3 customer segmentation best practices

Let’s face it. You can’t sell your product or services to everyone. But if you can’t, how can you make a profit from what you’re marketing? And if you already are, how do you rake in more revenue? That’s where market segmentation comes in.

Customer segmentation enables enterprises to find the perfect market to sell their products and services. Your patrons come from different backgrounds and possess unique objectives as well as purchasing patterns. By identifying these and grouping clients together with effective customer segmentation methods, you can discover the right niche for your product alongside untapped opportunities that lead to improved product development and enhanced marketing.
There are plenty of customer segmentation examples as well as practices out there, so let’s get started:

1. Broad segmentations are a huge no-no.

Businesses that describe customer segments broadly provide a greater opening for competitors that target a narrow consumer base. In order to avoid that, you have to carefully construct your customer segments by collecting customer data via firmographics, item behavior, and other significant segments.

Then, specifically, describe which kind of customer you’d like to attract. Draft criteria for grouping your buyers, and look through various customer segmentation models to achieve your goals.

2. Look at customer segmentation models.

Here are some examples:

  • Behavioral segmentation

Basically, behavioral segmentation takes a look at consumers’ buying patterns: how customers use the product, and when they use the product.

You can see this in companies that release limited edition products during holidays and use this strategy for their customer segmentation metrics. For instance, Santa Claus and Rudolph prints on boxes of chocolates for Christmas or spooky-themed crackers featuring different monsters during Halloween. Customers can’t get them anytime beyond the holiday, and marketers observe that buyers support their products to celebrate that particular occasion.

Another way businesses use this method can be through targeting customers based on the benefits they look for in a product. A person with sensitive skin will definitely purchase an item that guarantees they don’t get an allergy when using it.

They can also look at how often they use this product. Let’s say you’re a skincare company. You can release a small container for customers who use your special night cream from time to time. You can also put out a larger volume of the cream for everyday users who have incorporated your product in their nightly routine.

Marketers can also target buyers based on customer loyalty. Hotels, restaurants, and airlines provide appealing customer rewards or loyalty programs to foster faithfulness from their patrons. They do this because retaining customers broaden the customer base and secures company growth.

For consumers, purchasing decisions are influenced by behavior. EDUCBA highlights the imperative for organizations to examine buyer behavior, since it fosters consumer understanding, which, in turn, allows businesses to come up with better products and services for them.
If your product is not aiming for the general masses and if your product flourishes naturally through a niche and through the demands and needs of customers, behavioral segmentation is one of the most recommended customer segmentation models for you to follow.

  • New vs. Existing

A brand can also divide customers based on how new they are to the product or service they offer. New customers include a consumer that has just been introduced to the brand and hasn’t made a purchase yet as well as a buyer that has recently completed a few transactions.

It’s one of the tried and true customer segmentation examples, and with this, businesses often focus on how the customer came across their brand. This can be followed up with a sub-segment that tackles the level of interaction the consumer had with your brand, website, social media platform, application, and salesperson.

Once a new customer has been converted to an existing buyer, you can group them based on purchasing frequency or reason for transactions.

  • Values segmentation

Benefits segmentation is one of the best customer segmentation metrics that can sort your buyers based on their perception of your products and services. In this scheme, your organization can group consumers according to the values and advantages your patrons believe they acquire when availing what you offer.

It’s one of the customer segmentation models that only work for existing customers and recent purchasers but not new buyers. It also demands considerable insights and analysis regarding consumer behavior beginning from their first contact with the brand to the minute they accomplish a transaction and leave.

Enterprises that use benefits segmentation cover customers who make the most out of a brand’s value, customers who constantly look for advantages in a product, heavy spenders as well as unwilling spenders.

3. Use your results to your advantage

Once you’ve selected from numerous customer segmentation examples, it’s time for you to implement it into your marketing strategy.

Use the results to understand the demands of each segment and improve customer relationships. To further enhance this, look into this list of top 15 CRM tools from CompareCamp.

Determine customers that provide more value for your brand, and tap into cross-selling and upselling opportunities. Analyze your data and increase revenue by constructing more effective marketing strategies for every customer segment.

Win the game

Customer segmentation is a linchpin in many industries. Businesses group their buyers to sell better, improve services, and maintain stronger connections with their patrons.
Walker reports that by the end of this year, buyer experience will overtake product and price on how they can differentiate and support brands, so if you don’t want to fall back, you better start segmenting your patrons and developing more personalized marketing campaigns for them.

Did we miss something on our list? If we did, let us know. Tell us what you think and tell us if you have some customer segmentation practices of your own.