5 Factors to consider for Effective Customer Segmentation

In B2B business, we apply an 80-20 rule that suggests 20% of the customers are responsible for 80% of the profits. I am certain you realize that’s in a way or the other some customers are more profitable than the rest. This definition, in terms emphasizes the importance of customer segmentation is the process. It’s important we enhance our content and the business and management grows.

Customer segmentation analysis requires segmenting your customer base into  necessary groups of individuals that are similar in personal characteristics, preferences or behaviours who fit in various models of segmentation basically personalized.

According to the 2021 stats, 91% Customers Expect a Personalized Brand Experience, and this might go forward as well in 2023.

Features like geography, age, gender, locality, marital status, life stage can be useful or used for business-to-customer marketing method and features and characteristics like type of company, buying new product needs, location and number of employees can be used for B2B marketing. 

When we group together similar people we need to consider their distinctive needs, characteristics and features, their pain and their expectations always and how our service can make sure it is delivered on a satisfactory level. We also need to understand and have all the updates about their preferences and styles as far as possible and for longer.

Customer segmentation helps boost the effectiveness of the product delivery and the efficiency of the company. Next, Customer segmentation also helps in personalised and related targeted campaigns so you are able to hit the right group with right content material and account not being wrong in the path.

This ways for customers its also is profitable to achieve the benefits in improving the customer experience, customer segmentation and customer service and thus increases customer satisfaction and improve and creating customer loyalty, which indirectly helps marketers in customer retention.

We need to understand our customer’s communication style in total, knowing in mind so that we can reach out to them in a more convincing and good manner. We have to identify and try opportunities to get created in various areas to make better success rates better and management with following changes and updates. It is also important and valuable we focus on the customers into groups who bring in more profits.

Customer segmentation enables a company to customize its relationships with the customer journey, as we do in our daily lives, This dataset is actual sales data courtesy of an e-commerce company. It was provided to me for an interview case study.

When personalizing marketing materials and course, companies need to ask and review along with analyzing and look at demographic data like behavioral age, location place etc.  As we advance, the tools for customer segmentation and positioning will also develop in terms of functionality.

It will help businesses to have an understanding in terms of individual customers and building and establish relationship and improve customer support at individual levels and also retain them.

Data analysis goen on increasing its dependency on machine learning and automation to make and creating necessary progress. In just a short while, these two will become the norm for all digital businesses ?

Different types to segment the customers

1. Demographic Segmentation – This can be truly used based on the primary customer’s details based on age, geographic, gender, community, behaviors, job, income, work type, education, marital status, psychographic, status, education, income, behavior, language, location you can view. This ways it is helpful in find their needs and availability no matter what.
2. Geographic segmentation – the customer’s living location such as country, state, city and town. Here you can figure ways out the availability and market in their locality.
3. Psychographic Segmentation – the customer’s personality, traits, likes and dislikes, interests, values, attitude to see and view their approach and responses towards the sales.
4. Technographic Segmentation – It can be small changes based technology, i.e on what devices they used as mobile phones, tabs or personal computers. The kind of apps they use and the software to figure out what they are into and their work and interests.
5. Behavioural Based Segmentation – This is where we study the customer’s past behaviour on a day to day basis and habits and what they are into and their frequent actions on the regular days.
6. Needs-Based Segmentation –  Here we categorize the customers based on their needs and what they are looking for. Here we need to work on their pain points.
7. Value-Based Segmentation –  The economic value of the customer such as their income and then grouping customers of the same level.

Benefits of customer segmentation

• Customer segmentation helps you conduct target specific which results in gaining more business and profit. In target specific campaigns we hit create different latest frequency customer segments with different plans so that we deliver them with correct content and services by maintaining a good and build relationships.
• We can also figure a way out what kind of offers and services can be given to what type of customers which will boost the sales cycles and lead generation to more purchased.
• Customer segmentation model develops a better connection between you and your customers, increases values and brand appreciation and relationships.
• Customer segmentation model helps you up the game and stay ahead of the competitors.
• You can do the assessment, updates and do tasks hand in hand with full engagement of the customer groups according to the research and strategy of their categories which will yield higher and increase in productivity.
• Customer segmentation can be beneficial to understand and dedicate on the improvement of your product and services and its delivery.
• You must check what customers need and if the new product is fulfilling and where you can improvise it. You can afterwards include your reports in an advanced product quality planning checklist and use it to develop a new product or improve the previous one on the next roll-out.
• Customer segmentation provides a focused messages to customer groups of same category to provide them exactly what they are looking for.
• Customer segmentation gives you a lot more latest opportunities to test to be used and options on gaining more momentum with engaging your customers and also to expand and explore different ways of fields and styles of working for better results and insights hand in hand. If not google it!!
• Find Higher revenues are expected since their is better approach in marketing with customer segmentation

