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pieOK so the idea of segmenting your customers and prospects isn't breaking news. What would make for some interesting headlines would be the percentage of businesses using segmentation effectively.

With this in mind, and with the continued increase in knowledge based content around social media and the importance to businesses being published online, I've taken a step back.

On the one hand basic segmentation, such as only viewing how well paid traffic is converting, will come out of the box for most of your favourite web analytics package. However, advanced segmentation can be taken to a completely different level, by integrating with CRM's, personalisation engines and behavioural targeting solutions.

During my step back I've tried to flesh out some of the benefits for different people, client and agency side, around traffic segmentation.

Why the post?

  1. What better time to talk about segmenting traffic than when you'll likely to be seeing traffic increases through drive towards social?
  2. Even now there is the one-size-fits-all approach within businesses when it comes to looking at web analytics.
  3. There is a lack of awareness amongst businesses as to what is possible with these tools, perhaps a bit of smoke and mirrors.

Benefits of segmentation

We all want to gain a benefit from time or money spent, and there is one thing that segmentation does do - it delivers benefits to clients, agencies and last but not least end users. I've listed a few examples of how people in different roles gain a benefit from slicing the pie, for want of a better phrase.

  • SEO companies, their work in driving quality traffic to a site is rewarded with better performance improvements, as the quality of traffic they target matches segmentations applied
  • Business owners, quite simply, when combined with other optimisation techniques and testing, segmentation will help improve ROI from the online channel
  • Marketing managers, they are able to see which areas of their website need to be improved to encourage their primary target audience to engage with them and convert
  • Conversion improvement/usability companies, they (we) are able to demonstrate greater increases to conversion rates, as the optimisation work carried out is aimed at improving conversions of the clients most profitable customers
  • for the end user, if a business is investing in making informed decisions based on intelligent traffic segmentation, this is guaranteed to lead to improvements to the user experience as the business look to improve conversion rates

A very simple case in point

I would expect that the following scenario isn't too dissimilar to a lot of businesses, irrespective of size.

Background

The business has had a redesigned website which aims to boost the number of new enquiries it generates. Continual investment is made in both natural and paid search to ensure that the new site receives more visitors, especially with the new redesign. An analytics solution is implemented and key business goals are set-up, to monitor the two key site conversions that they are aiming to improve.

So far so good: the new site has a good user experience, traffic generation techniques are in place and the site has plenty of web analytics to mull over.

What happened next

As traffic volumes increased, a conversion rate of around 2% ensured that as more traffic came to the site more enquires were made. Whilst around 20% of traffic came via paid channels, the majority of traffic came through organic search. With a content rich website and a large number of landing pages targeted at key search terms, top level traffic figures were certainly healthy and continued to grow.

We would like to try and improve our 2% conversion rate

At this stage we were brought in to evaluate their current user experience and begin improving their 2% conversion rate. On our first meeting we were told 'we have xx number of people coming to our site each month, and we would like to improve our 2% conversion rate'. We first of all asked them, who are your ideal visitors you are most likely to convert into a new customer if you received an enquiry?

As expected they were able to quickly list out a number of characteristics that make their ideal, most profitable customer, and this included their location, in this case UK wide.

At this stage we were told that they had set up reports which allowed them to see what conversion rate they are getting from UK visitors, and this report was automatically generated each week. They also used the standard segments such as paid traffic, traffic from a referral and direct traffic.

Advanced segmentation I hear you say?

At this stage we introduced the idea of creating tailored segments that fit their business, which they can constantly use to determine how well their site is converting for visitors most likely to be interested in their services.

Never mind the 80/20 rule, this was the 90/10 rule

By creating a segment that simply filtered UK traffic online, ignored visitors that bounce when they arrive, and filtered visitors that spent at least 60 seconds on the site, irrespective of the number of pages they looked at, what our client saw was that almost 90% of all their traffic is never likely to convert into a new sale.

But what about conversion rates?

As expected, the new segmented traffic converted into new online quotation requests higher than all site visitors. In fact, where our client was looking to us to improve a 2% conversion rate, with the new segment applied, they realised their current conversion rate was actually 21%.
 
What is this saying?

On the one hand this simple example highlights the importance of segmenting traffic to get a realistic view of the visitors you should be focussing on converting when optimising your site experience. It also underlines that dependant on the market you are in, the likelihood of traffic finding your site whom don't fit your target audience can vary wildly. In this example, due to the nature of what our client provides (translation services) they have content on their site which inadvertently attracts visitors from outside of the UK.
 
We don't often work with clients with such a high percentage of traffic that isn't likely to convert, but the message here is that businesses should certainly be separating out the wheat from the chaff.
 
Social media and segmentation

With the continued investment in traffic generation, especially using social media, traffic segmentation will become even more important. Accountability of marketing activities will continue to be rightly scrutinised, and with the explosion of short URL's in twitter posts and the like, my guess is this - although brands can expect new waves of traffic at their sites from social networks, having only seen a short message and then a short URL, the quality of this new traffic will need even greater scrutiny. Compare this to visitors arriving via the more traditional route of receiving an email. What a brand can get across in terms of their proposition and USP's is far superior to what can be showcased in 140 letters, although you could argue that people trust their social network peers more than emails arriving direct from a business.
 
Summary

Although this post is merely scratching the surface when it comes to creating and using advanced segmentation to help make commercial business decisions, I'm not expecting the above scenario will be dis-appearing from the industry any time soon.

Paul Rouke

Published 4 August, 2009 by Paul Rouke

Paul Rouke is Founder & CEO at PRWD, author and a contributor to Econsultancy. You can follow him on Twitter or hook up with him on LinkedIn.

35 more posts from this author

Comments (3)

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Sara Kmiecik

Very interesting post. I agree that with traffic coming from such short messages in social media, segmentation will be a key component that will need to be addressed and analyzed.

almost 7 years ago

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Anna Knox

Analysis of Web segmenting traffic can be efficiently fulfilled, if a CRM software running on the Web site is integrated with Google Analytics to get comprehensive details about the visitors. Such combination also helps to use a marketing budget wisely and target audience more efficiently. In result, it leads toward better performance and higher profitability of the business.

almost 7 years ago

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Silvia

There are other tools than GA that offer segmentation possibilities: for instance Logaholic Web Analytics. Unlike GA, here segmentation is an embedded option in every statistics report and is a lot easier to use ( and more visible, due to less clutter in the interface).

A big drawback of GA is that it doesn't allow live reporting and it requires URL tagging which is quite offputting for some less advanced users. Logaholic has overcome that by combining Javascript with log file tracking. ( in its self hosted edition).

almost 7 years ago

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