Know Your Audience: The Power of Customer Segmentation

How much do you know about your target audience? You probably already know your audience is made of different categories of individuals, also known as customer segments. Having a good idea about your audience categories and their needs can significantly enhance the results of your marketing campaigns.

Companies that deliver website content based on segment analysis see two to five times more effectiveness in their marketing campaigns when compared to businesses that don’t conduct a deeper analysis of their customer base.

The same applies to personalized email campaigns. Studies show that something as simple as delivering the right message to the right segment can boost open rates by more than 14 percent.

The numbers don’t lie and sound impressive. But what does it take to create the right customer segmentation models? Let’s dive into the essentials.

What Is Customer Segmentation?

To segment customers, you need to acquire timely and accurate information about the different groups that rely on your products and services.

The division into groups is made based on common characteristics or aspects of the customer journey. That’s why demographic segmentation is one of the most prominent models used by businesses across industries.

Segmentation is used in both B2C and B2B marketing. B2B customers can be segmented based on industry, size, location, range of products or services commonly used, etc.

Once the ideal customers are divided into individual segments, the marketing approach can be fine-tuned and aligned with specific characteristics. Marketers can start building buyer personas to start delivering the right message to the right group.

Buyer personas are detailed descriptions of an individual serving as an actual representation of the target audience. Through segmentation, traits of the buyer persona can be pinpointed and determined accurately.

Customer segmentation can also be used to:

• Make marketing messaging more engaging and relevant to a potential customer.
• Identify and build a brand that will resonate with ideal customers.
• Create more relevant product and service offerings.
• Reduce the overall cost of marketing.
• Establish better relationships that have the ability to stand the test of time.

Types of Customer Segments

Demographic segmentation isn’t the only option you have. Most marketers explore various types of customer segmentation based on distinctive characteristics:

• Demographic segmentation: When a marketing team focuses on demographics, they can target different customer groups by age, gender, education, location (geographic segmentation), and income level. Valuable insights about current customers can be collected in various simple ways, be it through customer surveys or using online analytics tools.
• Geographic segmentation: Because location is so important, it deserves a separate mention as a marketing segment. The term location itself is fairly broad. Geographic segmentation can be performed based on nationality, preferred language, area or city. Depending on the importance of this type of information, you can collect data about commuting preferences and transportation means, as a part of the customer segmentation process.
• Psychographic segmentation: Customer interests, preferences, and lifestyles are at the very heart of psychographic segmentation. Common traits included in the customer segments include interests, hobbies, personal values, beliefs, and even individual quirks/traits. Social listening makes it fairly easy to collect psychographic data as many people share their opinions and preferences via such profiles.
• Behavioral segmentation: The actions customers have undertaken in the past can help you establish behavioral segments. What’s their purchasing history? How have clients responded to marketing campaigns? Do they interact often with customer support? Behavioral segmentation is often based on website and online activity, the level of customer engagement, and the overall customer history (something that you have intimate knowledge of). Sales teams have access to lots of valuable data in this category, as long as the information is properly organized and made approachable.

The Benefits of Using Customer Segments in Your Marketing Efforts

Customer retention can be difficult to achieve if you don’t know the people who buy from your brand. In order to maximize customer loyalty, you need to have data on personality traits and other important determinants that will help you to carry out tailored campaigns.

The biggest advantages of creating successful segments include:

• Improved competitiveness, even in niches that feature lots of active players.
• Enhanced marketing efforts since you’ll no longer be trying to reach cold markets.
• Overall improvements in customer service.
• Increased customer engagement.
• More niche and precise product development.
• A better understanding of customer behavior to facilitate the processes in all departments.

The Best Ways to Handle Customer Segmentation and Get Optimal Results

Meeting your customer segmentation goals depends on many things – from making use of the right customer segmentation tools to avoiding the most typical segmentation process mistakes.

Did you know that companies waste more than a quarter of their budget on the wrong marketing strategies? Very often, the wrong approach to customer segmentation is to blame.

The benefits of customer segmentation are far too many to engage in amateurish efforts that fail to unlock the full potential of this approach. In order to boost customer loyalty and deliver marketing messages that make a difference, you have to partner up with the right professionals for the job.

Outstaffing the customer segmentation project can deliver the customer loyalty boost you’ve been hoping for. Everything – from the right marketing approach to the selection of appropriate marketing channels and enhancing business outcomes depends on knowing your clients and incorporating that knowledge into the business plan.

Having access to marketing and data analysis talent on demand gives you cost efficiency and the chance to immediately develop sales strategies bound to give you better ROI over a longer period of time.

Final Thoughts

It doesn’t matter if you’re operating a small business or a Fortune 500 company! Professional services in the field of customer segmentation strategies and marketing campaigns address the very specific marketing and communication needs or challenges that you face.

Getting access to talented resources isn’t always easy, especially in highly competitive fields such as marketing. Even if you have the chance to connect with top talent, that could cost you a lot. The immediacy of results isn’t guaranteed, which can impact your company and the long-term stability of your customer acquisition efforts.

Customer-centric strategies should be the forefront activities of your advertising strategy. But even if you have access to the right analytics tools, you could still be missing the experience and know-how required to analyze such data correctly. Outstaffing customer segmentation helps you turn information into actionable steps that build long-term relationships and help you establish the right kind of reputation for your brand.