WHY YOU SHOULD SEGMENT YOUR VISITORS? (Google Analytics)
Some time ago Avinash Kaushik the web analytics Guru said: "Analyzing data in aggregate is a crime against humanity". No we're not talking about the last episode of Dexter but about the visitors to your website. Segmentation has become one of the most important thing you should do to understand traffic to your website and hence your business.
So why is visitor segmentation so important?It is simply the breaking of your site visitors into groups and examining traffic and conversion data for those specific groups. Actually, in Google Analytics, you can perform advanced visitor segmentation and see the number of visits, the average number of pages viewed per visit, and conversion rates for different groups of visitors (example analysis of visitors from different locations).
Google Analytics provides a number of default segments like New, Returning, Paid and Non-Paid Visitors, Search, Direct and Referral Traffic. But you can also create your own custom segments. For example you could find yourself segmenting branded search vs non-branded search terms for organic and paid traffic. Why segmenting all these? Because looking at 'all' your figures that in average does not mean a lot. Figures like 'Average Time on Site' does not mean a lot since it is too broad. To find the real actionable insights we need to break our analytics data and split the various sources, behaviour, goals and outcomes. In brief we need to focus on the details as far as possible. Because trying to make strategic decision based on global data can simply lead our business to failure.
Google Analytics Advanced Segments
Ok, let's now really ask why we should segment our visitors and customers and think about the 'real' reasons for these.In today's, highly competitive world successful companies realise that the nurturing of high-value, faithful, recurring, pleased and lucrative customers is the key solution for having long lasting profits and help the business stay afloat. In fact, I totally believe that it is imperative for organisations to properly identify their customers. No company can afford to offer the premier level of service to all its customers without really knowing who they are.
Therefore calculating the visitors' and customers' value to the company enable us to know better the different types of customers we have and therefore put us in a better position to allocate valuable resources to different types of visitors/customers. After discovery of those different customer classes we can approach different type of customers differently, like proposing appropriate products at appropriate prices for a particular segment.
For exemple: Advanced segmentation could let you see what are the web pages that are most visited by visitors who came on your site by typing brand keywords. And also what are the products that they bought?
Another common term 'Customer Differentiation' is in fact the segmentation of the high-value and high-potential customers but also the identification and separation of the least cost-effective customers. This process is important to know who the company want to serve, it involves the effort to understand what the customer really wants, what are the customers worth or potential. After discovering valuable information about customers we are is in a better position to give priority to the most profitable ones. We can also decide what to do with the least cost-effective customers.
For exemple: It is useful to discover who are the customers that purchased more than one items on your website, and/or who are the ones that purchased again. Then based on these figures we could deploy more effort to a particular 'segment' of our customers.
One way of differentiating customers is by establishing a baseline for the servicing cost of all customers. The segmentation of all customers should then be done to represent them in figures. After that we evaluate actual and strategic value of all the different types of customers (segments) and finally compare the customer value figures to the baseline established before and consequently make appropriate strategic decisions accordingly. The following graph shows an example of how customer segmentation, customer value and the servicing cost baseline can be represented for decision-making purposes.
Customer Differentiation
Customers in the 'Tier 1' are actually the most valued customers with the highest actual and strategic value, they can be considered as the company's very important customers (VIP) and all effort must be made not to lose them.Whereas the last group (tier 5) is well below the customer service cost baseline and has also a very low strategic value, appropriate decisions can then be made by managers concerning those customers classified under this group. For example: keep them with expectations that they can be more lucrative later or simply fire them?
As said by Brett Crosby, the Manager of Google Analytics : "Segmentation can help you perform better through an economic downturn and go with what works, find new ways to drive revenue, find the right segments, working for them and invest there to increase their conversions."
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