Who Do You Actually Sell To? Understand and Classify Consumers in Your Digital Business, Correctly.
Who is your customer? Why do they actually buy from you? Let’s show how to understand their behavior and discover what subconsciously leads them to purchase.
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After reading this article, you should have a clear understanding of who your customer is in the digital world, gain tools for better classification, and know how to approach them correctly.
There are many guides on understanding the consumer, creating an avatar, or classifying them correctly. However, before I moved more into product consultancy, I provided behavioral analyses for e-commerce businesses that were among the most detailed on the market.
I wrote thousands of pages of analyses for various types of e-commerce businesses. The analyses were so comprehensive that small e-shops implemented them over the years. This, of course, became tedious for me.
So now, I use this knowledge more in product development or consulting.
Before starting an analysis of an e-shop, I created my own methods, templates, and frameworks to understand and identify the types of consumers visiting the e-shop.
One of the methods I use, which I have not seen anywhere on the internet, is precisely what I will talk about in this article.
Summary for those who don’t want to read the whole article:
Divide customers into unique and belonging categories. This approach helps us understand whether customers are looking for products that set them apart or want to belong to a certain group. Excessive uniqueness or social isolation can lead to dissatisfaction, so it’s important to balance these aspects.
Customers seek products that express their personality and uniqueness, like luxury clothing or art pieces, or provide a sense of belonging due to their popularity.
Classify customers based on how they use their cognitive resources. Some customers prefer a simple and efficient shopping process, while others, especially enthusiasts, enjoy investing time in selecting products in their areas of interest.
In UX/UI design, finding a balance between simplicity and stimulation is crucial. Simple processes are ideal for basic operations like banking transactions, while more complex, gamified elements can increase engagement in other areas, such as loyalty programs.
Segment customers in at least five areas: Demographic, Technographic, Geographic, Behavioral, and Psychographic areas.
Combining demographic and psychographic segmentation provides a more comprehensive market view, enabling more targeted and effective marketing strategies.
When creating personas, group users based on common behavioral traits, not just which group they belong to.
Personas help companies empathize with user needs and preferences, which is key to improving product development and building customer relationships. Personas should be regularly updated according to the changing market.
Let’s get into it.
Note: In this context, consumers, customers, avatars, users, and end-users are the same; I just address them differently throughout the article.
1. Helicopter View of Group Segmentation
First, I try to classify the customers of a particular e-commerce, application, or business from a very “broad” perspective.
This categorization is extremely useful for me. I once read it in a book, but I absolutely don’t remember which one, so if anyone knows, please let me know.
Initially, I divide the people who come to the business into two scales:
i. Belonging Scale: Unique vs. Belonging
ii. Cognitive Scale: Pleasure vs. Suffering
Such a division is something that the best companies apply, but I have never seen it clearly defined or specified anywhere.
a) The Uniqueness and Belonging Scale
This phenomenon is colloquially referred to as “snowflake and storm” or formally as “unique and belonging.”
We humans are peculiar creatures with a paradoxical need to both stand out and fit in. If we don’t feel special or unique, we may fall into depression. Similarly, if we don’t feel part of a group, it can also lead to depression.
Therefore, it is crucial to understand where your customers lie on this scale and tailor your strategy accordingly.
Here is a visualization of this scale:
On either end of the spectrum, if people (in this case, your customers) reach the red boundary of the scale, they will be dissatisfied. Quite the opposite, they will most likely feel depressed.
My goal was not just to identify where people lie on this scale, but also to understand the range they fall into.
i. Unique
I’ve often heard women say:
“I am different from the rest!” – Every woman
If you tell people they dress like everyone else, it might offend them. Everyone needs to feel somewhat different, unique in some way.
From my experience, people seek uniqueness, or a sense of uniqueness in products, items, or services primarily in two main cases:
Expression of personality
Luxury/premium
Everything that is directly related to personality or expressing who people truly are should appeal more to the uniqueness of a person.
For instance, no one wants clothes, dresses, watches, paintings, or furniture that everyone else has because these items express who they are.
On the contrary, when purchasing practical items like washing machines, kitchen accessories, or tools, we prefer what most people prefer.
However, if you are a professional chef, you will certainly pay attention to items like knives and pans because they also express your personality and professionalism.
