What is customer segmentation?
How is it used in ecommerce?
You pick a trait and sort customers by it. Common traits are what they bought, how much they spend, how recently they ordered or how they found you.
Then each group gets a different treatment: another offer, another message, another budget, or no ad at all.
Without the last step, the groups are only labels. A segment earns its place when it changes a budget, an offer or a message. Whether the split pays is a margin question: each group has a different contribution margin, so a treatment that works for one group can lose money on another.
Our view: keep a segment only if you would spend differently on it, and judge it on margin, not on volume.
Worked example
Easily confused with
Customer segmentation vs Custom audience
A Meta targeting option that finds people you already have a connection with, using customer lists, website or app traffic, or engagement on Meta. A segment can become the list behind one. The two are not the same thing.
Customer segmentation vs Cohort analysis
Grouping customers by a shared trait, usually the month of their first purchase, and tracking their behaviour over time. It follows groups. Segmentation decides how to treat them.
Customer segmentation vs Email automation flows
Emails sent automatically when a customer does something or meets a condition. Flows are one place where segments get different treatment.
Buzzword alert
"We have built advanced customer segments"
Usually means: a set of group names in a deck.
Ask: what is different in the account for each group, and since when?
"Hyper-personalised segmentation"
Usually means: more groups than anyone has the budget or creative to treat differently.
Ask: how many segments get their own message today?
FAQ
Is segmentation the same as targeting?
No. Segmentation is how you split customers. Targeting is what you do next, such as showing ads to one group.
How many segments do I need?
As many as you will treat differently, and no more. A segment that gets the same offer as every other is a label.
Sources
- What is customer segmentationBlog or media
Let’s find what’s actually working.
Next step. Check what your numbers say before you split anything, with the Is your ROAS real? calculator.