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5 Factors to consider for Effective Customer Segmentation

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In B2B business, we apply an 80-20 rule that suggests 20% of the customers are responsible for 80% of the profits. I am sure you realize that in one way or the other some customers are more profitable than the rest. This emphasizes the importance of customer segmentation. Customer segmentation requires segmenting your customer base into groups of individuals that are similar in personal characteristics, preferences or behaviours.

When personalizing marketing materials, companies need to look at demographic data like age, location, and gender.  As we advance, the tools for customer segmentation will also develop in terms of functionality. It will help businesses to have an understanding of individual customers at individual levels. Data analysis keeps increasing its dependency on machine learning and automation to progress. In just a short while, these two will become the norm for all digital businesses 😎

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

1. Customer Segmentation and Behaviour

For customer segmentation to be effective, there is a lot that needs to be in place. It calls for a thorough analysis of customer behavior and not so readily available in-depth details. Look at the kind of actions that customers perform when they browse your website. Identify whether or not these actions are similar to that of other customers. Find out whether their actions are a trend 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.

Some e-commerce companies segment customers based on how many times they have viewed a single product and products similar to it. When they identify such customers, they reach out to them and offer discounts or ask them if they have any questions about the product. You can segment this group further by segmenting the customers who did not enter the credit/debit card information.  Also, you can segment those with denied credit cards or those that did not feed a single crucial detail after they added a product to the cart.

When you track and sort your customers according to their behaviors, you will be able to customize your message for different customers. You can use landing page builders like Unbounce that will help you design the landing pages. You can also develop the other materials for marketing as per the customer segmentation.

2. Automation and Machine Learning are crucial parts of Segmentation

Sorting your customer data is a very tedious procedure. That is why many companies do not do a thorough job in segmentation. The process may take days when you are manually segmenting the data to ensure you accurately categorize all your customers.

Marketing Automation and machine learning significantly impacts and reshapes digital marketing and segmentation. With an engagement platform that is properly designed will offer hyper-targeting that examines the customer journey. It will then automatically perform marketing material optimization for a particular customer. In turn, you will get an excellent customer interaction on personal levels. A Marketing Automation tool can ease the segmentation for your business. You just need to set up some filters and you are done. Accuracy is essential. You don’t want to send 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 value.

3. By Micro-segmenting, you build trust levels

All customers prefer companies that understand them. You must ensure you address their pain points in all your marketing materials. Fulfill their demands to know that you understand their pain, needs, and wishes. Your customers just want to feel positive about the product you offer 😇

Micro-segmenting revolves around sorting your customers into categories that are more specific. In an average segmentation, you may segment 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, lives 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 order when compared to their first purchase. Click To Tweet

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 have.

4. Research on Segmentation should inform Product Development

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

The data for segmentation is not for marketing alone. It 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. Even so, many of them can benefit from more involvement of customer data in product development.

Customer data that is extremely detailed is a weapon that every company should have. 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

Do not fail to analyze your customers after segmenting them into relevant categories. If you do, the customers will remain there even if you get new data in the future.

The problem arises as the needs and preferences of the customers keep changing 😰 over time. The customer may be in a very different place today when compared to where they were in the previous year. When you work on categorizing your customers, you will target them more accurately in the marketing and sales strategies.

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 customers. From there, you can effectively 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 one customer segment. Even so, they should create a scalable segmentation.

If you use customer segmentation to improve customer experience, let us know. Also, let us know the tips that you will implement from this blog. Drop your comments below, and we will be happy to hear from you.

Pritha
Pritha Bose is the Marketing Content Specialist at Aritic where she writes and edits for their marketing and sales blog. She has an eye for details and likes to do in-depth research for her articles. In her free time, Pritha likes to travel and post pictures of beautiful locales on her Instagram profile. Follow her on Twitter @prithabose
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1 Comment
  • Patricia Lopez
    3 months ago

    Customers are the heart of any business organization. For any business to strive its customers should receive optimum satisfaction. Segmenting them into groups allows a business to focus on the needs of the customer and act on it accordingly. You have very well put in all the factors one needs to know for customer segmentation.

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