Customer segmentation is one of the most effective marketing strategies you can use to understand and service a diverse customer base in an effective and personalized manner. The shortest explanation of this strategy revolves around creating several sub-groups of consumers or clients (known as segments) based on shared characteristics or interests. In this article, we will show you how this strategy can be implemented in two sectors – e-commerce and education.
Segmentation is something most business owners do intuitively. After all, you don’t recommend skirts to a male teen customer, right? In essence, that’s what this approach is all about; it just takes everything one step further to streamline and improve your marketing efforts. How does it work in practice?
What is customer segmentation?
This term simply describes the process of dividing your customer base into two or more groups of customers with different needs, characteristics, or behaviors. The general assumption is that each group shares similar needs and interests. Here’s a quick example – you can generally assume that male teenagers would be interested in hoodies as a product. If you offer those, boy teenagers would constitute one segment of customers in your online store.
The second important thing is that customer segments usually require or could benefit from separate products or marketing communication (another example – boy teenagers won’t probably resonate with messaging revolving around how easy a given hoodie is to clean because that’s not what they pay attention to).
All in all, customer segmentation enables you to tailor your marketing efforts to specific segments, thus increasing the relevance and effectiveness of your marketing campaigns.
DIFFERENT ASPECTS OF SEGMENTATION
In most cases, customer segmentation can be based on various criteria, including:
- Demographic (e.g., age, gender, income, occupation, location, etc.)
- Psychographic (e.g., lifestyle, social status, personality traits, values, etc.)
- Behavioral (primarily past purchases, viewed products, user status, etc.)
Why is segmentation so important?
The shortest answer is that because it helps you to sell more products and build long-term relationships with your customers. There are four main reasons why you ought to introduce segmentation to your marketing strategy:
BETTER UNDERSTANDING OF YOUR CUSTOMERS
Segmentation allows you to understand your customers and resonate with them on a deeper level. By analyzing the specific needs and preferences of different segments, you can tailor your marketing messaging and even your offer to meet the specific needs of different customer groups.
IMPROVED EFFECTIVENESS OF YOUR MARKETING EFFORTS
Personalized product recommendations and offers that are tailored to a given segment usually produce better results. Moreover, once you understand the needs and interests of a specific customer segment, you can benefit from cross-selling and upselling and optimize your marketing budget (because you don’t have to spend it on things that don’t work).
INCREASED CUSTOMER LOYALTY
When your customers feel understood and valued (that’s the goal of well-designed customer segmentation), they are more likely to remain loyal to your brand. Personalized CX and offers can win you not just satisfaction but long-term engagement of thousands of customers. Don’t underestimate the value of this approach!
COMPETITIVE ADVANTAGE
Lastly, segmentation gives you a more competitive advantage over your competitors. If your company can effectively segment your target audience, you can also identify underserved segments, tailor your offerings to meet the unique needs of these groups and position yourself as the preferred choice for those customers, thus giving you access to new audiences.
How can segmentation work in real life? 2 examples
Now, let’s have a look at how customer segmentation can work in two industries:
CUSTOMER SEGMENTATION IN E-COMMERCE
It’s almost impossible to talk about segmentation without mentioning e-commerce as an example. Online retailers usually have a vast and diverse customer base, making it essential to understand and serve different segments effectively.
For example, an online clothing seller can segment its customers based on factors such as gender, age, and purchasing behavior. By doing so, they can recommend products that are more likely to appeal to each segment, increasing the likelihood of purchase. Here, segmentation overlaps with many other marketing tactics, such as retargeting.
Additionally, with the right segmentation in place, you can design targeted promotions and marketing campaigns for different customer groups. A good example is a special offer that’s available only to high-value customers or frequent buyers to reward their loyalty to your brand.
CUSTOMER SEGMENTATION IN EDUCATION
Educational institutions and companies work with diverse student groups with varying needs. Thanks to segmentation, you can provide students and employees with not only personalized offers but also personalized learning plans. For example, students can be segmented based on age, learning styles (think online learning vs. individual classes), and interests. By understanding the specific needs and abilities of different segments, education companies can create offers and messaging that are more effective and engaging for each group.
If you want to go one step further, you can tailor communication strategies for prospective students, current students, and alumni. Prospective students might receive information about admission processes and campus life, current students can be informed about academic resources and events, and alumni and past course participants can be informed about new classes/learning programs that are within their areas of interest.
What do you need to implement customer segmentation in your business?
No doubt, segmentation is one of the sharpest arrows in your marketing quiver. By dividing your customer base into different segments based on different characteristics, you can run more effective marketing strategies that result in higher sales, customer satisfaction, and a competitive advantage.
However, you need tools that enable you to introduce this strategy to your business. First of all, you need to track all the characteristics you want to use for segmentation and next store them in one organized space that can be used for marketing purposes.
Here at iPresso, we provide you with two such tools:
- Contact database management: This is our main customer data management tool that allows you to keep all customer information in one place. What’s great about this tool is that it enables you to attach personalized attributes to each contact depending on your business profile. Moreover, you can also track the behavior and actions taken by the monitored contacts, making it very useful for marketing automation purposes.
- Customer Data Platform (CDP): This tool will come in handy if you use and gather customer data from different sources, not just your website. It’s our more advanced tool for larger companies.
If you’d like to test both tools, you can do so for free. We offer free 30-day trial access to our platform so that you can see for yourself how it can help you with your marketing needs. We invite you to start your trial today!
Leave a Reply