How to Grow Your Business Through E-Commerce Segmentation

As an e-commerce business gains momentum after its initial launch and looks to further efforts to improve the user experience, one of the clear paths it can take is to embrace visitor segmentation as a lever for growth.

What is user segmentation? Segmentation may be best described as serving unique content and promotions to varied shoppers based upon the behavior or data that corresponds with their previous visits and brand history.

Segmentation drives results within your customer base and is centralized on driving satisfaction through better user experiences. It helps customers discover products and entices them to take action, and can have a dramatic impact to your business and bottom line. Segmentation is an effective way to speak differently to varied segments in a concentrated effort to construct a more personalized experience, hence increasing the conversion rate.

Most retailers aren't looking at segmentation as a way to drive economic gains. Because of this, if you're not segmenting your web audience today, you're in the majority — but you must start considering the benefits that this type of initiative can bring. Segmentation can potentially blow away your forecast for 2015 if you get it right.

The Shapes of Segmentation and Driving LTV
Segmentation can occur in many forms and functions, using both online and offline data to target users. For this example we're going to discuss ways that a simple "pure play" e-commerce business can use online data to help shape customer experiences. By tailoring your website creative, promotions and messaging with the tactics below, your website will serve more productive sessions and your conversion rate will drive incremental gains.

The goal is to use segmentation as a driver for building lifetime value (LTV) within your customer base through better customer relationships and earning user trust via great products and services.

If you're serious about growth, LTV should be top of mind. Mining your historical data will give you the details into how the business is truly performing. Looking at session-based conversion rates is paramount to your efforts, but a business shouldn't neglect the review of the LTV metric.

Simply put, LTV is your average order value times repeat purchase rate times length of average customer relationship. By using segmentation to impact any of these aspects, you're going to drive margin growth in your business.

Where to Start?
If you're looking to implement a segmentation strategy, you'll need a solution to help in constructing the business rules and to serve your content.

Start simple by targeting new and returning visitors. Try basic banner targeting to these segments. After mastering the basics, you'll become more sophisticated and can begin targeting by some of the other methodologies such as purchase and visit history. In no time your e-commerce site will become dynamic and tailor itself to a plethora of user types and behavior patterns, driving conversion gains that transform e-commerce revenue and profit metrics.

Craig Smith is the CEO of Trinity Insight, an e-commerce consulting agency that serves medium and large e-commerce brands.