Customer segmenting articles

Customer segmenting is the process to group customers that are similar in some way.

Uses of customer segmenting

The main reason for customer segmenting is to send marketing messages to only part of your customer base.

This might be due to having limited stock, incentives/coupons that are relevant to only some people, or as a way to test an offer before everyone can see it.

The other use of customer segmenting is on the metrics-side, specifically measuring how a group of customers perform. They can be compared to your overall customer base or other groups as an easy way to benchmark.

Customer segmenting strategies

There are a lot of strategies to segment by. Simple ones include:

The last two touch on some more complex segmenting options, ones around customer behavior.

Using customer behavior to segment is nice because if you pick the right behaviors, the system can self-adjust which makes optimization easy. e.g. segmenting customers who buy the most to send more marketing messages will cause them to buy more, which causes more marketing messages...

Getting start with customer segmenting

If you're getting started with customer analysis, customer grading is the easiest to understand and make decisions based. It works well for small stores all the way up to mid-sized stores (say under 100,000 customers). With larger stores it becomes limited and something like RFM should be used.

Articles for further reading

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