Successful Segmentation – How to Work Your Data Assets

The process of customer segmentation splits customers into groups based on specific and relevant shared characteristics, such as demographics, location, lifestyle, personality, and behavior.

By determining the specific needs of each group, businesses can tailor marketing and sales strategies accordingly, thus extracting real value from their data. As explained by Forbes, “You can’t be all things to all buyers. You can, however, be the right solution to a large enough group of buyers to successfully grow your business, if you can implement a smart segmentation strategy.”

Here are some of our top tips to obtain the best results from segmentation.

1. Choose differentiating characteristics to segment customers wisely

The choice of characteristics to emphasize in your company's segmentation strategy should align with the type, sector, and size of your business. It's important to bear in mind that as the number of segments increases, so does the time and resources required for data analysis. A multitude of segments can also complicate the process of identifying distinct features. Therefore, it's crucial to meticulously select the most critical characteristics, keeping in mind that differences should not be artificially imposed or predetermined.

2. Look for patterns

Successful segmentation will pinpoint trends in customer purchasing and contact preferences. These patterns will highlight needs and pain points, which will help tailor subsequent interactions with the customer to create individual customer journeys and build longer-lasting relationships. If you know from previous feedback that a particular demographic prefers to be contacted by phone after 6pm then surely your sales team is more likely to succeed in their interactions with this group if they stick to this?

3. Identify your most profitable customer groups

Are you wasting marketing efforts and resources on customers who are producing little or no return on investment? Through segmentation, groups that produce the most revenue and, therefore, the most potential for company growth can be identified. Marketing budgets can then be allocated proportionally and effectively.

4. Tailor your marketing strategies

Generic marketing is off-putting, especially when customers readily provide you with data that should help you improve how you communicate with them. Failing to act on data insight tells the customer that you aren’t listening to them or putting their needs at the center of your business – hardly a good start in what you hope will become a long-term, profitable relationship. When there are significant differences between segments, indicating that they are likely to be more responsive to a particular selection of your products or services, you can start to develop targeted marketing strategies and show your customers that you have considered their needs and how best to meet them.

5. Position your products with target segments

The ultimate goal of segmentation is to align your products and services to each of your target segments, by analyzing and having a clear view of your product line’s unique attributes and their key benefits to customers. Only by doing this will you be able to help customers visualize situations where your product or service will fit their requirements and add value to their business.

Analyzing your customer base in this way is crucial to understanding (and being able to respond to) the needs and expectations of the twenty-first century, digitally-savvy consumer who prizes their Customer Experience (CX) above almost everything else. According to Gartner, “81% of marketing leaders responsible for customer experience (CX) say their companies will mostly or completely compete on the basis of CX in two years. Yet only 22% say their CX efforts have exceeded customer expectations.” Segmentation will help to ensure your business is among those destined to succeed.