation allows businesses to target their already existing customer with better marketing strategies and personalized options.
Want to know more about How to Increase Shopify Customer Retention
Read Detailed BlogEnhanced Customer Loyalty
Customer segmentation builds a strong connection of your business with the client. It helps businesses to customize their products and marketing strategies according to customers’ choices.
It supports repeated purchases and a positive brand image which in turn increases customers’ loyalty.
Highly Optimized Inventories
Businesses can optimize their inventory management processes and product sync tasks easily with the help of the right customer segmentation.
The accurate segmentation of Shopify customers ensures the alignment of inventory levels, stockouts, and customers’ preferred products.
Improved Marketing Efficiency
Shopify customer segmentation allows businesses to customize their marketing plans according to their mass audience. They can deliver personalized messages, offer sales, and increase conversions with the help of the right customer segmentation data.
Better CLV & AOV
Shopify customer segmentation also helps in increasing Customer Lifetime Value (CLV) and Average Order Value (AOV). With the help of customized marketing & targeting the right audience, the CLV & AOV increase for a long period.
By focusing on high-level customers, businesses can get maximum revenue & sustainable growth.
Best Apps for Shopify Customer Segmentation
Shopify provides some built-in tools and features for getting customers’ data and arranging it into target customer segments.
However, there are also some online apps available for in-detailed overviews and data insights. Let us look into the top five apps for customer market segmentation:
1. Nostradamus
Average Rating: ★★★★★
Free Trial: 14 Days
Subscription Fee: $39/month
It is a Shopify app that has AI features for providing performance analytics for a Shopify store. This performance analytics data helps you analyze the customer segments.
Nostradamus will also give you information about the health check of your store and sales forecast, revenue & predictions.
It shows results in simple & easy graphs with all the important data displayed on it. The dynamics of sales, average order value of a customer, & gross margins can easily be calculated from the app.
2. Auto Tags
Average Rating: ★★★★★
Free Trial: The basic Plan is Free
Subscription Fee: $8/month
Auto Tags is one of the best Shopify customer segmentation apps that will tag your customers, orders, and products automatically without any hassle.
It gives you the choice of setting tagging rules and then the app will arrange your data according to store insights.
It allows businesses to manage orders smoothly, and create customer segments for optimized marketing campaigns and product sync improvements.
The automatic app features will tag the products, and customers according to the requirements of your business.
3. Reveal
Average Rating: ★★★★★
Free Trial: The basic Plan is Free
Subscription Fee: $299/month
It is a Shopify customer segmentation app that helps optimize communication strategies and smart email marketing. By gaining insights into customers’ data, Reveal can help you lower your advertising spending and increase your sales.
Businesses can use the app to fix the performance of the store as well as to reach estimated customer targets and generate sales. It saves a lot of time with advanced data insights about customer engagement with your store.
4. Peel
Average Rating: ★★★★★
Free Trial: The basic Plan is Free
Subscription Fee: $499/month
Peel is a Shopify app used to create customer segments and provide in-depth performance reports. One of the best features of this app is that it is easily accessible for store owners who own multiple stores from multiple locations.
Peel helps businesses to look into customer retention and revenue trends in the target market. It easily allows the Shopify store owners to view customer ROI, and average Life Time Value (LTV) with the store.
5. Loyal
Average Rating: ★★★★★
Free Trial: The basic Plan is Free
Subscription Fee: No Fee
It is a Shopify app used for target market segmentation and helping in analyzing customer data based on their shopping habits and interests.
One of the greatest benefits of this app is that it will provide you with additional tips on improving your store through personalized advertising.
This app is also helpful in generating customized messages and targeting these messages to specific client segments. Loyal also provides data about changes in your customer’s preferences through weekly reports.
Success Stories by Accurate Shopify Customer Segmentation
Gymshark
Niche: Fitness
Customer Segments: Gym lovers, Bodybuilders, Yoga Enthusiasts
Gymshark created three main segments of their ideal customers. Most were already gym-going individuals or preparing to work on their bodies in gyms.
The brand created targeted advertising campaigns for their customer segments for personalized product recommendations. It highly increased customer engagement and conversion rates of Gymshark.
They also used social media for creating online groups of their specific customer segments which helped them to directly interact with their ideal buyers. This step increased customer satisfaction & brand recognition to another level.
ColourPop Cosmetics
Niche: Makeup
Customer Segments: Makeup Collectors, Vibrant Makeup fans, Price-Conscious Buyers
By using eCommerce Customer Segmentation data, ColourPop, a famous makeup brand targeted its ideal audience segments with social media campaigns, influencer collaborations, and offer-based product marketing.
The brand focused directly on its ideal buyers including beauty influencers, makeup enthusiasts, and trend-following customers. Once they found their ideal audience, they created three main segments and targeted them with customized marketing.
With the help of accurate client segmentation, the brand earned a lot of success from generating revenues to building a renowned brand image.
Chubbies Shorts
Niche: Men’s Clothing (Shorts)
Customer Segments: College Students, Beach Goers, Outdoor Picnic Enthusiasts
Chubbies Shorts is a famous men’s shorts brand that targeted its ideal customers by analyzing Shopify Customer Segmentation data.
They focused on adventurous and fun-loving male audiences of young and middle age who might be interested in their product.
By using targeted email marketing, social media marketing, and event sponsorships, Chubbies Shorts uniquely reached its specific segment.
It not only increased their brand loyalty but also generated a lot of sales through word-of-mouth references.
Ending Note
In the end, Shopify Customer Segmentation is a strategic tool for Shopify store owners looking for success in the highly competitive e-commerce world.
It helps in utilizing important customer data for better engagement, revenue generation, and marketing efficiency.
Shopify client segmentation strategies help businesses in inventory management tasks, reducing extra advertising costs, and meeting the customers’ demands.
Businesses that use Shopify customer segmentation can earn long-term success and organic growth as they serve their customers with value-based services.
By utilizing target market segmentation, companies can maintain brand image, improve customer retention, and make strategic decisions.
FAQs
Customer Segmentation is a process of creating segments of your ideal customers based on their similar characteristics, demographics, psychographics, interests, hobbies, and preferences.
Steps to Create Customer Segments:
- Collect Customer Data
- Analyze Customer Data
- Finalise Segmentation Criteria
- Create Customer Segments
Shopify customer segmentation can highly improve engagements through personalized marketing, relevant product recommendations, behavior-based analysis, timely promotions, and direct feedback.
By collecting comprehensive data, refining segmentation criteria, test the results from existing segmentation, a business can improve its segmentation. Remember that, Customer segmentation is a continuous process that requires continuous efforts and updates.
Yes, there are multiple third-party apps available for Shopify customer segmentation that perform several result-oriented actions. The main functions that Shopify Customer segmentation apps can perform include analytics reporting, marketing insights, and improving customer LTV & AOV.
