Customer segmentation is crucial for any business, big or small. It is the practice of dividing a business’ customer base into various groups to which they belong. Marketers find the similarity among them.
The very essence of segmentation is for marketers to design an approach tailored to each group of customers. Through this, they can efficiently maximize the value of each customer to the business. There are four main approaches to segmenting customers:
- demographic – in which certain traits are looked for such as age, gender, occupation, cultural ethnicity, and family status;
- psychographic – wherein their activities, interests, insights, and opinions are looked into;
- behavioural – in which their frequency of purchase, loyalty, customer journey stages, and other attributes that reflect their behaviour towards your products and or brand;
- and geographical – wherein the customers are segmented based on their region, where they live, work or do their shopping.
But, why exactly do you have to segment the market when they are all your customers?
For marketing effectiveness. Let us put it this way, you cannot use the same language for different audiences. For the listening and understanding process to be effective, you must attune the language and content depending on the type of audience before you.
In the same way, you cannot target various segments using the same approach and technique as each one has a specific trait, character, or value that is unique to them. Customer segmentation, therefore, allows you to select the appropriate “language” that can be grasped and understood by a particular customer mix. Here are a few dependable ways in segmenting customers:
5 Easy Ways to Carry Out Customer Segmentation for Your Business
1. Find the most appropriate platform and schedule for reaching your customers.
Marketing does not follow a one size fits all strategy as all customers have unique needs. Perhaps the businessmen in your roster prefer that you reach them via email and only within office hours.
The normal housewife would rather receive an SMS than an email and high likely will read it after preparing lunch for the entire family. While you do not necessarily have to ask them one by one, categorizing your markets based on profession, gender, and other quantifiable characteristics, you can determine how you will target them across your organization.
2. Get to know the segment that spends the most.
Filter your customer pool by knowing who your big spenders are. These people belong in a social circle where they shop until they drop. As such, they can open more doors for your business through their friends.
Also, segmenting them can allow you to constantly optimize your sales funnel and further develop their shopping experience so you can gain loyalty. With a shortlist, you now have data on who you can provide a brand experience with a personal touch.
Since most of these spenders are known to be following a “flex” culture, or an ostentatious display on social media of the things they admire, you can make it to their social networking sites and be exposed to their groups by gift-wrapping their purchase, including a surprise in the shipment or simply leaving a heartwarming note for them.
3. Monitor dormant customers or their last purchase.
Their last interaction with your business could tell something about their character or lifestyle. Could they be busy? Might it be that they did not like their last experience? For these, you may segment your customers based on their last visit.
If their last interaction with you was long ago but turned out fantastic, then they probably just have too much on their plate. You can provide a gentle reminder through a newsletter about upcoming discounts. However, if their last visit ended up as regret, maybe you can proactively reach out to them and provide how you can make up for such a bad experience.
4. Capitalize on behavioural segmentation to reveal your most loyal customers.
You can do this through focus group discussions, a simple feedback survey, or a one-on-one interview, whichever is applicable. Ask about your brand’s attributes that they liked and why they keep on coming back.
This provides a positive atmosphere for your business so you can also learn about what you are good at. Loyal customers make the best referrers so be sure you get in touch with them. Knowing your market this way and tapping them forges a collaboration too, and it will warm their heart knowing you value their inputs in your continuous improvement.
5. Lean into customer segmentation tools.
This could probably be the best way for your business to optimize its performance. Implementing analytics and segmentation tools can help you reduce costs in countless trials and errors in your pursuit to find a more efficient way of doing things.
You need solid data that can serve as a baseline for making informed decisions, and good software can cover just that. Reliable software can help you refine your segmentation, cluster groups, measure customer experience, and then analyze them to understand their unique qualities so you can design and implement a marketing campaign tailored to those specific groups or mix.
Author: Bash Sarmiento
Bash Sarmiento is a writer and an educator from Manila. He writes in the education, lifestyle, and health realms. His academic background and extensive experience in teaching, textbook evaluation, business management, and travelling are translated into his works