Early on in your e-commerce small business’ growth, you probably focused on the quality of your product, credibility of your brand, and getting feedback 1:1 from customers. At some point, as your business grows and the number of customers you serve grows, you’ll turn to email marketing as a way to build customer relationships at scale.
It’s no surprise, email marketing is highly effective. In a recent 2022 post, Hubspot shares that: “Email generates $42 for every $1 spent, which is an astounding 4,200% ROI.” In addition, Campaign Monitor reports that marketers who use segmented campaigns note as much as a 760% increase in revenue. And According to Klaviyo’s new tagline “Retention is the new Acquisition,” there’s also a lot to be said for retaining customers and encouraging repeat business.
So how do you make the most of email marketing, acquiring customers, retaining customers, keeping them engaged, and maximizing your email marketing spend? The key is to start by recognizing that your customers are not all the same, but instead have different needs and interests. We call this customer lifecycle marketing; personalizing how you talk to your customers based on the stage of their journey with your business.
Here’s a closer look at how to get started with the three customer segments every eCommerce business needs.
What is Customer Segmentation?
Customer segmentation refers to the practice of dividing customers into different categories (customer segments) based on shared traits.
Business-to-consumer (B2C) organizations can segment customers based on demographics, geographic data, lifestyle (shopping habits), and online behavior (behavioral characteristics). The practice matters for business-to-business (B2B) companies, too, who can segment customers based on some of the following commonalities: industry, the number of employees, headquarter location and areas served, and previously purchased products.
Segmenting customers based on shared traits helps businesses target customer experiences tailored to their unique needs, interests, shopping habits, and other characteristics. Your brand can deliver these targeted experiences through:
- Tailored discounts
- Improved user experience on your company’s eCommerce website
- Better customer service and customer relationships
- Augmented communications and marketing strategies
- Improved products or services, and more.
Segmenting your customers is an ongoing process, but it begins with analyzing data about your customers to identify similarities and see patterns that you can use to create groups. However, with so much data about your customers available, it can be difficult to find a starting point. Once you’ve established these groups, you can make sure you’re automatically adding new customers to these groups and tailor the communications they receive from you accordingly.
Where Do I Start?
At Centric Squared, we’ve built up a fair amount of expertise in this area having helped over 60 small businesses implement CRMs, as well as being certified Hubspot & Klaviyo Partners, and we’d like to share that with you. We recommend our eCommerce clients to begin with three simple customer segments based on data that is widely available and easy to find. These segments lay an essential foundation for successful email marketing campaigns to deliver targeted customer experiences.
These three simple customer segments include:
- Recent (New) Customers
- Past Customers
- Potential Purchasers
Recent (New) Customers
When a person makes a purchase, they become a customer.
Building trust and developing a relationship with customers is central to the survival of a direct-to-consumer business, some would argue even more important than the quality of products.
When it comes to email marketing to customers, your communications should extend beyond simple transactional invoices and shipping information.
How do you build trust with customers? We recommend you start by acknowledging their purchase beyond a simple transactional invoice and shipping updates. You can start by saying thank you for your support, or explain what to expect from your product when it arrives. After the product has arrived, you can ask them how they’re enjoying it and even to share feedback or reviews. Depending on the lifecycle of your product, you can also invite a customer to repurchase, and consider giving an incentive to build customer loyalty.
Our suggestion: stay human, be authentic, your customers will find it endearing and your business will thank you in the long run.
Past customers are an often untapped source of revenue, don’t overlook them! Instead, capitalize on your past relationship with them and the opinion they already have about your brand. To identify past customers, you simply have to identify a timeframe — a place to draw the line between recent (new) customers and past customers. Businesses can use anywhere between 2–12 months for this definition, and it really depends on the products you’re selling (and their shelf life, and typical repurchase behavior). For consumable products like say coffee, 2 months may work. While items like fashion might benefit from 4 months, higher ticket/longer-term items maybe 12 months.
Identifying past customers once you have that timeframe is simple. It’s anyone who’s made a purchase from you who is not considered “new”. Create opportunities for past customers to repurchase by inviting them to.
- Invite them to purchase similar or tangential products or services (ex: Did you like ABC? Pair it with XYZ!)
- If it’s been a long time since their purchase, consider a re-engagement deal just for them: ‘We’ve missed you, here’s a great reason to come back!’
Anyone who has not made a purchase yes can be categorized as a potential purchaser. In addition, if you’re using an email marketing software that’s using tracking cookies, like Klaviyo or Hubspot, you’re also often capturing emails of people who have visited product pages on your website. There’s a few ways to identify this segment based on your tech stack, and it’s a powerful one to target because they’ve already shown an interest in your business or product and are much more likely to purchase from you in the future than someone who has not done either.
So how do you help these potential customers make the decision to purchase from you? There’s a few strategies here you can employ:
- You can educate them about the features of your products and help them see the benefit of becoming a customer
- You can address common questions, FAQs, help them choose the right product or overcome specific hesitancy around purchase (ex: Can I return it if it doesn’t fit?)
- You can share your expertise, via regular blog posting or newsletters
- You can share social proof, reviews and testimonials from existing customers
- You can make them a first time offer they can’t refuse.
Usually, some combination of these in a “pre-purchase” flow is highly effective in email marketing. Either way, making it easy for your customers to make informed purchasing decisions is a great piece to automate in email.
At Centric Squared, we understand that email marketing has the power to have individual conversations with your customers at scale. It’s direct marketing, where you’re able to call them by name, and often you know some identifying elements about them — either their interest (what blog posts they’ve engaged with), the types of products/services they’ve shown interest in, and where they fall in your typical customer lifecycle. We are experts at helping small businesses identify their customer segments and implement data-driven marketing and sales strategies. Through our partnerships with Hubspot and Klaviyo, we are able to offer our small business clients access to tools for growth.
Not sure where to start with CRM (customer relationship management), or which CRM is right for your business? You can download our free guide for small businesses to help you get started.
If you’re interested in creating a customer-centric and data-centric marketing strategy for your business, book a complimentary consultation with us to see if we can help.