How to Segment your Customer Base

Customers are like snowflakes: Every customer is different. Segmentation allows you to compare different customer groups with each other and analyze which ones show particular behavioral patterns. Based on this, you then know which customers you should rather avoid and which ones you should concentrate on. So let's build your customer segments!

How to Build Segments

To set up a new segment, navigate to Customer Segments.
Now you can either create segments based on our suggestions or build your own segments from scratch.

1. Segment Suggestions

Per default, RetentionX offers more than 20 predefined segment suggestions:

Based on the RFM Score

Top Customers	Customers with an RFM score of 111
High Potential Customers	Customers with an RFM score of XX1
Small Buyers	Customers with an RFM score of X13 or X14
Worst Customers	Customers with an RFM score of 444
Loyal Customers	Customers with an RFM score of X1X
Dormant Customers	Customers with an RFM score of 44X
Top Customers at Risk	Top Customers, who have a churn probability of ≥90%, and who are overdue with their next order - compared to the median order gap value.

Based on the 1st Order Behaviour

2nd Order Due	Customers who placed their first order within the last 365 days but are overdue with their second order, i.e. the customers who - compared to your total customer base - are above the median order gap.
1st Order incl. Bestseller	Customers who bought your bestseller in their first purchase.
1st Order incl. most popular Coupon	Customers who've used your most popular coupon code with their first purchase.

Based on the Overall Purchase Behavior

Active Customers	Customers who have placed at least 1 order within the last 12 months.
High-Value Customers	Top 10% of your customers according to their Lifetime Value.
One-Time Shoppers	Customers who have only placed one order so far.
Repeat Shoppers	Customers who have placed a minimum of two orders so far.
Bargain Hunters	Customers with a poor Gross Margin compared to the average.
Heavy Returners	Customers who have a return rate ≥50%.
Latest Repeat Shoppers	Customers who've placed at least two orders and the most recent one within the last 30 days.
Big Spenders	The top 20% of your customers according to their average order value.
Customers from *City*	Customers from the city with the highest customer lifetime value.

For Subscription Business Models

Active Subscribers	Customers who are tagged as "Active Subscriber" - if you are using ReCharge or Bold for your subscription management.
Inactive Subscribers	Customers who are tagged as "Inactive Subscriber" - if you are using ReCharge or Bold for your subscription management.
Non-Subscription Customers	Customers who have neither an active nor an inactive subscription - if you are using ReCharge or Bold for your subscription management.

Based on Marketing Journey

First-Click Customers from *Channel*	Customers who first interacted with your best performing first-click marketing channel
Last-Click Customers from *Channel*	Customers who last interacted with your best performing last-click marketing channel

Please note that based on your data, not all segment suggestions are available and therefore may not be displayed (e.g. if you do not offer subscriptions, the Active Subscribers suggestion will not appear).

2. Customized Segments

If you want to build your own segments from the scratch, it is quite straightforward:

1. Give your segment a name under which it will appear in your account
2. To identify the customers to whom this segment applies, click Add Rule
3. Select the property you want to consider

4. Specify the operator you want to use (e.g. is exactly, is greater than, is one of...)

5. Define a condition per rule, e.g. Shipping Country is exactly United States
6. Connect multiple rules via
   • AND: Rule A and B must be satisfied; narrows the segment pool
   • OR: Either rule A or B must be satisfied; expands the segment pool
7. Create groups to link sets of properties together using an AND or an OR conjunction.

 

Use Cases

After you have segmented your customer base, you can start getting even deeper insights into who your customer is and how they behave:

• Analyze all the reports available in RetentionX for one segment in particular, or compare two different segments.
• Sync your segments with Facebook and target these customers with your campaigns. By this, you ensure to spend your marketing budget on the right Facebook users, e.g. your Top Customers.
• Take your marketing performance even to the next level and create lookalike audiences.

But let's take a look at a handy example:

If you are struggling with the quality of your customers, you can start by acquiring fewer bad customers from the outset. In order to define your low-quality customers, you can think of three groups: Customers with a high product return rate, inactive customers with only one order, and customers with small gross margins, so-called bargain hunters:

Once we have the segments created, you can push it to Facebook Ads as an audience and exclude them and like-minded users from your retargeting campaigns - save money and give Facebook the input so they can attract fewer customers of this type!

Learn more about how to work with segments in the How to Deep Dive into you Customer Segments article