Steps to create customer segmentation

1. Define and meet your distinct goals and objectives, test and set up a project. In such cases, discuss it with the stakeholders  and gather and mix around project parameters showcasing the scope, deliverables and highlight the key find.
2. Gather the data on the customer behavior and their complete their attributes. In the sense, Define the problems to be solved and address the sales, marketing and support teams, communication and establish the principle and continue to meet the general guidelines with opportunities.
3. Select the different variables of the segments. Use the collected customers data and divide them according to their behaviour and attributes into the categories mentioned above. Analyze and prioritize your customers to identify the best customer segments and practices with a quality. You have to have minimum criteria and its hard to sort out the segments for system grouping of similar customers.
4.  Deciding how to approach and appealing each kind of customer segment is very important and valuable. Each approach defines the importance of customer segmentation. Each category has its own needs to be met with so we have to create a plan for each segment accordingly for best outcomes. And that’s called customer segmentation.
5. Validate the data and the methods and check how effective they are at producing desired results at absolute privacy. In the sense, Evaluate the quality of product and outcomes and segment growth. Measure the customer quality and take appropriate actions and allow it based on the feedback given by customers on the product and service in the way they want.

Now let us look at five certain crucial factors to consider before you embark on customer segmentation analysis.

1. Customer Segmentation and Behaviour

For customer segmentation to be efficient, there’s a lot that needs to be in place, there is a lot of potential. It calls for a thorough analysis of customer behaviour and not so readily available in-depth details and definition. Look, improve and review at the kind of acts and approaches that customers perform when they browse your website. Identify whether or not these movements are similar to that of other customers.

Find out whether their actions are a ready trend and policy or not. There are so many brands that do not dig deeper into segmentation. They won’t do a thorough job on this as they should be doing day wise.

Personalizing the content based on customer segments on how a customer behaviour and experience takes place across. In these cases, How the customer reacts to the product, the key features and characteristics  he is looking for. His purchasing behaviour, customer buyer journey phase, timing, communication and occasion are the external factors we have to work on with complete privacy.

We have to create the table of content as a result and insights in which manages to catch the customer attention and continue increase the engagement level. Its like available opportunities without any wait.

Studying the patterns and behaviour in previous or post purchases of different groups of customer segments. Checking what is the majority response to different products and other aspects such as which product is gaining popularity in general public and how many times a product is viewed and how many times it’s purchased.

These research and study helps in forming better tactics, topics and methods and also in improvising and following the marketing strategy and policy and work on our weak points in case.

Probably we have to identify our high end customers and the value based segment who have the greater potential on the business impact. When we make smarter moves by hitting the right customer at the right time with appropriate offers, cost and deals, we increase our chances in higher sales.

Prioritizing such customers and customer segments and providing them with best customer support can also bring the brand value up and better and build the customer relationship along with privacy maintained. This can also lead into attracting more new customers of the value based segment category.

Knowledge in monitoring and tracking all these aspects in regular time intervals helps you to updated on the changing trends and and changing categories of customers based on their current statistics and gives you a hold on the strategies also to track on the positive and negative impact on customers so you can come up with much more great ways to engage and up the definition known as marketing game.

Some e-commerce companies segment customers based on times they have viewed a single product and products/materials similar to it. When they identify such customers, they reach out to your audience and offer discounts or ask/called them if they have any questions about the product.

You can segment this group further by segmenting customers who did not enter the credit/debit card information.  Also, you can segment those with denied credit cards or those others that did not feed a single crucial detail after they added a product to the cart.

In fact, When you track and sort/discrete your customers according to their behaviours, you will be able to customize your messages for others different customer. You can use landing page builders like Unbounce that will hope to help or tailor you to design the landing pages. You can also develop the others materials for marketing as per the b2b customer segmentation.

