I’ve spoken multiple times about how important customer segmentation is, not just with email but for your whole ecommerce brand. Hyper-targeted marketing and personalised messaging is king in a world where impersonal automation is rife and consumers can easily feel disconnected.

Segmenting audiences in pursuit of greater relevance opens up conversations with your customers that you otherwise wouldn’t be able to have and not only can it increase sales, but also form relationships that are pivotal for customer retention.

Some ecommerce brands may have been riding the wave the past few years with massive amounts of growth YoY, but with the economy tightening and an ever-worrying cost of living crisis – now is the perfect time to optimise your email strategy.

Segmentation Pre-work

Before beginning to segment, it’s important to clarify a few key terminologies and what these specifically mean for your business. When segmenting audiences, we tend to use two main factors to dictate it:

• Engagement
• Purchasing

With engagement, we look at the user’s interaction with our emails. We primarily use open rate, when filtering out iOS15 opens, and click rate for this.

Purchasing looks at a user’s purchase history. We will look at how many orders were placed, the amount spent, how often they purchase and average order value.

For each section, we need to identify some key metrics based on your business:

Engagement

Recent

What is considered “recently engaged” with your email list? This is often determined by how often you email. If you email your list daily, how long it takes for users to be considered “disengaged” will be a lot sooner than if you email weekly or monthly. If you’re not sure, it’s safe to just assume if a user hasn’t engaged with your emails within the last three months then they are no longer considered engaged.

Frequent

How often does a user have to open/click on your emails until it’s considered “frequent”? Likewise with recency, it depends on how often you email. Again, if you’re unsure, it’s a good rule of thumb to just use “three times or more” as a baseline.

This then brings us to the final statement:

If a user has clicked an email three times in the last three months, they are considered engaged.

This is still quite a broad segment and will vary based on email frequency and list size. I would recommend testing different time periods and number of engagements to find the one that gives you the best results.

Purchasing

Recent

What is considered a “recent purchase” for your customers? This is mostly dependent on how often a customer is likely to purchase at your store. If you specifically sell ovens, it’s unlikely a user is going to make another purchase for a while compared to a store that sells t-shirts.

Investigate the average time it takes for a user to make a repeat purchase, and use that to calculate this. For example, if a customer is likely to purchase every three months – it’s safe to say if someone has purchased in the last month it’s considered “recent”.

Frequent

How many purchases does a user have to make before they are considered “frequent”? It’s key to look at your average number of purchases per customer to identify this. If a customer on average purchases three times, I’d likely consider any purchases more than four as a “frequent” buyer.

High Monetary Value and High Lifetime Value

Does this customer purchase products that are of higher value? This can be vital in determining your best customers, as you generally want customers that are likely to make bigger purchases. Take a look at your average order value and then add around 20% to get this value.

Once you have this, multiply it by your average number of orders per customer – and this will be your High Lifetime Value number.

You can fill out the helpful table below to consolidate all this data in one place. We have entered some dummy data to use as examples:

Segment 1 – The VIPs

Despite being our most valued customers and highest revenue-generators, our VIPs can quite often be forgotten about. These are customers who are subscribed to your email list, have purchased more than your average number of purchases and have also raked in more revenue than your average customer lifetime value.

Defining your VIPs

To help define this segment, we need:

• Purchase Frequency
• High Lifetime Value
• Recently Engaged
• Frequently Engaged

From the above data, we know that a frequent purchase is at least three times or more, with a lifetime value of £350. Looking at the engagement stats, we want someone that has engaged with our emails at least three times or more in the past three months.

So, to define this audience within Klaviyo we would say:

• Historic Customer Lifetime Value is at least £350
• Placed Order is at least 2 over all time
• Opened Email at least once in the last 90 days where Apple Privacy Open equals False
• Subscribed to list Newsletter Subscribers
• Person is not suppressed for email

This can be tailored to your own ecommerce store. For example, you may have a “premium” subscriber that you can implement into the audience definition.

Targeting VIPs

Our VIPs are exactly that – very important people. These customers offer us our highest return on investment and are a vital source of third party referrals. Ensuring these customers know they’re special and are looked after is very important.

Make sure to let this audience know that they’re a VIP – you can set up an automation that when a customer moves into the segment, they are automatically notified.

This is also the perfect audience to offer sneak peaks too, give them bonuses or freebies and generally keep them happy. This is a brilliant way to create the foundations of building up a community.

Feedback is valuable from this audience too, what can you be doing better? What are you doing really well currently? What are their pain points? This allows you to target other people just like them with your ad messaging.

