You might think you know your customer inside and out, but what you really know are the likes, dislikes, and behaviors of your ideal customer.
In reality, each person engaging with your brand is unique. A one-size-fits-all approach to marketing fails to account for their individual quirks. The solution: customer segmentation strategies.
Personalization has fast become a crucial element in any marketer’s toolbox, with seven in ten claiming that personalization significantly impacts customer experience, improving loyalty, and providing measurable ROI.
The Benefits of Customer Segmentation
Expertly executed customer segmentation strategies can benefit your brand in several ways. Here are a few stand-out advantages to get you thinking:
Improve Customer Retention
Estimates suggest that 52 percent of consumers switch brands during a one-year period, with 68 percent never going back. This results in a $1.6 trillion cost felt by businesses due to customer loss.
“In order for a business to continue to grow and prosper, retaining clients is a priority: Without repeat business—and the word of mouth it brings—it can be hard for a company to find long-term success.” – Forbes
Customer segmentation can assist you in crafting and delivering effective retention campaigns. For example, you might single-out top-paying customers and offer exclusive discounts. Or, you might target customers that haven’t purchased in some time in an attempt to re-engage their interest.
Support Ad Targeting
Different messaging connects with different audiences and serving targeted ads to customer segments often results in a higher conversion rate.
For example, you might design ads for customers segmented according to the stage of the buying journey they’re at. That way, your ads will appear in the right place and the right time, generating more engagement.
Deliver a Better Customer Experience
Customer experience is everything to the modern-day consumer. They expect consistency across channels. They anticipate personalized messaging that’s relevant and provides valuable information when and where they need it. Segmentation allows you to deliver things like customized product recommendations, reminders, and discounts.
Four Customer Segmentation Strategies You Should Use
Customers can be segmented according to a whole variety of basic and sophisticated factors. You should be using the following four customer segmentation strategies to deliver higher-quality content, relevant messaging, and personalized experience.
Let’s start with demographic segmentation, perhaps the most common factor used to group audiences. Parameters might include things like age, gender, income, education, and occupation. This information is pretty easy to gather from your audience – a simple email sign-up form should do the trick.
Demographic data can also be paired with other segmentation techniques – such as behavioral factors – to gain further insight into who your customers are, what they want, and how you can best form long, meaningful relationships.
Geographic parameters include your customers’ country, state, city, region, market, and climate. After segmenting based on geographic information, you can design location-specific content (touching on weather conditions, events, culture, etc.) that better connects with locals. Geographic segmentation is also critical if your business offers in-person services in several regions across your area, state, or country.
3. Customer Journey
The customer journey is rarely linear. Segmenting your audience based on their individual journey can improve your lead conversion rate. For example, you might send different messages to those that have visited your site but not purchased, those that have purchased once but not again, and those that have contacted your support team but not responded.
Behavioral segmentation is one of the most powerful strategies – it allows teams to target individuals when and where they prefer, delivering timely information that translates into a personalized customer experience.
Behavioral segmentation is typically defined by the following variables:
- How often do they make a purchase?
- Are they purchasing for Christmas or another holiday?
- What is the motivation behind their purchasing decision?
- How often and on what channels do they engage with your brand?
For example, if a web visitor abandons their cart, you can send a follow-up email reminding them to check out. You can prompt a past customer to re-purchase based on an upcoming holiday, or you can issue ads via social media to those in your mailing list that have historically engaged with your social posts.