It's one thing to see what the masses are doing on your site, the search terms they use, the pages they visit, the sales the generate. It's quite another thing to truly understand how targeted groups of visitors are behaving in your virtual
outpost. The latter approach to analyzing Web metrics offers insights that open the doors to target marketing opportunities galore.
The concept is called visitor segmentation: grouping visitors into segments according to specific actions you are trying to measure. You could segment visitors based on any number of factors, such as new versus returning visitors, paid versus organic search traffic, or converting versus non-converting users. The possibilities are virtually endless and the insights are absolutely valuable.
"Segmentation is not a new idea in traditional marketing," says John Squire, senior vice president at Coremetrics, an on-demand Web analytics and marketing solutions vendor. "The idea," Squire says, "is to target the people who have a high likelihood of becoming long-term customers. You have to find out what it takes to get them interested, how they use the site and what it takes to turn them into customers."
Such is the value of Web analytics. When you tap into these metrics, there are no expensive market research studies or demographic studies to conduct. No focus groups to gather. No surveys to execute. It's all right there in the data. Your job is to properly segment the data so you can clearly determine which business opportunities you could be cashing in on.
An Essential Tactic
Visitor segmentation is the first essential tool for producing crisp metrics and analysis, says Gary Angel, president and CTO of Semphonic, a Web analytics consultancy and search-engine tool provider. What's more, he says, visitor segmentation is fundamental to understanding what each piece of your Web site is supposed to accomplish. From his view, there is almost no Web analysis problem that doesn't require a visitor segmentation first.
"Almost every Web site serves a variety of constituents with different interests and concerns," Angel explains. "Judging how well a Web site is performing demands understanding of how well each piece is serving the appropriate set of visitors."
Web sites are especially prone to misinterpretation because they often draw many unqualified or misdirected visitors. This traffic typically distorts almost every "average" or key performance indicator (KPI) on the site, including conversion rates and reach metrics. Segmenting the visitors helps avoid this scenario.
Defining Visitor Segments
The visitor segments you choose are inherently business- and industry-specific. They are also specific to a certain kind of analysis. For example, if you are looking at the effectiveness of a particular area or tool on your site, your visitor segmentations will often revolve around usage of that tool.
In general, Angel says, most e-commerce sites find that it is essential to segment in a way that differentiats customers and prospects -- and almost always on much finer grained divisions of each. Prospect segmentations usually focus on measures of engagement and on the original source of the traffic, or which ad campaigns drove leads to come and visit. Customer segmentations, however, typically involve either product interest or revenue and loyalty metrics.
"We also encourage sites to use 'customer since' metrics to track customers by their length of relationship," Angel explains. "For ad-based sites, content interest and return loyalty are two of the most important dimensions. For lead-generation sites, interest and engagement level often drive segmentation."
Comparing Visitors to Visitors
Visitor segmentation is simple from a technology standpoint. The major vendors offer back-end bells and whistles that make it as easy as clicking a few buttons: once you define your target. As Angel mentioned, customer and prospect segmentation is high level. You can drill down into deeper analysis, but you should know why you are drilling down and what you hope to find before you begin the expedition.
"The best marketers examine the value of their brand and their company's vision to determine how to segment their visitors," Squire says, noting that offline shopping patterns may or may not be the same as online shopping patterns, but unique value propositions are the same.
"Think about the segments you've attracted in the bricks and mortar world," he adds. "You can target those same customers in the same way once you identify them online."
Follow the Money
Based on Squire's philosophy that it's the long-term customers who count, you could track first-time visitors, repeat visitors, first-time buyers and repeat buyers and compare them to one another.
For example, if you discover that first-time visitors rarely make a purchase, then attempting to strike their fancy with more choices doesn't offer as much value as catering to trends revealed among your segment of repeat buyers. In other words, if your first-time visitors are searching for almond coffee, find it, but don't buy it, but your repeat visitors are buying vanilla coffee by the barrel, then your promotional efforts should be around upselling those vanilla-coffee lovers on complimentary products, perhaps vanilla scones, rather than trying to find a way to get those almond-coffee shoppers to convert.
If you have the resources, you could spend time on both groups, but if you have to prioritize, then follow Squire's advice: focus on the likely buyers.
You could take the opposite tack, of course. If you discover that your repeat buyers aren't demonstrating any product trends, but droves of first-time visitors are looking for something that you don't carry, then you may want to test the market for that product on your loyal customers and then broaden your merchandising horizons. You could also leverage the data your visitor-segmentation efforts unveil to uncover the best places to advertise to generate conversions, as Angel mentioned, or the best geographic regions to market certain products, and so on.
Get Results Now!
The best way to become more familiar with visitor segmentation is to get your hands dirty with the data. Based on your unique value proposition, your specific business goals, and the visitor history you've already accumulated, you can define visitor segments as broadly or as narrowly as you'd like and begin driving additional value from the online channel within a matter of days.
"Using visitor segmentation, you can discover what types of products are appealing to what types of customers in weeks rather than months, or in days rather than weeks," Squire says. "You can run tests to see what's working and what isn't based on your target audience. You can determine," he says, "without a doubt, which customer groups respond to which promotions."
If you can think it up, you can use visitor-segmentation technology found in Web analytics programs to track it. And, if you can track it, you can most likely use that data to understand your prospects and customers better, and ultimately, to increase your online sales.