The key factors in customer segmentation and behaviour for examples can be their purchasing behaviours, and provide the benefits the look for, the timing, occasion and the trends , the buyer journey and stage, the product use, user status and serving the customer loyalty towards your product or service.

2. Automation and Machine Learning are crucial parts of Segmentation

Customer segments and sorting your customer base data is a very simple tedious procedure. That is why most of companies are not used to do a thorough job in segmentation. The process may take days, weekly and months as well when you are manually segmenting the data to ensure you accurately categorize all your customers.

With machine learning strategies you can deliver the right content to the right person at the right time closely.

When you send in the irrelevant content, the customers start avoiding your future mails and get away from you. Segmentation according to even gender can play a major role since they have completely different interests and usage of certain products for customers.

The usage of automation removes and not targeting the limitations of the traditional marketing segmentation by creating more segments and account and analyzation of the customer base data deeper. The campaigns can get more personalised by adjusting and run each step by breaking it down. It can give you the benefit of high variation in campaign and provide more various customized long term plans to follow.

The machine learning algorithms analyze the data without any presumptions and give a available statistical analysis of the with accuracy. It is well to find patterns which might not have been done by humans, its easier. The update on the segments and different aspects is quick and automatic which saves you a lot of time and comes along with increases the efficiency.

There can be an unlimited number of variations, options and benefits in segmentation. Higher levels and stage of personalization can be attained using large machine learning algorithms tools and by collecting user data within a date. It also requires very minimal maintenance and works at full efficiency compared to that of a human or customers. 

Marketing Automation and machine learning significantly appear impacts and reshapes digital marketing and customer segmentation machine learning. With an engagement platform that is properly designed will offer hyper-targeting that examines gives knowledge about the customer journey. It will then automatically perform marketing material optimization for a particular customer.

In turn, actually you will get an excellent and easier customer interaction on personal levels. A Marketing Automation tools can ease the segmentation for your business. You just need to set up some filters and you’re done. Accuracy is essential, which doesn’t want to send back or submit inappropriate emails to your customers, do you?

Such tools are slowly becoming a standard for all brands that have serious online businesses. They add the much-needed one or two value too.

3. By Micro-segmenting, you build trust levels

All customers into groups prefer companies that understand them. You must want and ensure back your address their pain points in all your various ways marketing materials and things. Fulfil their demands to know that you understand their pain, needs, and wishes. Your customers just want to feel positive about the product or service you offer ?

Rather than focusing on the high extend data of customers like contact details, location, range age gender, habits life stage, marital status and status, job, behaviors and gender we can focus and analyze on more specific answer with data such as history with last purchase and preferences and behavioral data. Have to have a base audience to create segmentation.

Then use their data to identify their characteristics and influence their thoughts and action by using various and customized long term plans, strategy and methods to address the clients. The grouping in a more specific way or path on narrowed audiences.

Next, Using the mentioned above we can categories offering our clients accordingly. We should base them and store them updated according to the in depth research attributes and variables based on the analytics and ask data which gives a solution and understanding and helps divide them into subgroups which are converted into micro segmentation or customer segments. For detailed and thorough powerful coverage, each base should have at least three to four micro segmentation.

Several times the base audiences share common attributes when divided into micro segmentation and can overlap. You can identify the most relevant micro segments and base audiences and provide them with target specific content. Micro segmentation can be made irrespective of detailed data if need be.

Micro-segmentation revolves around sorting your customers into categories that are more specific and private sector. In an average segmentation, you may help you segmenting your customers based on standard features. Like who lives in India, who is the CEO of a company, or who is more than forty years old.

But with micro-segmentation, you will include all the three features. You will have a category for people who are more than forty years old, live in India and are CEO of a company.

Building an initial trust is very important. Typically, customers who have been purchasing from a company for at least 30 years spend 67% more for one or two order when compared to their first purchase. Share on X

Infosys survey shows that 78% of customers are more likely to do business with companies that send them more targeted offers. With micro-segmentation, you will be able to speak to the most significant concerns your customers in groups have.

4. Research on Segmentation should inform Product Development

Customer segmentation begins with understanding your customers. You should tailor and allow your marketing uniquely to your customer’s problems, preferences, things and desires.

The objective of your organization and product should be well defined which focuses on the direction of your business by using great marketing campaigns or social media channels and enhancing your products and services.

