Paul Rogers

eCommerce, Digital & Magento Consultant

November 17th

A Guide to Using Customer Groups in Magento

As one of the most fully-featured eCommerce platforms on te market, Magento contains a huge array of functionality, to cater for the needs of every type of online store, from small, independent businesses with just a handful of products, to international retailers and wholesalers with vast product catalogs. The ability within Magento to define specific customer groups (allocate each customer to a group and control store behaviour according to which group a customer belongs to) is hugely important and appealing for B2B eCommerce stores.

In this article, we look at what customer groups can be used for, how to configure them, and what can be achieved with them.

Why use customer groups?

The most common use for customer groups in Magento is when a store is selling to other businesses. Typically, a B2B merchant will require their customers to have an account on their store – be it that they’ve registered or they’ve been setup by an account manager – before they can see trade prices or buy on a wholesale basis. On a typical store that sells products for trade customers and D2C customers, ordinary visitors might see retail prices, or perhaps no prices at all, whereas registered users who had been assigned to a ‘wholesale’ or ‘trade customer’ group, would be able to see wholesale prices and make trade purchases.  In some cases, the entire product catalog might be locked down to non-registered visitors, to prevent unauthorised access by retail consumers.

Whilst wholesale or B2B stores are the most common reason to use customer groups, B2C stores can also make use of this functionality. As an example, Amazon Prime customers could be seen to be a customer group. With Amazon Prime, customers pay an annual fee, and in return get free standard delivery on all orders for a year, along with other perks. There is no reason why smaller retailers cannot mimic this type of customer grouping, in order to incentivise specific customers to make repeat purchases. Another creative use of customer groups for retail stores is to create a ‘club membership’ for customers in which club members get access to exclusive products, special discounts and other bonuses.

How to create a customer group

Out of the box, Magento comes with three default customer groups: General, Not Logged In and Wholesale, but creating additional customer groups is very quick and easy. Go to Customers > Customer Groups and then click on ‘Add new customer group’. Simply give the customer group a meaningful name and assign it to the appropriate tax class, then click ‘Save’.

How to assign a customer to a customer group

Any new customer groups you create will not have any effect until you assign customers to that new group, and define what actions you want to apply to the group. To assign a customer to a group, go to Customers > Manage Customers and select the customer you want to update. Then, in the ‘Account Information’ tab, choose the group you require from the dropdown list of groups available. Click save to confirm your changes.

What can customer groups influence?

Once you have defined your customer groups and assigned customers to specific groups, it’s time to define what you want to happen when a member of a particular customer group visits your store. For example, certain discounts might be available to specific customer groups, or different prices could be shown depending on which group a customer belonged to. Products and entire categories can be restricted for certain customer groups, and with the help of third-party extensions, even shipping methods and payment methods can be controlled by customer group.

How to apply discounts to customer groups

Both catalog price rules and shopping cart price rules can be limited by customer groups, as required. To define a price rule to apply to a particular customer group, go to Promotions and select either Catalog Price Rules or Shopping cart Price Rules, depending on the type of discount you would like to apply. Create the price rule as you would normally do, specifying conditions and actions for the rule, as normal. In the ‘Rule Information’ panel, select the customer group you wish to apply this new rule to.  If you want to apply it to more than one group, simply hold down the Ctrl key (or Command key on a Mac) whilst selecting the groups.

It’s important to be clear on the difference between discounts for customer groups and customer group pricing. Discounts would generally be used as a promotional tool, whereas customer group pricing would be used, for example, to display wholesale prices to trade customers.

Customer group pricing

Where a store wants to define one price for general customers and another price for trade customers, customer group pricing would be used. During product set-up, the standard price would be defined in the Prices panel, and an additional price would be defined for each customer group that is to have its own price. In a B2B business, it is common to have differing prices for different trade customers, so in theory, several group prices would be configured for each product. For example, trade customers spending over a certain amount per month or per year may receive preferential prices to those customers who only purchase occasionally or at lower volumes.

