Understand Customer Segmentation : Basics and Types

Think about your family and friends.

Do you communicate with each of them in the same way?

No, you probably have different expectations and modes of interacting with these groups. The same theory goes for your customers.

If you are often bombarded with the questions like:

“Why I’m not engaging enough customers?”

“Why my marketing campaigns aren’t relishing any results?”

“Why I don’t have enough traffic on my website?”

Then You need to READ THIS BLOG NOW!

Within your customer base, there exist different people with different pains, demands, and expectations.

Are you utilizing a uniform marketing strategy to target your audience?

You are making a MASSIVE MISTAKE!

The blog states what is customer segmentation and its types; and how it can impact your business.

The blog covers:

  • What is customer segmentation?
  • Why segment customers?
  • How to segment customers?
  • What are the characteristics of a successful customer segment?
  • Customer segmentation: Types and examples

What is Customer Segmentation?

Customer segmentation is the process of segmenting or dividing the customers based on certain traits (behavioral, geographical, psychological, and demographic) that those customers share.

This segmentation of the customers into manageable groups helps in optimizing marketing efforts and launching targeted marketing campaigns.  The primary purpose of customer segmentation is to introduced tailored messaging that will be received successfully.

Why Segment Customers?

When it comes to maximizing the efficiency of the campaigns and reaching maximum customers, segmentation eases up the deal.

There are several reasons why customer segmentation is important for your business online:

  • Help you tailor content according to your customers’ needs
  • Create targeted campaigns that resonate with your customers
  • Increasing customer loyalty with customized interactions
  • Understand who your most potential customers are and how you can improve their experience
  • Meeting specific groups where they are
  • Identifying fresh opportunities for product updates, changing customer behavior and support efficiently
  • Increased revenue and profit
  • Interact with the ones who are most likely to convert without wasting money on users who aren’t ready to buy

How to Segment customers?

Customer segmentation is all about analyzing the data and segmenting it according to the actions taken on the website.  To build market segments, the firms collect various data points about their customers and built with this data.

The elements that mark the key decision points in building customer segmentation strategy are:

  • Segmentation: Identify the markets and the customers you want to approach
  • Targeting: Narrow your customers to the groups that deliver the greatest business benefit
  • Positioning: Define how to position your brands to your customers

You will need to have a fair data analysis to segment your customers.

For segmenting customers, you should:

  • Create a customer avatar for your products
  • Collect the data of your previous customers and group them according to the characteristics you mentioned in the customer avatar
  • Build a marketing strategy tailored to these segments
  • Roll out your marketing and sales tactics

What are the characteristics of a successful customer segment?

  • measurable: the segment should be measurable using realistic and accessible parameters
  • profitable: the segment should able to serve the end result of high sales numbers and profit
  • stable: the volumes of participants should not vary drastically with the change in time
  • accessible: the segmented should be accessible with available marketing strategies, activities, and tools
  • cost-effective: the constituents of the segment and its relationship should bear cost-effective nature
  • static: the preferences shared by the segment should be uniform
  • responsive: the segment should be receptive to applied actions
  • sample size: the number should always be handy enough to make a segment an overall success

By refining your customers into different segments and launching targeted marketing campaigns, you can improve your revenue growth by 400%!

Provide what your customers are seeking and beat competitors

Customer segmentation: Types

1. Geography Segmentation

In comparison to other customer segmentation types, geographical segmentation is one of the easiest ways to identify and group customers according to their physical location.  The location can be segmented based on-

  • postal code
  • city
  • region
  • country

For example: Dart and True Temper that market their snow shovels in countries with cold temperatures and where snowfall is a natural phenomenon. There is no point in marketing ice shovels in warm areas with no rainfall.

2. Behavioral Segmentation

Past behaviors can be indicative of future actions, like purchasing for future events, occasions, purchasing from particular brands, and significant life events like marriage. It’s important to consider the reasons for customer purchases and how these reasons can change accordingly. In this, you can segment the customers based on their:

  • Spending habits
  • Purchasing habits
  • Browsing habits
  • Interactions with the brand
  • Previous product ratings

For example, Starbucks utilizes behavior segmentation to target their regular morning customers with an incentive to get back to them with another purchase. Since the users are likely to have an afternoon coffee on occasion. Starbucks uses email marketing and Push notifications to offer happy hours.

With Click Nurture’s Push Notification tool you can:

  • Send a million message at a time
  • Use responsive templates to drive your message
  • Evaluate response on every click
  • The software works hassle-free on different browsers
  • Reach 50% more customers with hyper-personalized push notifications

3. Demographic Segmentation

Demographic segmentation groups customers based on demographic factors like age, gender, and income. Instead of reaching an entire market, the businesses use this method to focus resources into a defined group within that market. In this, customer can be segmented on the basis of:

  • Age
  • Gender
  • Occupation
  • Cultural background
  • Status

For example: Pen manufacturers Bic launched “Bic for her” and second with an International Women’s Day campaign that told women to “Look like a girl, act like a lady, think like a man, work like a boss.”

Gender-specific marketing can be powerful if done well. The main thing to focus on is the messaging.

4. Psychological Segmentation

Psychological segmentation is done according to the intent and where groups are formed according to psychological traits that influence consumption habits drawn from people’s lifestyles. It is mainly conducted based on “how they think” and what are their aspirations regarding the product or services. You can diversify customers based on:

  • Social status
  • Daily activities
  • Food activities
  • Search activity

For example: Klook is one of the fastest-growing travel companies in the East Asian Region. Knowing that customers travel for different reasons, they created their website to allow flexibility to select from destinations and things to do before reaching the destination. It is because Klook realizes the intent that travelers decide the destination based on the activities available.

Click Nurture provides an all-in-one platform for automating your online marketing as well as streamlining the tasks for better reach and productivity.

Using Click Nurture’s Customer Segmentation tool, you can –

  • make a presence before your customers at the right time
  • you can define, analyze and measure metrics
  • help in identifying new audience segment
  • Drive detailed insight into the behavior and buying intentions
  • Tailor messaging according to the behavior data

So, Customer Segmentation can prove an important tool for your business as it helps in launching targeted campaigns that yield results and improves marketing efficiency.

Contact Click Nurture to know more!