How you engage with your friends, kids, co-workers, parents, partner, or siblings most likely differs with each group. While you might be chatty with your friends, the conversations with your co-workers may be more formal. The same goes for your customers.
Customers all have unique personalities, needs, and expectations and spread across different locations. Understanding how to group your customers goes a long way in creating and maintaining successful engagements that can lead to more sales. This is a process in marketing referred to as customer segmentation.
Customer segmentation should not be viewed as an option for any entrepreneur or modern marketer but rather a necessity. Here, we’ll look at the meaning of customer segmentation and consider how you can segment your target audience and generate sales. We’ll also discuss some tools that can help make segmentation easier.
What Is Customer Segmentation?
Customer segmentation is breaking up your more extensive customer base into smaller categories based on their traits, interests, age, activities, location, saved items, previous purchases, etc. It enables you to personalize your marketing strategies and interactions with each group of customers.
This practice is common in the beauty, retail and financial industry. A lot of businesses use criteria such as age, education, income, gender, or marital status to accurately segment customers. Whole Foods owned by Amazon is a good example of a company that has been able to properly segment customers. They tapped into the multi-billion dollar organic foods market. The people that buy from them are normally very health conscious and care about their environment. Catering to this niche set of individuals has proven to be very profitable.
The benefit of segmentation to your business is that it provides you with an easy way of creating targeted marketing campaigns, service, and sales segmentation for each of the specific groups.
Customer Segmentation Approach
Haven looked at what customer segmentation entails, let’s consider four types of market segmentation approach and how you can use them in your sales segmentation marketing strategies.
This covers the external physical features of your target audience. For example, their gender, education, age, occupation, ethnicity, location, marital status, education, wage, etc. Although some of your customers may share similar physical demographics, their buying behaviors may turn out to be very different.
For instance, segmenting one age group such as millennials based on an assumption of their age and lifestyle can be detrimental to your business. Studies have shown that millennials often spread across other segments due to several consumer attitudes and variations that exist. So when segmenting based on physical demographics, it is not enough to take only age, gender, lifestyle, etc. into consideration. Your segmentation should include several other consumer traits.
A means of fixing the demographics inadequacies is to segment your consumers further using socioeconomic status or life cycle stages. Considering the same group of millennials we looked at, they can be further segmented into life cycles. While some may be young adults with kids, others may live at home with their parents or on their own.
Grouping them via life cycles enables you to have a better idea of this group of consumer needs and when creating your marketing and sales strategy. The customer life cycle stages are grouped into geoTribes, as seen below:
Behavioral segmentation requires that you categorize your customers based on their purchasing behavior. You will need to monitor activities that pertain to how each customer engages with your product or service and, likewise, how they interact outside of your brand. To have a more accurate consumer behavioral segmentation performing quantitative research works will help.
You can do this by gathering data on different consumer behavior characteristics like spending and purchasing habits, product usage, cart content, alternative purchase, etc. Analyze the data and compare similarities and differences among consumer habits. You may have customers that only buy seasonally and those who buy all year round, customers that buy in bulk, and those who buy in piecemeal. With this information, you can anticipate their future needs and market it to them with ease.
Geographic segmentation is the most natural type of customer segmentation. Your customers are categorized based on geographic boundaries such as city, suburbs, zip code, country, climate, language, urban or rural, etc. For instance, geographic segmentation ads may be a fashion brand that chooses to market their winter jacket collection to only target customers that live in cold and snowy climates.
Customers can also be segmented according to specific attitudes, values, priorities, current events, lifestyles, etc. Unlike the other types of segmentation, psychographic segmentation is subjective and can be difficult to pinpoint since there are no specific sets of data, like age, purchasing power, city, etc. Thus, you will need a bit more digging to get the information you’ll require. You can use surveys, loyalty programs, polls, interviews, or quizzes to gain more knowledge on how your products fit into the consumers’ lifestyles.
From your data, you can begin to group customers based on similar attitudes and beliefs. However, just as with the physical demographics, you shouldn’t be too fast to group customers with similar positions, because their characteristics might differ. Try to consider other types of categorization before you finalize on this segment.
Customer Segmentation Tips
Key Social Channels
A bulk of your customers are online and spread across different social platforms. It is essential to know the platforms they are consuming your content on. It helps with how your product or services are marketed on each platform. Knowledge of social media usage and other statistics will give you a better idea of the best platforms to post content targeted at a specific customer group.
Statistics show that 59% of Instagram users are under age 30, while 32% of teenagers consider the platform as the best social network. While on Facebook, teenagers make up 51% of users, and those below the age of 30 are 79%.
Platform and device
The use of multiple devices is another way to reach customers based on their segments. With this information, you can create content that suits browser and screen resolution specifications. AI-based systems can also provide useful personalization information such as visitors you get on Apple iOS, Android, or desktop platforms and their preferred product value.
For instance, millennials have the highest number of social media users and have the broadest access to smartphones, while Gen X is more active via tablets. And then the Baby Boomers are also bridging their gap by embracing technology and becoming more familiar with device usage.
Create Content Relevant for Each Customer Segment
If you can segment your customers at the end of the day but still go-ahead to provide blanket content for your marketing, such a strategy is bound to fail. Your content should be accurate and relevant to your market segment to generate sales. For example, if your target group is segmented based on values such as sustainability and climate change, advertising content that is adverse and harmful to the environment will not make sense to them.
Useful Customer Segmentation Tools
There are several multipurpose and specific tools available to make the process of segmentation easier and quicker. These tools enable email automation, social platform, contact scoring, and customer habits segmentation. Some of these tools include:
- Google Tag Manager
- Facebook’s Custom Audiences
Customer segmentation goes a long way in helping you personalize your marketing schemes to enhance customer engagement and loyalty. Coupled with tools that provide multiple levels of personalization, conversion, and product sales can only get easier.
Aaron Swain is a writing specialist who is currently working in the writing service reviews company Best Writers Online. He is passionate about marketing and SEO. He expands and improves his skills throughout the writing process to help and inspire people.