Website Segmentation Begins with RFM
Segmentation is how marketers group customers based on interests or behaviours. This post covers what to track, how to track it, and why you should be using segmentation.
Segmentation is a way to group your customers based on their interests and behaviours. By doing so, you can better understand their needs. Marketers often think about segmentation but may not connect their segmentation strategy to their website. But doing so helps you create better website experiences. Let’s explore how to do this.
Starting with RFM
Recency/Frequency/Monetary (RFM) segmentation is one of the most popular methods. This method looks at three key factors: how recently the customer made a purchase, how frequently they make purchases, and how much money they spend. By grouping customers based on these factors, you can tailor your marketing efforts to each group's specific needs and preferences.
When I worked for a retailer in the early days of omnichannel sales and marketing, we relied on RFM to drive most of our campaigns on the web, in stores, and in print (in ancient times, we mailed out these relics of a bygone era called “catalogues” to people). We also added an “X” for Cross-Sell to the end of RFM. RFMX segmentation includes the likelihood of any customer buying across product categories.
Even if your website doesn’t do e-commerce, there is probably some concept of a “conversion.” This could be a downloaded document, a signup for a service or newsletter, or creating an account. Each of these has a value internally, even if it’s an abstract concept. This value can be tracked in Google Analytics as a success metric. This is also how you can use virtual currency without being a crypto-bro!
Personalise based on your segments
There are other ways to segment. Behavioural segmentation translates well to websites. This means grouping customers based on their past behaviour, such as what they buy and how often they buy it. This can help you understand what products or services they are interested in. Personalisation engines handle this for you: they look at what a user is clicking, and the engine shows similar content.
This allows you to create content for the exact stages of your customers' funnel or lifecycle. If your website goals are more about delivering content as a service, you can still build customer journeys that include content geared to answer their needs in measurable ways.
Personalisation is a marketing tactic, not a single solution. Implementations can include integration with CRMs or other marketing tools or be privacy-focused, not storing any customer’s information or utilising 3rd party data. While it can get complex, we help organisations quickly get started with meaningful personalisation in Drupal.
You can’t improve what you aren’t measuring
Other segmentation strategies are possible with the crafty use of Google Analytics. GA4, the most recent version, allows you to create trackable groups of users based on common attributes. These include:
- Demographic segmentation is based on age, gender, and other personal characteristics.
- Psychographic segmentation is based on their values, interests, and lifestyle.
- Geographic segmentation is based on where users live.
- Firmographic segmentation means grouping customers based on their company size, industry, and other business-related characteristics.
GA4 Audiences are groups of users based on common attributes, behaviours, etc. You can create an Audience using dimensions, metrics, and events to include any subset of users that makes sense for your business. Segments can not be used in standard reports, while Audiences can be used in standard reports by including them in Comparison as comparison criteria.
Segment and win
Segmentation allows you to meet users where they are faster. Contact us to discuss how to use segmentation or personalisation on your website. We can help you build more than just a website; we can help you build a success factory for your customers and your organisation. Our tools help you to analyse customer data and use it to create tailored content and marketing campaigns.