Customer segmentation involves tailoring your products, services or marketing to your individual customers rather than using a one-size-fits-all approach.
By curating your brand experience through customer segmentation, you will best meet the needs of your customers and encourage sales. Over the longer term, segmenting can lead to long term brand loyalty.
When done well, customer segmentation will streamline your marketing efforts, ensuring your products and services are pitched to the right people.
New to all things customer segmentation? Keep reading to get a full lowdown on what it is and how to do it right.
Customer Segmentation Definition 📖
Customer segmentation is the process of grouping your users according to specific characteristics and behaviours.
For instance:
Behavioural - Purchasing habits, content they consume or actions taken on the website.
Customer journey - The stage at which the buyer is within the purchasing journey.
Demographics - The age, gender, income, profession and similar personal details which helps build up a picture about the customer.
Firmographic - B2B characteristics including the company size, revenue, location and purchasing behaviour.
Geographic - The neighbourhood, city, county and country of the customer.
Persona - The typical traits of the customer such as eco-conscious or tech savvy.
Psychographic - Aspects such as the customer's lifestyle, beliefs, social status or interests.
As a business, you can decide what type segments will offer the most relevance in terms of the ability to tailor your products, services and messaging most effectively.
It’s also possible to add any other custom data sets to get to know your customers even better. For instance, a skincare company could send a survey to discover a customer's skin type or favourite products from other brands.
Read more: Segmentation definition on the EcoSend Glossary
Customer Segmentation Benefits 🤩
According to Business Dasher, segmented campaigns can result in an 760% increase in revenue.
Why? When you segment your audience, you pitch your messaging to the unique wants and needs of individual customers rather than treating everyone the same.
All of which is a sure recipe for success, especially versus sending the same generic message to everyone and expecting the same results.
How To Do Customer Segmentation 🤷♂️
The first challenge to better understanding your users is to put the right tools in place to capture the data.
As well as being GDPR compliant, the method needs to be reliable. Plus, if using analytical software, it can't slow your website down. That's a tall order, but luckily we've got you covered with our top suggestions.
P.S. Like the look of the above tool? This is our demo page, but you can build your own customer database using EcoSend!
Customer Segmentation Software
Intelligent customer segmentation is crucial for SaaS businesses to operate their growth and customer success functions at scale. Once you have the right tools in place to collect your customer data, you can then segment them into the correct groups and engage with them accordingly.
Lead Capture Forms
Lead capture forms often work best when positioned in front of gated content. If you are offering a lead magnet, such as an eBook or webinar, place a lead capture form in front of it to receive users' email addresses in return. You can also request additional information; just be careful not to be too demanding or risk users quitting the page.
Live Chat
Live chat tools provide another channel to collect customer data. If a new visitor to your site has any questions about your product, they can engage with your Live chat widget to speak to your team. Many live chat tools offer settings to make email address input obligatory, so you can capture your users' data when they start conversations.
Manual Updates
Don't forget; you can add data manually too! The best CRM tools offer the ability for team members to fill out user profiles manually with additional details. This means your sales team can add any information from their demo calls, and your CS team can add notes from their onboarding sessions.
Feedback from your customers in their own words can be incredibly useful in defining your user segments, particularly those based on needs and values.
Why Is Customer Segmentation Important? 🔍
Being able to act personally at scale is the truest benefit of segmenting your customers. This is especially true when you build in segmentation by activity and actions, not just demographics.
Most businesses don't want to build out large sales teams to move prospective customers through their funnels manually. It's just not practical.
Luckily, this is one of the core problems that led to the creation of great segmentation tools. So what can you do with this superpower?
Send Targeted Marketing
Knowing your user-base intimately, and dividing them into relevant segments, enables you to send highly targeted and personalised marketing messaging. This allows you to operate at scale while still retaining a personal touch.
You can use automation to send nurture sequences to segments of new Leads. You could send relevant material based on your new visitors' preceding interactions with your sales material.
If they've downloaded an eBook, you could send them a follow-up message offering a link to a relevant webinar, and a message after that to offer a demo call to the Webinar attendees.
Identify Your Top Customers
By analysing key activation features and engagement times, you can discover the top customers within your client base. These users can then be reached out to and converted into product advocates via referral programs. This can lead to a reduction in marketing spend and an increase in customer conversion rates.
Reduce Churn
Behavioural analytics allows you to create customer segments to identify users displaying leading indicators of churn. You could filter according to key features of your product, which new clients have not yet activated.
You can then proactively reach out to these segments and offer refresher training sessions with your CS team. Help the clients get set up properly and mitigate the churn risk.
Customer Segmentation FAQ
Below, we’ve answered some of the most common questions about customer segmentation.
If you’re a business owner or marketer wanting to know about customer segmentation can help you reach your goals specifically, please contact us and our segmentation specialists would be more than happy to help you.
What Does Customer Segmentation Mean?
Customer segmentation breaks down your entire customer base into individual ‘segments’ based on factors that could make your campaigns, products or services more or less likely to appeal to them. Instead of treating everyone the same, customer segmentation gets to the crux of what will work best for each individual segment, which is more likely to result in conversions for your business, because these different wants and needs have been considered.
How To Do Customer Segmentation?
Using a customer segmentation tool such as an email marketing platform will allow you to build an audience in a way that allows you to create individual segments. For instance, details such as their age, gender, location and even how engaged that user is with your business. You can then start to strategise based on the data segmentation provides to make smarter marketing decisions.
Why Is Customer Segmentation Important?
Customer segmentation is important because it treats customers as individuals. It can be used to understand how to best target prospects, so that your efforts can be concentrated where success is more likely. Ultimately, customer segmentation can drive ROI and improve customer satisfaction simultaneously when done successfully.
Discover Other Content Related To Segmentation On EcoSend:
EcoSend - Discover Our Email Marketing Software With Customer Segmentation Capabilities! ✉️
Email marketing tools are one of the many ways to securely collect and process user data so that you can perform customer segmentation.
EcoSend is an email platform with a difference, as our systems run on renewable energy sources to reduce the carbon footprint of your campaigns.
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