Have a detailed account of your target audience at least. Who fit in your customer category and who are the high valued customers into groups together . Which type of segment needs what kind of service and the product and setting criteria for them and then providing insight. Keeping their demographics like name geography, range age gender, habits etc to name a few in consideration, want their pain and trigger points in place already. The result and insight of product consumption and among how frequently your customer uses the product or service. The price factor and the influences on their purchase decision, their media channels intake comes along with lists, powerful tools, packaging and technology. Instead, Its an ongoing exercise!

Examining the data which you’re already using e-commerce analytics which will still provide you with some interesting facts on demographic and behavioural information going on. For example what do they add in cart, how often do they buy or purchased a particular products and services and what attracts and what repels them. The feedback they provide is also a great content for the analysis and distinct goal. Social media is an ocean which gives both quantitative and qualitative data, which is a quality work! Utilize the channels well. How they interact with the brand and what they talk about it. What are their behavioural patterns and what feed and serve they consume. What content holds their interests for a larger amount of time and what kind of content they follow and browse through already.

Rather than sending emails in mass, send personalised content in emails and study the response from the customers to retarget the audiences, instead, low and simply choose paid media campaigns and channels which have enormous amounts of information about customers and the grow the leads driving them for particular action. Conduct and analyzing popular surveys, maybe interest just a small one when they visit your pages, it provides and have an understanding on customers expectations and everything. Which means, when you know their concerns and their data it tailor and empowers you to proactively provide them with solutions. The customer journey feels more comfortable and engages more and builds interest and grow when he feels his needs have been understood. Personally engaging with them is also a great way of practices knowing your customers attributes. We try to match our perceptions with reality to form a ground to make decisions of engagement and sales in marketing. We try to have a data driven approach when the buyer’s journey and state starts.

The data for segmentation is not for marketing alone. Customer segmentation models should also bring up product development. Startups tend to pivot to find a market in need of solutions. With customer segmentation that is efficient, they can spot the perfect market. It is true that not all established businesses will do a full-fledged pivot the way startups do. So, most of them can benefit from more involvement of customer data in product development.

Customer data that is extremely defined detailed is a weapon that every company should have, it provides a plus point. Therefore, you should use the data to develop a product that revolves around data-informed facts and not assumptions.

5. Customer Needs are Not Constant

Among the five this is the crucial one!! Do not fail to analyze your customers after segmenting them into relevant course and categories. If you do, the customers will remain there even if you get new data which will help you do the analysis in the future.

Connecting with customers in groups on one to one basis offers and cost the marketers powerful means to gain more and improve customer engagement. Mapping the customer process and customer journey, conduction surveys, strategy and research. Analyzing where you stand in your competitors to fulfil the needs of customers and recording the previous experiences. As the market grows more advances the choices of customers remain going and fluctuating and it change. When there is a wide sea of options in the market it’s very important we work on meeting client and customers expectations and everything they need in the management. 

The main customer based segmentation needs to note in mind are 

1. Functionality of product and its ability to solve their problem.
2. The price of the product and if the features of the product are worth of the amount they pay and spend.
3. Convenient usage of the buying product.
4. Having smooth and and hassle free experience.
5. Design of the product for better use of it.
6. Reliability on the product every time and any day they need it.
7. Compatibility of the product with other products or services they are using.
8. Efficiency of the product.
9. Accessibility of services and segmentation customer support team regarding the product.

The problem arises as the things, needs and preferences of the customers remain changing ? over time. The customers segmentation may be in a very different place today when compared to where they were in the previous year, the change happens. When you work on categorizing your customers journey, you will target them more accurately in the marketing and sales strategies that matter the most.

The future of Personalization

By doing a thorough segmentation of your audience, you will enjoy many opportunities for personalization. Personalization brings about a better understanding of the customer segments and prospects. From there, you can cleverly tailor your sales and marketing efforts. Segmentation is not a new subject in digital marketing. However, the tools we currently have make micro-segmentation highly feasible for companies of all sizes.

Segmentation can make or break a business.  More companies are moving towards the possibility of 1 customer segment. Even so, they should create a good scalable segmentation.

If you use small different customer journey segmentation strategy to improve customer experience, let us know. Also, let us start getting to know the lists, tips and strategic that you will implement from this blog or article . Drop your comments below, and we will be happy to hear from you. Also sign up for our weekly newsletter if interested!