No matter what your position is in the business world, the first thing you learn is the importance of understanding your customers. The various types of customer segmentation are crucial here.
Even if you’re a customer, it’s almost always better to find someone who specialises in what you need. The closer a business’ offering matches a customer’s needs, the better.
So what is customer segmentation? In the end, all businesses want to gain the trust of their customers. Having a clear picture of the different people who benefit from your products and services is a huge part of this.
What Is Customer Segmentation?
Customer segmentation, also known as market segmentation, is the practice of dividing consumers into subgroups. This makes it easier to target your messaging more closely to your customers’ needs.
All sorts of data can inform your customer segmentation. For example:
- Social factors,
- Economic factors,
- Demographics,
- Product uses,
- Behavioural preferences.
Segmenting your market according to customers is sound practice. It empowers you to build up a more solid understanding of your clients and find what influences them.
When you’re conveying a message, it will be more compelling if it resonates with customers. Division is essentially a method for orchestrating your clients into littler gatherings as indicated by write.
Each segment should be described by specific traits. We’ll explain this in more detail a little later.
Why Is Customer Segmentation Important?
Creating a corporate strategy without first employing an effective customer segmentation strategy would be a shot in the dark. You’re unlikely to have much success if you don’t know who you’re targeting.
All types of customer segmentation help you to spend money efficiently. This is because segmentation helps you to decide which marketing strategies deserve different allocations of resources.
Furthermore, a lack of an effective customer segmentation plan can cause uncertain product development strategies. Together, all of those variables can slow or stop a company’s progression.
When customer segmentation is done well, the business benefits are huge. For instance, a customer segmentation strategy can unmistakably affect your working outcomes in the following ways.
Improving Your Product
Customer segmentation helps you to improve your product, through a better understanding of who uses it. Ultimately, this will lead to more sales. The advantages likewise stretch out past your core product offering.
Any bits of insight into your best clients will enable you to offer better customer care, administration, and whatever other offerings that make up their experience with your brand.
Focusing Your Promoting Messages
Along with product changes, customer segmentation can enable you to craft more engaging messages. Allowing customised messages to each segment brings about higher quality enthusiasm for your brand.
Seeking New Sales Opportunities
Segmentation allows you to focus resources on the channels and customers who provide the best return on investment. This way your business group will have the capacity to expand its win rate, make more progress, and better revenues.
4 Types of Customer Segmentation
Customer segmentation is important when attempting to sell any kind of product, but it’s important to choose the right strategy.
There are a number of different types of customer segmentation. Some of these include:
- Geographic segmentation,
- Demographic segmentation,
- Psychographic segmentation,
- Behavioural segmentation.
1. Geographic
Geographic segmentation is the act of dividing your market in light of where they are found. Sections can be as wide as a nation or a district, or as thin as one road of homes in a town.
Furthermore, geographic division is valuable for all kinds of companies. Large organisations with global markets may offer items to people in different areas.
For instance, you might be selling skis and winter equipment. Introducing this promotion to hot regions, for example, would be pointless, and could even desensitise the public to future commercials.
Especially for independent companies, geographic division can be utilised to target particular clients without wasting resources on impressions that won’t transform into deals.
For instance, a neighbourhood cafe could exhibit their advertisement to just individuals inside the town they are found.
Geographic customer segmentation is one strategy that is easy to implement.
2. Demographic
Demographic division is sectioning the market in view of specific attributes of the gathering of people. Qualities frequently include:
- Age,
- Sex,
- Religious,
- Salary,
- Occupation.
Additionally, genuinely simple to execute, demographic division can be helpful in countless ways. Luxury brands may market to a demographic who earn more than £100,000.
Universities may mainly market to 17-22 year olds.
Demographic customer segmentation is much more effective while focusing on different segments at the same time. Imagine you ran an email campaign focused on neighborhood females, 25-50 years of age, with a family unit wage of under £50,000.
Basically, this means you employed multiple demographic criteria as age, sex, and income. Joining many customer segmentation criteria can possibly achieve an exceptionally greater outcome.
3. Psychographic
Psychographic customer segmentation is far less concrete than both geographic and statistical client division, as the qualities used to section are less “substantial” than the last two.
Dividing psychographically separates the market on standards, for example, way of life, values, social class, and identity.
This kind of client division is essentially more hard to execute than geographic or statistical division.
To appropriately portion the market in light of psychographics, advertisers should truly set aside the opportunity to become more acquainted with their present and past clients.
This means identifying the perfect purchaser persona for the item or administration and creating relationships with the client base.
A prime case of psychographic division is focusing on the individuals who are thrifty. These individuals esteem a decent arrangement and have a tendency to be brilliant customers.
Retail stores use this strategy more than anyone. Utilising marketing messages like “Amazing Prices” and “Best Online Specials” since it will resonate with the consumers they are trying to reach.
4. Behavioural
Behavioural segmentation is the act of isolating buyers into groups as per any of the accompanying characteristics:
- Utilisation,
- Loyalties,
- Mindfulness,
- Events,
- Learning,
- Purchase intents.
Behavioral customer segmentation can be utilized as a part of an assortment of ways.
Behavioural division enables advertisers to be more applicable and create information that will resonate well with their target audience.
Applying Customer Segmentation Efficiently
Knowing the customer segmentation criteria is only half the equation. The next step is to fully integrate your own customer segments in your business. However, first you need to gather data specific to your company, this can be done by:
Choosing Which Data is Relevant
Among all the many types of customer segmentation you need to figure out which are most relevant to your business.
Furthermore, you need to figure out which criteria from each will offer the most insight on your targeted customer. For example, which age group and gender in demographics? Which spending patterns and shopping locations in behaviour segmentation.
Gathering Information
After choosing which data to collect, you’ll need to find the best way to collect this data. The internet is your number one source for data collection on potential clients.
Facebook ads are a perfect way to research customer segmentation data. Google Analytics is another great pool for client data. Surveys can also be used to provide direct data from the clients.
The past numbers of the business itself, from all departments are the best indicators for developing new segmentation methods.
Establishing a Line of Communications with All Departments
The purpose of a successful customer segmentation strategy is to enhance the overall performance of a business. This is why it’s critical to relay all customer investigations and findings to and from all the departments within a business.
The marketing department, for example, can give data on the outreach and interactions of an ad campaign, as well as, utilise information from the newest customer segmentation research in creating more effective campaigns.
Leverage Different Types of Customer Segmentation
The difference between an average business and a leader in the industry, is that a leader never stops growing. The truth is there is no one magic recipe to finding the best customer segmentation for life.
What the customer wants or needs is an ever changing game and the key is to always be ahead. The only way to do that is to mix and match all segmentation types, finding the perfect customer.
However, it doesn’t stop at that, you need to keep researching and perfecting your image of the target client forever. If you want to learn more about customer segmentation, contact ProfileTree today.