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. It’s important we enhance our content and the business grows.

Customer segmentation analysis requires segmenting your customer base into groups of individuals that are similar in personal characteristics, preferences or behaviours who fit in different models of segmentation. Features like age, gender, locality, life stage can be useful for business-to-customer marketing and features like type of company, product needs, location and number of employees can be useful for B2B marketing. 

When we group similar types of people we need to consider their distinctive needs, characteristics and features, their pain points and their expectations and how our service can make sure it is delivered on a satisfactory level. We also need to understand their preferences and styles.

Customer segmentation helps boost the effectiveness of the product delivery and the efficiency of the company. This also helps in personalised and targeted campaigns so you can hit the right group with right content material. This also benefits in improving the customer experience and customer service and thus increases customer satisfaction and customer loyalty. We need to understand our customer’s communication style, so that we can reach out to them in a more convincing and effective manner. We have to identify the opportunities in different areas to make better success rates. It is also important we focus on the customers who bring in more profits.

When personalizing marketing materials, companies need to look at demographic data.  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 ?

Different types to segment the customers

  1. Demographic Segmentation – This can be done based on the customer’s details based on age, gender, community, income, work type, education, marital status. This is helpful in finding their needs and availability.
  2. Geographic segmentation – the customer’s living location such as country, state, city and town. Here you can figure out the availability and market in their locality.
  3. Psychographic Segmentation – the customer’s personality, traits, likes and dislikes, interests, values, attitude to see their approach and responses towards the sales.
  4. Technographic Segmentation – It can be based on what devices they use as mobile phones, tabs or personal computers. The kind of apps they use and the softwares to figure out what they are into and their work and interests.
  5. Behavioural Segmentation – This is where we study the customer’s 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

  • It helps you conduct target specific campaigns which results in gaining more business. In target specific campaigns we hit different customer segments with different strategies so that we deliver them with right content.
  • We can also figure out what kind of offers can be given to what type of customers which will boost the sales cycles and lead to more purchases.
  • This develops a better connection between you and your customers, increases values and brand appreciation.
  • It helps you up the game and stay ahead of the competitors.
  • You can do the assessment and work on full engagement of the customer according to the research of their categories which will yield higher productivity.
  • This can be beneficial to understand and work on the improvement of your product and its delivery. You can check what customers need and if the product is fulfilling and where you can improvise it.
  • Focused messages to customers of similar category  to give them exactly what they are looking for.
  • This gives you a lot more opportunities to work on gaining more momentum with engaging your customers and also to expand and explore different fields and styles of working for better results.
  • Higher revenues are expected since their is much better approach in marketing with customer segmentation

Steps to create customer segmentation

  1. Define your goals and objectives, and set up a project. Discuss it with the stakeholders  and gather around project parameters showcasing the scope, deliverables and highlight the key findings.
  2. Gather around the data on the customer behaviour and their attributes. Define the problems to be solved and address  the sales, marketing and support teams and establish the principle guidelines.
  3. Select the different variables of the segments. Use the collected 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. You have to have minimum criteria to sort out the segments for better grouping of similar customers.
  4.  Deciding how to approach each kind of customer segment is very important. Each category has its own needs to be met with so we have to create a plan for each segment accordingly for best outcomes.
  5. Validate the data and the methods and check how effective they are at producing desired results. Evaluate the quality of product and outcomes and segment growth. Measure the customer quality and take appropriate actions based on the feedback given by customers on the product and service.

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

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 behaviour 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.

Personalizing the content based on how a customer behaviour takes place. How the customer reacts to the product, the key features he is looking for. His purchasing behaviour, customer journey phase, timing and occasion are the factors we have to work on. We have to create the content which manages to catch the customer attention and increase the engagement level.

Studying the patterns and behaviour in previous 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 and how many times a product is viewed and how many times it’s purchased. These research and study helps in forming better tactics and methods and also in improvising the marketing strategies and work on our weak points.

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 and deals, we increase our chances in higher sales. Prioritizing such customers can also bring the brand value up and better the customer relationship. This can also lead into attracting more new customers of the value based segment category.

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

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 behaviours, 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 b2b customer segmentation. The key factors in customer segmentation and behaviour can be their purchasing behaviours, the benefits the look for, the timing, occasion and the trends , the buyer’s journey, the product usage, user status and the customer loyalty towards your product.

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

The usage of automation removes the limitations of the traditional marketing segmentation by creating more segments and analization of the customer data. The campaigns can get even more personalised by adjusting each step. It can give you high variation in campaign and provide more strategies.