The same applies to luxury or premium items. Even if these items are not unique, you definitely want to feel unique when purchasing them.
For example, the Luxury Library project sells quite a few unique books of various kinds. My friend ordered a children’s bible from them, where various illustrations were gilded. But that wasn’t all. The book also came with white gloves to handle it without getting it dirty. Such a small detail, which doesn’t cost much, significantly enhanced the experience of the book.
We’ll look at more examples shortly, but first, let’s look at the other side of the scale, which is Belonging.
ii. Belonging
Although people want to be unique, they still have a need to belong somewhere. From an evolutionary perspective, we were created as social creatures. If you were not accepted into society, it almost always meant death for centuries. This is deeply ingrained in us even today.
If a child is so exceptional or unique that no one in kindergarten wants to play with them, it will have a significant impact on their mental health and future.
Just like the story of the ugly duckling that was born black. It was unique, but no one wanted to have anything to do with it. It was constantly hungry because everyone drove it away from the food.
The same goes for people who buy various unique things that others don’t have or can’t afford. They do it not only to be unique but also to belong to a certain group of people – whether artists, collectors, or the upper social class.
Even if something is unique, for example, the only one of its kind in the world, if no one knows it’s unique, it would have no value and no one would buy it.
Let’s now look at some examples.
Alza (one of the largest e-commerce businesses in CEE) and Amazon are both e-commerce businesses that sell mostly regular consumer goods or try to offer goods at the best prices on the market.
People who come here want to buy something at a good price and often need to feel that other people are also interested in these products, which attests to their quality. In such cases, the e-shop’s website should feel busy, with organized chaos and lots of different stimuli.
Here is Alza’s website:
Here is Amazon’s website:
They should subconsciously create a feeling as if people are at a marketplace, like in the old days.
On the other hand, if we were selling luxury products or products that evoke a sense of premium quality, we need to take the opposite approach and create a feeling of uniqueness.
Here is Breitling’s website:
Here is Rolex’s website:
Or even fashion stores like ASOS:
ASOS, however, would be somewhere on the uniqueness scale but closer to the middle.
We can create a sense of uniqueness in several ways, and here are a few of them:
Reduce the number of stimuli
Use more and higher quality images
Offer less content
Create more “white space,” i.e., gaps between products
This is the first of the two initial ways of classifying consumers that I use. Let’s look at the second one – the cognitive scale.
b) Cognitive Scale
The brain is designed to conserve energy and thus our cognitive resources. This is why companies invest heavily in reducing friction (e.g., UX/UI), aiming to provide you with what you’re interested in as easily as possible.
However, as always, there is an exception. It is not true that we only want to minimize cognitive effort or conserve cognitive resources. We want to use our cognitive resources (brain capacity, performance, memory) on things that interest us and save on those that do not. For example, a person who loves electronics might spend hours assembling computers or selecting accessories.
Conversely, people who are not as interested in electronics want to get the “right” product for them as easily and quickly as possible.
Therefore, it is necessary to determine where the customer is likely to be on this scale and adjust our approach to service creation accordingly
Of course, there can be two types of customers on this scale.
Based on this, I identify to what extent to focus on UX/UI and information provision.
When choosing games, where people are usually enthusiasts, it’s more about content, gamification on the site, and the pleasure derived from time spent on the site, rather than the entire process. When buying groceries or conducting various operations in a banking app, the goal is to make the process as simple as possible.
“Everything should be made as simple as possible, but not simpler.” – Albert Einstein
However, keep in mind that if you make something too simple, people will be dissatisfied, even though it sounds strange.
On the other hand, if you make something too stimulating or too pleasurable, you will again encounter dissatisfaction.
An example is the recent release of the game Suicide Squad: Kill the Justice League. The game has so many gamification elements and different stimuli that many people, including myself, just can’t play it.
It is always important to find the right balance. When building applications, for example, financial ones, I try to make banking transactions as simple as possible, while making the loyalty program more fun.
In the next section, I will delve deeper into defining customers and consumers.
2. Categorizing Customers or Consumers
As the next step, I try to categorize people into different groups, which can be done using both qualitative and quantitative research.
These are the two main methods I use to categorize and define people:
a) User Segmentation
b) Categorization based on common behavioral traits or beliefs
a) User Segmentation
User segmentation is the practice of dividing users into groups based on common characteristics (e.g., region, age, device, or behavior).
