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Everything You Need to Know About Customer Segmentation

Your customers are smart! They know what they want and don’t want, and they know if you understand their needs—or not. To grow your business, you must understand how and when to communicate with customers on a personal level. 

Mass communication can no longer be “one-size-fits-all” to market effectively and efficiently. The good news is that with a customer segmentation strategy, you can maximize your marketing dollars while helping customers feel like they matter through personalized communication. 

How does it work? Why is it effective? Keep reading to learn more about segmenting your customers.

What is Customer Segmentation?

Think about your personal experiences as a customer at your favorite restaurant. You choose the food you want, cooked the way you want, and then you add your salt or pepper to taste. You return to this restaurant for repeat business because they provide the options you enjoy. If they only offered a one-food-fits-all meal without consideration to personal preferences, you probably wouldn’t come back—or recommend it to others. 

Your customers appreciate the same kind of experience. Why continue offering products or services to customers who don’t need (or want) everything you offer? Blanket messaging and impersonal offers don’t encourage your customers to come back for more of what they do want from you. 

As you learn more about your customers, segmentation becomes a valuable tool to grow your relationship with different types of customers. Customer segmentation is a process of defining and subdividing your large customer base into identifiable segments with similar needs, demands, or preferences.

Within your large customer base, you have customers who will only use specific products or services from everything you offer. You’ll also have customers who don’t want a weekly email from you. Segmenting allows you to offer and communicate with customers in a way that they prefer. This helps you retain customers and create focused campaigns to encourage repeat business from them.

What’s the Benefit? 

Adding personalization to your marketing communications helps customers feel valued. Creating a communication schedule for different customer segments helps them feel heard. 

However, customer satisfaction isn’t the only benefit of incorporating segmentation into your business and marketing strategy. Targeting smaller groups with different messaging can increase your bottom line—no matter your type of business. Click here to find out more about how customer segmentation helps subscription businesses.  

Improve Loyalty

Finding new customers is more expensive than generating repeat business from long-term customers. So, how can you keep your customers coming back to you instead of drifting over to your competition? 

Using targeting communication to speak directly to customer needs or pain points helps them see your business as the solution they need. However, not every customer has the same needs or feels the same pain points. By segmenting customers into shared experience groups, you can create different messages and offers that speak to more than one type of customer.

Personalized product or service recommendations can help drive buying decisions, including encouraging customers to add impulse buys before closing out a shopping cart. 

Maximize Different Platforms

Unless all of your customers read your emails, you’re probably missing customers on other platforms. Not all of your customers will interact with you in the same way or on the same platforms. 

Target your messaging and delivery method based on the platforms your customers use most. Whether it’s email, text messaging, or social media, there’s no need to exclude any audience. It’s also more effective to tailor each message to each platform. A text message format won’t work as well for your audience as a Facebook message. 

Use segmentation to reach each audience with the right type of message on multiple platforms. 

Use Feedback to Build Relationships

Word of mouth goes a long way these days. A positive review or recommendation from a loyal customer can bring more business to you without a large marketing budget. 

Targeting your communications by customers who have product preferences and listening to feedback helps develop a better relationship with your customers. When customers have a positive ongoing experience with your business services or products, they’re more likely to recommend you to friends, family, and even strangers.

How Does it Work?

Customer segments provide an almost endless opportunity to create customer groups for marketing purposes. While you can create segments based on just about anything, start with some of the basics:

  • Communication method (phone, email, text, mail, etc.)
  • Communication frequency (once a week, once per month, quarterly, etc.)
  • Gender
  • Age group
  • Product or service type

These types of segments can make a big difference in how you craft a message that elicits a purchase or other feedback—even if you offer the same product or service to every group. The way you speak to an older audience versus a younger audience can help frame your product or offer in the way they need to hear it to make a purchase. 

How Do I Put Customer in Segments?

When you define different segments, you need information about your customers to understand where they fit. Tracking customer behavior through your website, social media interaction, and purchase history can help you determine the best segment for each customer. 

To gather more data, use a survey to collect demographic information about age, gender, or location. Online or email surveys are simple to create and can help your customers feel like you value their input on your products, services, and communication methods. 

Customer Segmentation Creates a Personalized Experience!

Using customer segmentation creates a personalized experience for you and your customers. Segmentation also allows you to analyze customer trends, understand your most successful services or products, and help drive future decisions for your business. 

Segmenting and targeting different customer groups within your total audience can help grow your business! It requires some time and strategy, but the improvement to you when your bottom line is worth it. 

Did you find this information helpful? Be sure to check out more articles on our website!

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Adam Torkildson
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