Magento 2 Customer Segmentation and Personalization
If you want to sell successfully through your Magento store, you need to think about your customers and what they want.
In the online buying space, what appeals to one group of people need not necessarily appeal to another group of people. As a merchant you know that you cannot please all people, all the time. You will also need to constantly find new ways to make your products and services visible to your customers. In order to show your customers the product/s they might be looking for you need to understand what they would be looking for when they come to your website. Based on that understanding you need to present the most relevant products and services. This way you will keep your customers engaged with your brand. How do you understand what they are looking for? In order to reach their audience more effectively and have them engage better, merchants are turning to segmentation and personalization.
So, what is the difference between about segmentation and personalization?
What is Customer Segmentation?
Segmentation is the grouping of your target customers into smaller groups with similar interests and priorities so that you can create strategies and messaging specific to each group. The groups can be created based on the perceived interests and priorities. Sone ways in which you can segment your audience are:
- Demographic – based on age, gender, location, etc.
- eographic – based on location such as country, state, city, etc.
- ultural – based on cultural origin
- ehavioral – based on attitude, knowledge, etc.
- sychographic – based on interests, actions, etc.
Segmentation helps you to create messaging that is more appropriate to the target segment; which will help deliver the required result.
What is Personalization?
Personalization is optimization of the strategy and messaging to an individual customer; not the group to which the customer belongs. Personalization strategy is determined by profile, behaviour, demographics gathered from customer information.
Unlike segmentation which focuses on the group and is controlled by the marketer; personalization focusses on one customer and is controlled by data collected from the customers’ behaviour and demographics.
Using Artificial Intelligence and Machine algorithms it is possible to show customers information, recommendations and offers relevant to their interests and buying behaviour. In this way, you can keep your customers engaged with your brand as they get the impression that you understand what they want. The behaviour of visitors to your Magento store can be monitored from the moment they land on your store and based on the information you collect you can tailor the experience for each visitor.
Some of the different ways that you can segment and personalize the experience of the customers on your Magento store are:
- Visitor Type – Determining new or returning visitors; and providing discounts to new visitors for first purchase and rewards to returning customers for repeat purchases.
- By Traffic source – Determining where the visitor was before landing on you website, for example, Facebook or Google and providing a discount if they came from social media sites or Goole ad.
- Site engagement – Determining the time spent browsing your site or the number of pages viewed on your site; and providing them an offer.
- Products viewed/liked/in wishlist/previously purchased – Showing Related products or Similar products based on the products viewed /liked/ previously bought by the customer. Or offering products to new customers based on the purchase behaviour of existing customers from the similar demographics.
- Customer information – Upsell, cross-sell products based on the profile information or behaviour of the customer. This can be achieved using automation. For example, displaying similar products with higher price when viewing a product or displaying accessories when viewing apparel or incentivizing a repeat purchase for a frequent customer.
- By Location – Displaying products based on the country, city of the visitor. For example, displaying warm clothes / winter wear on determining that the visitor is from New York and it is the month of December.
- Search queries – Display product recommendation based on the search terms used by the customer.
- Current cart contents – Offer products that are similar or related to the products in the current cart of the customer.
- Value of shopping cart – Offer discounts based on cart value; so that users whose cart value is close to the amount are enticed to purchase more products to avail the discount.
- Account type – Mainly for B2B customers. Displaying products relevant to the business type of the customer. For example, displaying beverages and serving sauces and not cooking sauces to cafés.
Segmentation and Personalization with Magento 2
Magento 2 comes with features to manage segmentation and personalization. Customer segmentation in Magento allows merchants to create dynamic segments from the customer base based on their browsing and purchasing behaviour. And then personalize content to be presented to these segments. The relationship of customers to a segment can change in real-time based on their journey through the website.
To create customer segments in Magento 2, first enable Customer segments in the Store Configuration and then create the segments under Customers and add user types to the segment.
Once customer segments are created on your Magento store, configure rules to deliver personalized content to these created segments. Some of the features that can be used for personalization based on the shopping behaviour of your customer are:
- Banners – display an image with/out a block of content for a specific customer segment and determine where and when these banners will display on your website. For example, on the homepage display a common banner for all visitors to your website and display a banner offering bonus points on repeat purchase for registered customers who have previously bought products from a specific category or discount on winter wear for customers from United Kingdom.
- Related Products, Cross-Sells and Up-Sells – On the Product Details page, display related products or up-sells to recommend products that the customer can quickly add to the cart thus encouraging additional purchase. Cross-sells can be displayed on the shopping cart page enabling customers to quickly add recommended products to their cart before checkout. The products to be displayed can be configured using dynamic rules based on the customer segment.
- Shopping Cart Price Rules – Rules set up to allow discounts to customers who belong to a specific segment. These offers can be presented to the customers using banners. For example, on the Shopping cart page display an offer to customers who have spent Rs 5000 and above on your website within the last 30 days.
Magento 2 has several extensions for segmentation and personalization for customers. These can be found on the Magento Marketplace. The Magento Enterprise edition has options to:
- Categorise inventory by product groups
- Categorise price by customer segment and product type
- Segment customers by demographic data
- Distinguish new and repeat customers
- Distinguish customers by shopping cart contents and purchase history
- Track items that customers have searched for
- Trigger reminder emails on abandoned carts and wish lists
- Offer gift cards
Using these features you can run campaigns and display contents dynamically to predefined segments; so as to ensure that you are delivering the right content to the right customers at the right time.
Segmentation and personalization help to maximize the cost-effectiveness of your promotions. The real-time segmentation of customers in Magento 2 enables customers to be dynamically added to or removed from the predefined customer segments based on their behaviour on your Magento store. This ensures that your customer segments are up-to-date and your marketing strategy is delivered to the right customer at the right time. You can also create a report of your customers and segments.
To run successful marketing campaigns, as a merchant you need to develop insights and strategies for the different needs of your audience.