The machine learning algorithms analyze the data without any presumptions and give a statistical analysis of the with accuracy. It is well with finding patterns which might not have been done by humans. The update on the segments and different aspects is quick and automatic which saves you a lot of time and increases the efficiency. There can be an unlimited number of variations in segmentation. Higher levels of personalization can be attained using machine learning algorithms and by collecting user data. It also requires very minimal maintenance and works at full efficiency compared to that of a human. 

Marketing Automation and machine learning significantly impacts and reshapes digital marketing and customer segmentation machine learning. 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. Fulfil their demands to know that you understand their pain, needs, and wishes. Your customers just want to feel positive about the product you offer ?

Rather than focusing on the high level data of customers like location, age and gender we can focus on more specific data such as history with previous purchases and preferences and behavioural 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 strategies to address the clients. The grouping is done in a more specific way on narrowed audiences. Using the types mentioned above we can categories our clients accordingly. We should base them according to the in depth attributes and variables based on the analytics and data which gives a better understanding and helps divide them into subgroups which are converted into micro segmentation. For detailed and thorough 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 done irrespective of detailed data if need be.

Micro-segmentation 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 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 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 objective of your organization and product should be well defined which focuses on the direction of your business by using effective marketing campaigns and enhancing your products and services.

Have a detailed account of your target audience. Who fit in your customer category and who are the high valued customers. Which type of segment needs what kind of service and the product. Keep their demographics in consideration, their pain points and trigger points. The result of product usage and how frequently your customer uses the product. The price factor and the influences on their purchase decision, their media intake along with tools and technology.

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

Rather than sending emails in mass, send personalised content in emails and study the response from the customers to retarget the audiences. Choose paid media campaigns which have enormous amounts of information about customers and the leads driving them for particular action. Conduct surveys, maybe just a small one when they visit your pages and have a better understanding on their expectations. When you know their concerns and their data it empowers you to proactively provide them with solutions. The customer feels more comfortable and engages more when he feels his needs have been understood. Personally engaging with them is also a great way of 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 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. 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.

Connecting with customers on one to one basis offers the marketers powerful means to gain more customer engagement. Mapping the customer process and customer journey, conduction surveys 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 keep fluctuating. When there is a wide sea of options in the market it’s very important we work on meeting client expectations. 

The main customer needs to keep 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.
  3. Convenient usage of the product.
  4. Having smooth and and hassle free experience.
  5. Design of the product for better usage of it.
  6. Reliability on the product every time they need it.
  7. Compatibility of the product with other products they are using.
  8. Efficiency of the product.
  9. Accessibility of services and support team regarding the product.

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 types of customer segmentation strategy 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.

⭐ What is Customer Segmentation?

Customer segmentation is the process of segregating customers into groups so that companies can market to each group appropriately.

⭐ What are the types of customer segmentation?

Following are the different types of customer segments:
Geographic
Demographic
Behavioral
Firmographic
Psychographic

⭐ Why is customer segmentation important?

Customer segmentation is essential for reaching out to consumers with specific needs and wants. Even you need to differentiate your customers more effectively to satisfy the requirements.

⭐ What is effective segmentation?

Effective segmentation is the essential facts of large and profitable market segments to sell a massive volume of products to buyers.

Author

Pritha Bose is the Senior Marketing Content Specialist at Aritic where she writes and edits for their marketing and sales blog. She is an avid reader and a social media enthusiast. On the flip side, Pritha thinks the whole world is an artificial simulation, and one fine day the skies will open up and she will see who controls it.

13 Comments

  1. Patricia Lopez Reply

    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.

  2. Evelyn Walker Reply

    Hey Pritha, great job here on Customer segmentation. Thanks a lot for putting importance on the topic of customer segmentation which is the critical ingredient of a business organization.

  3. Jacqueline Foster Reply

    Well written Pritha. Segmentation is vital for any marketer to drive more conversions since it will help them send more personalised emails.

  4. Jose Powell Reply

    Customer segmentation is a significant part of marketing. It is a quite essential requirement in marketing which can help a marketer do marketing in a better way.

  5. Justin Johnson Reply

    For carrying out successful business organizations, customer segmentation is the most important task which can help you out in a better way.

  6. Janice Wood Reply

    It’s true that personalization is the best thing which can be easily carried out with the help of segmentation.

  7. Marilyn Turner Reply

    Personalization can be done in a better way with the help of the segmentation so that you can convert a lot more visitors into leads.

  8. Veronica D Reply

    This is one of the nicest blogs I came across. Keep writing such articles that will help people.

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