Your VIPs can also be a vital source of user generated content (UGC). Sometimes they’ll be more than happy to do this for free because they love your brand so much.

During Black Friday, giving your VIPs access to deals sooner or giving them a larger discount can work really well. You could even give them a discount code they can share with their friends which not only increases your customer base but can make them feel like a hero to their friends.

Segment 2 – One-Hit Wonders

The ever-elusive one-hit wonders comprise a very important segment to focus on as you can greatly reduce your customer churn rate and increase customer lifetime value by targeting these customers correctly. One-hit wonders are customers who made a big purchase, or multiple purchases, a long time ago – but haven’t returned.

Black Friday offers a perfect opportunity to entice these people back to your store.

Defining your One-Hit Wonders

To help define this segment, we need:

• Purchase Frequency
• Purchase Recency
• Lifetime value

From the above data, we know that a purchase is no longer recent after four months, that total orders under three  are considered not frequent and a high average lifetime value is £350.

So, within Klaviyo we can define this audience as:

• Placed Order is less than 3 between 120 and 365 days.
• Placed Order is zero times in the last 120 days.
• Revenue is greater than £350 over all time.
• Person is not suppressed for email

Targeting One-Hit Wonders

One-hit wonders should be a massive priority for Black Friday. A large discount or special offer during this time is the perfect way to bring one of these customers back.

What’s so enticing about this customer segment, is that we know they spend big so this can be a great increase in revenue.

Before the build-up to Black Friday, we can send them brand-building emails or helpful content to remind them what they’re missing out on. Then, we can entice them to re-engage with emails by letting them know some big sales are coming up for Black Friday.

Often, this is enough to encourage another sale.

After Black Friday, it may be worth issuing a survey to the ones who did not come back. Why did they spend so much with us but not return? It can be a great way to discover any holes in your customer experience and help prevent customer churn in the future.

Segment 3 – The Nearly Theres

The “nearly theres” are a very interesting segment and are differentiated from the other two by the fact they have not yet made a purchase. These are users who have signed up to your newsletter list or shown interest in your store, who consistently engage with your emails, but just haven’t quite made that leap of faith yet.

There may be multiple reasons they haven’t purchased yet. Maybe they’re waiting for a specific product to go on sale, maybe they’re just waiting for a site-wide sale or delivery charges are too high for them. Black Friday is a perfect time to finally get these users over the line.

Defining your Nearly Theres

To help define this segment, we need:

• Purchase Frequency/Recency (never)
• Recently Engaged
• Frequently Engaged

From the above data, we can tell we consider someone engaged if they have opened or clicked emails at least three times in the past three months. For this segment, we can potentially narrow this – but again I would recommend testing different time periods.

So, within Klaviyo we can define this audience as:

• Subscribed
• Opened Email is at least 3 in the last 30 days.
• Clicked Email is at least 3 in the last 60 days.
• Placed Order zero times over all time.

Targeting The Nearly Theres

With this segment, we know that they’re interested in us because they are engaging with our emails – we just need to entice them into making the purchase.

One thing that is important to keep in mind with this segment is that, if they’re looking for a deal specifically, their lifetime value is going to potentially be less than that of a regular customer. So, I wouldn’t bend over backwards for them but it also doesn’t mean they can’t become a valuable customer.

During Black Friday, it could be worth offering a bonus discount to this segment. For example, if you’re offering 15% off everything – you could provide a bonus of free shipping if they order more than three products. Adding a minimum basket size can help weed out the less-profitable customer if it’s pure profit you are looking to generate.

Also, many users in this segment may not be waiting for a discount – but just aren’t convinced to purchase from you yet. If you are in a competitive market, it could be that they are still deciding between you or a competitor. If you are a high-ticket store, they may not be ready to commit that amount of money to you yet. In that case, it’s your job to ensure you are the right brand to invest in. Use testimonials, brand-ethos emails and put a focus on USPs to encourage them to convert.

Conclusion

Black Friday is an exciting and busy time for us in ecommerce. It can be easy to get lost in the right offer, the highest-converting messaging and the perfect ad campaigns to get the most value from it. However, it’s important to remember your current customers and it can be very beneficial to take a micro-level approach to increase revenue.

This is also a time where we see a large spike in new customer acquisition. Make sure you have the right post purchase flow in place to help nurture these new customers to become those important VIPs we discussed earlier.

If you’d like some help with your Black Friday email campaigns or setting up a post-purchase flow, please get in touch.