Segmentation allows for more precise targeting and tailoring of the approach based on user attributes or behaviors so that each segment can be addressed with a customer-focused approach.
It is essential to deeply understand your customers, establish a solid foundation for proper data management, and thoroughly test everything.
Here is what segmentation looks like in brief:
I won’t go into more detail about the individual parts, as there is plenty of information available online. Use these basic steps as a guide to creating personas or tracking metrics that these data provide.
What I focus on in greater detail is dividing users based on demographic and psychographic analysis.
What is Demographic Segmentation?
Demographic segmentation involves dividing the market into groups based on demographic variables such as age, gender, income, education, occupation, marital status, and family size. This type of segmentation is one of the simplest and most commonly used methods because demographic data is relatively easy to obtain and analyze.
Key Variables in Demographic Segmentation
Age: Different age groups have distinct needs, preferences, and buying behaviors. For example, teenagers may prefer trendy, affordable clothing, while older adults often prioritize comfort and quality.
Gender: Men and women often have different preferences and buying habits. Segmenting by gender allows for tailoring products and marketing strategies to these different needs.
Income: Income level influences purchasing power and preferences. High-income consumers may seek luxury products, while lower-income groups may prioritize affordability.
Education: Education can influence preferences and buying behavior. Higher education levels may correlate with a preference for sophisticated or high-tech products.
Occupation: A person’s occupation can significantly influence their purchasing behavior and needs. For example, a business manager may need professional attire, while a construction worker may require durable work clothing.
Marital Status and Family Size: These factors influence consumer patterns because individuals, married couples, and families with children have different needs and priorities.
Benefits of Demographic Segmentation
Simplicity and Clarity: Easily gathered and analyzed data.
Cost-Effectiveness: Obtaining demographic data is often cheaper.
Wide Application: Applicable in virtually all markets and industries.
Predictive Power: Provides reliable insights into consumer behavior patterns.
Challenges of Demographic Segmentation
Overgeneralization: Can lead to broad categorizations that overlook individual differences.
Lack of Depth: Does not capture psychological and emotional factors influencing consumer behavior.
Dynamic Changes: Demographic characteristics can change over time, affecting the accuracy of segmentation.
What is Psychographic Segmentation?
Psychographic segmentation divides the market based on lifestyle, personality traits, values, opinions, interests, and other psychological factors. This type of segmentation goes beyond basic demographic data to understand the underlying motivations and attitudes that influence consumer behavior.
Key Variables in Psychographic Segmentation
Lifestyle: Reflects how people live their lives, including their activities, interests, and opinions. For example, health-conscious individuals may prefer organic products.
Personality: Includes individual characteristics and traits such as being introverted or extroverted, adventurous or cautious.
Values: Fundamental beliefs and principles that guide behavior. For instance, environmentally conscious consumers may prefer sustainable products.
Social Status: The social standing of a person, which can influence their preferences and purchasing behavior.
Activities, Interests, and Opinions (AIO): Detailed information about what people do in their free time, their hobbies, and their opinions on various topics.
Benefits of Psychographic Segmentation
Deeper Insights: Provides a comprehensive understanding of consumer motivations and behavior.
Improved Personalization: Enables more tailored marketing messages and product offerings.
Competitive Advantage: Helps differentiate brands by aligning with specific consumer values and lifestyles.
Challenges of Psychographic Segmentation
Complexity: More difficult and costly to gather and analyze psychographic data.
Subjectivity: Data may be less accurate and harder to quantify.
Dynamic Nature: Psychographic traits can evolve, requiring constant monitoring and adjustment.
If you want to read more about it, here is an article that describes the topic in detail.
Both demographic and psychographic segmentation play crucial roles in effective market segmentation. Demographic segmentation offers a simple and cost-effective way to categorize the market, while psychographic segmentation provides deeper insights into consumer behavior and motivations. Combining both approaches can lead to a more comprehensive understanding of the market, enabling more targeted and effective marketing strategies. Understanding when and how to apply each type of segmentation is key to optimizing your marketing efforts and meeting the diverse needs of your customers.
b) Categorization Based on Common Behavioral Traits or Beliefs
Categorizing based on common behavioral traits or beliefs is one of the most crucial aspects to focus on, especially in the beginning.