It’s easy to think that setting up these differing prices would be easier by simply applying a generic percentage discount to the entire product catalog, using a catalog price rule. However, a B2B retailer may sell products that have different margins, stock levels etc and would therefore want to apply group prices in a more targeted way, on a product by product basis. Likewise, by applying group prices to each individual product, the store owner has much more granular control, should any prices need to be revised at any time.

As well as group prices for products, tiered prices can also be applied to specific customer groups. Tiered prices allow the store owner to offer volume discounts, depending on the number of units purchased. This is a fairly standard feature in the B2B world, and incentivises customers to purchase larger amounts of a product. Again, it’s possible to define several tiered price tables for each product, and assign a different tiered price structure to each customer group, as required.

Restricting products and categories to specific customer groups

Unfortunately, in standard Magento it isn’t possible to restrict visibility of specific products or categories, or even entire store views, by customer group. The good news though, is that there are several third-party extensions that can extend customer group functionality to allow this level of control. Examples of these extensions include Aheadworks’ Catalog Permissions and Customer Group Catalog, from Amasty. The ability to control access to specific products or categories could be useful, for example, in a store that needed to prevent overseas customers from buying certain items, where shipping those items overseas was not possible due to weight restrictions. With some merchants choosing to sell wholesale and also direct to the public, this type of control could also be used to prevent non-trade customers from being able to buy volume packs or wholesale quantities.

Restricting shipping and payment methods to specific customer groups

It’s common for wholesalers to impose certain restrictions on new trade customers, until a relationship has been established and credit terms agreed. For example, a wholesaler may stipulate that new trade customers must pay up front for goods ordered, for the first three orders, and until references and credit checks have been completed. Being able to restrict payment methods by customer group would be useful in this circumstance, as new customers could be placed in a ‘New Trade Customers’ group, which was not able to access ‘Payment on Account’ or ‘Payment by Invoice’ options during the checkout process. Similarly, customers with locations not well served by courier companies (such as the Highlands and Islands of Scotland) could be placed in a group that was not allowed access to a ‘24hour courier’ delivery option.

Again, this type of restriction by customer group does not come as standard in Magento, but there are, as always, extensions that can add that functionality. Amasty again has a solid solution for this, in its Shipping & Payment By Customer Groups extension,

Customer groups versus customer segments

It’s important to understand the difference between customer groups and customer segments, in order to use each construct effectively. Out of the box, Magento CE does not handle customer segments, but Magento EE does. Segments are, in effect, a marketing tool, through which you can tightly define sets of customers based on a wide variety of attributes or behaviours, and then incentivise them to purchase using targeted promotions. Segments could for example be defined to cover

  • Customers who live in the same city or town as the site’s bricks and mortar store
  • Customers who have placed at least 3 orders in the past 12 months
  • Customers who have placed an order over £200 in value
  • Customers who have purchased from a particular category (gardening tools, for example)

With segments defined like this, it is possible to offer a high level of personalisation in terms of promotional offers, CMS content, email marketing and so on. Segments can be defined for one-off marketing efforts or longer term use. Obviously, customers could be part of more than one segment, depending on their purchasing profile and other attributes. Clearly, customer groups would not be appropriate for this type of customer targeting.

Whilst customer segments are part of Magento EE, all is not lost when it comes to Magento CE, as there are again extensions to replicate the customer segmentation functionality of the Enterprise edition, such as Aheadworks’ Market Segmentation Suite.

As can be seen, customer groups can offer a high level of control over product pricing and promotion for a store owner. The obvious case for using customer groups is clearly for wholesale and B2B merchants, but it is perhaps surprising how few retail merchants have considered the marketing opportunities that customer groups could offer their business. In a fierce economic climate, it could be only a matter of time before we see more retailers finding creative ways to exploit the commercial opportunities of customer groups – with club memberships, ‘Prime’ customers and other techniques becoming much more common.

Paul is an experienced eCommerce Consultant, specialising in working with the Magento platform. Paul works with online retailers and product companies from all over the world and is focused mainly on helping merchants get more from the Magento platform and growing stores (customer acquisition, customer experience, strategy etc).

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