Mage-r Surgery: Customer Segments in Magento 2 Enterprise Edition

Like most people, you’ve probably heard how customer segmentation can lead to better conversion rates and improved customer satisfaction. But also like most people, you may be unsure how to start developing your own customer segments. The good news is that with your Magento 2 EE store, you can now easily create customer segments based on your ecommerce data, and target these segments with Magento’s new in-built marketing functionality.

What are customer segments

Customer segments are made up of customers grouped by characteristics or behaviour. All businesses can benefit from customer segments, though those with a more diverse customer base may find they can create a wider range of customer segment types. For example, a pet store will have customers whose purchase behaviour is dictated by the types of pets they own as well as their lifestyle and income.

One size fits all marketing is often no longer effective enough to entice modern savvy shoppers. Customer segments are a double-sided answer to this problem. Firstly, merchants can start targeting communications and promotions to the right types of customers. This means better conversion rates, higher average order values (AOV) and increased profits. Secondly, merchants can stop wasting resources on creating blanket campaigns that don’t appeal and don’t convert. This includes wasted costs for marketing, product returns and customer service not to mention the detrimental impact on brand reputation from unhappy customers.

Why use customer segments

Achieving better conversion rates and increasing AOV is all well and good, but how can customer segments impact these metrics?

Nurture new customers

Maybe they’ve signed up to your newsletter but have yet to make a purchase, or have recently purchased but haven’t created an account. These potential and new customers can be nurtured into a loyal customer base with the help of segmentation. Check out abandonment emails, introduction emails or checkout banners can all be used to offer a tailored promotion based on the products in their cart or simply the products they previously viewed. A personalised promotion like this can be the first step on the path to nurturing a loyal customer.

Reward loyal customers

Identifying the customers with the highest AOV, the most frequent purchases or the most reviews can help you create a loyal customer segment. This group is a well of profit potential, and with the right communications can be nurtured into your biggest brand advocates and most loyal spenders. Reward schemes, special promotions and even personalised suggestions can all go a long way with your top 20% of customers, all of whom are responsible for up to 80% of your sales.

Cross and upsell

Improve the AOV of your customers with relevant product suggestions based on previous purchase behaviour, demographics or even psychographics. Depending on your data you can create ever more personalised product suggestions ideally suited to each customer’s needs, whether it’s the perfect accessory to an item they already own or a more luxury item they can’t live without. Use product page and checkout banners, and tailored email campaigns to target these segments.

Relevant promotions

Blanket promotions simply aren’t enough to cut through the noise of competitors and appeal to your customer base. Specialised promotions that are instead tailored to specific segments, such as a discount on cat food to those pet store customers that own cats, are much more relevant. Not only will you reap even more profits from your efforts, but customers will appreciate redeeming relevant promotions and cutting out those they’re uninterested in.

Using customer segments in Magneto 2

You can now create customer segments in Enterprise Edition based on a range of properties including location, order history and shopping cart contents. Merchants can then dynamically display content, from promotional banners to shopping cart price rules, to target specific segments. Customer segment information is constantly refreshed, so customers are automatically added and dropped from segments as they shop.

Step 1: Ensure customer segments is enabled

You to make sure customer segments is enabled before you begin. To do this simply go to the Stores section in the Admin sidebar.

Under Settings, choose Configuration.

In the left-hand panel under Customers select the option Customer Configuration.

Expand the Customer Segments section and verify that the Enable Customer Segment Functionality is set to Yes.

Step 2: The general set up of your customer segment

The first step of creating a customer segment is the general settings. Simply fill out the fields as prompted:

• A Segment Name to identify your customer segment.
• A Description to explain the segment.
• Select where the website you want to use the customer segment on under Assigned to Website.
• Set the Status to Active.
• Choose the customers you want the segment to Apply To from the options provided:
  • Visitors and Registered Customers
  • Registered Customers
  • Visitors
• Finish by clicking Save And Continue Edit – more options in the left-hand Segment Information panel will become available.

Step 3: Set the segment conditions

You will then need to set the segment conditions to decide what customers will be included in the segment.

In the left-hand panel where more options have appeared, select Conditions. You will see the conditions start with “If ALL of these conditions are TRUE:”

You can then select the green Add button to start adding your conditions to define your segment. You will be looking under the Customer section of the list that appears.

More options will appear as you select the attributes you want to condition by. As an example, here is how you might define a segment for millennial customers.

1. Select the condition Date of Birth from the Customers list section.
2. Next, select the is link from the options that appear.
3. Now select “equals or greater than” from the next set of options.
4. Click on the default date that appears, and instead enter the date “1977-01-01”.
5. Click the green checkmark to save.
6. On the next line, select the green Add button again.
7. Select the is link and “equals or less than” from the following options.
8. Replace the default date with “1994-12-31”.
9. Click the green checkmark to save.

Select Save And Continue Edit when you have finished selecting your conditions.

Step 4: Generate the customers for your segment

Finally, you just need to generate and check the customers that fit your segment.

Select Matched Customers from the options in the left-hand Segment Information panel. You will see a list of the customers that match your conditions. Check through some to make sure your conditions properly define the segment to meet your preferences.

If you’re happy, simply click Save.

You can now use this segment to target with catalog & cart price rules, promo banners and much more.

To target with cart price rule:

1. In the Admin sidebar, navigate to Marketing > Promotions > Cart Price Rules.
2. Choose either Add New Rule in the upper right corner, or open an existing rule to edit.
3. Scroll down to the conditions section and complete as follows:
   1. Select the green Add button and choose Customer Segment from the list of conditions.
   2. The condition is set to find a matching condition by default, but can be changed if needed by selecting the matches link and choosing from the following:
      1. Does not match
      2. Is one of
      3. Is not one of
   3. Target a specific segment but selecting the more link (…) and the Chooser icon. From the list, use the checkbox to mark all the segments you want to target.
4. Click the green Select button to add the chosen segments into the condition and then complete the rest of the price rule as required.
5. Select the Save button when you’re finished.

To target with banner:

You can target a banner to a customer segment and incorporate it into a car price rule.

1. Select Banners from Admin sidebar > Content > Elements. You can either select Add Banner from the top right corner or open an existing banner to edit.
2. In the Banner Properties, set Customer Segments to “Specified”. Choose the customer segment you want to target from the list.
3. Choose Related Promotions from the left-hand panel and mark the checkbox of each related promotion.
4. Complete the other banner settings as required and select the Save Banner button when you’re finished.

Customer segments are just one of the unique features Magento 2 Enterprise Edition offers; if you’re looking at platforms for your new ecommerce business, or are ready up upgrade from Magento 1, contact one of our team today to discuss how we could help.