We achieve this through interviews with people, creating profiles, and formulating hypotheses about their behaviors and beliefs, which we then validate.
When developing a new product or making innovations, I focus on segmentation as discussed in the previous section, but I also look at what people have in common through research.
For example, in research for a financial application, we identified various behaviors related to different types of services through interviews. From these insights, we gained valuable information such as:
Transparency and Simplicity: All terms must be absolutely clear for people undergoing the online financing process.
Trustworthiness: The bank enhances the credibility of the financing product.
Psychological Burden of Loans: Having a loan can be a psychological burden, but if the monthly installment is low, it is manageable. The immediate acquisition of the product outweighs the negative feelings about the loan.
Such insights are often more important to me than basic demographic data such as gender, hobbies, or the type of phone used, especially at the beginning of product development.
As I always say: “At 3 AM in McDonald’s, the only things connecting me and my friends are alcohol and hunger after a night full of fun.”
Once I have user segmentations and defined common behavioral characteristics, I can move on to creating personas, or so-called avatars.
3. Creating Personas or Avatars
In this section, we will briefly show how to create a persona and why it is important. We will then go through 8 main general e-commerce personas as a bonus, which I have been using for many years as a starting point before I begin to define personas, or avatars, in detail that are most relevant for a given business, product, or e-commerce, identified based on research and data.
a) Creating a Persona
User personas are semi-fictional representations of your ideal customers based on market research and real data about your existing customers. They help businesses understand and empathize with their target audience, ensuring that products and marketing strategies are tailored to meet the needs and preferences of different user groups.
As mentioned, I won’t go into too much detail because creating personas is a topic in itself. The process of creating personas can be brief and fit on one page or detailed and span hundreds of pages in a presentation – I’ve seen both extremes.
If you want to know the process of developing a persona, simply enter something like this into ChatGPT:
# Background
I am writing a blog on how to develop user personas and why is it important
# Task 1
I need to write at length general information about creating a user persona.
Just copy this and you’ll get a quality text.
For example, below is an introduction to a persona for an application in the Middle East that we developed. In this case, we were more assigning the persona to various main functions in the application.
Below that, we also added the customer journey that the persona goes through, including additional features they will require and the business impact.
At Sudolabs, developing personas is also one of our key activities.
In this case, we also often visually depict how the persona will behave in the application:
I’d like to emphasize again that we are focusing on practical examples of using personas rather than a deep, detailed analysis.
Creating user personas is a crucial step in understanding and meeting the needs of your target audience. By investing time and effort into creating detailed personas, companies can improve product development, marketing strategies, and customer relationships.
Remember that user personas are not static; they should be regularly reviewed and updated to reflect changing customer preferences and market trends.
b) General E-commerce Personas
Not every customer is the same. Each of them shops through different channels, responds to your marketing in various ways, shops at different frequencies, and has different levels of loyalty.
This diversity makes e-commerce so interesting, but also challenging! Therefore, think carefully about the personas of your buyers.
Here are the 8 most common personas found in e-commerce that you should address sooner or later.
Impatient Isac: “Easily frustrated and not afraid to voice their opinion.”
Researcher Risk: “Thoroughly researches all aspects of a product, slowly responds to new products.”
Lost Diamond Lisa: “A high-value, lost shopper.”
Single Scarlett: “Uses any channel.”
Suggestible Sia: “Your dream customer! Typically exists”
Showrooming Seneca: “The king of window shopping”
Returning Rita: “Picky customer with high purchase volume and high return volume”
Discount Daisy: “It’s all about the thrill of getting a good deal”
Impatient Isac
Researcher Rick
Lost Diamond Lisa
Single Scarlett
Suggestible Sia
Showroomer Seneca
Returning Rita
Discount Daisy
If the way I approach things resonates — or if your product, idea, or strategy feels even slightly “off” — I might be able to help.
Let’s have a quick 20-minute call to find clarity together:
4. Conclusion
The goal of this article was to briefly show the method I used when analyzing e-commerce businesses. Today, this process is much more complex, but that’s only because my involvement and the impact of my decisions are much deeper.
I believe that if nothing else, this article will serve as a useful exercise to revisit the basic insights you should know about your customers.
If you have any additional questions, don’t hesitate to contact me.
I look forward to seeing you in the next article.
- Peter