Think you know customer segmentation? Maybe not. If you’re still working with demographic customer data, you’re leaving stacks of money on the table.
Traditional customer segmentation is still valuable, but not personal enough to meet today’s customer expectations.
It’s time to stop thinking only about who your customers are, but also consider where they are in the customer journey. Once you have data to understand how the average customer buys, you can anticipate what they want before they do.
Without customer segmentation, even a brilliant marketing campaign is wasted. Market segmentation allows you to tailor offers to meet your customers’ very specific needs and guide their journey step-by-step through the buying process.
What Is Customer Segmentation?
Simply put, customer segmentation is how you divide customers into buying groups in order to better craft your marketing messages.
The most successful marketing professionals are able to use data to identify groups of customers who are most likely to be interested in a certain product or offer.
With that information figured out, they can build marketing materials, personalized landing pages, and guided customer journeys to a highly targeted audience.
Brandon Purcell, Forrester Principal Analyst, found that only 33% of companies using customer segmentation say it makes a difference. His conclusion: the rest are doing it wrong. (download the Forrester Report free)
Oldschool demographic segmentation involved creating 2-dimensional buyer personas based on information such as age, marital status, income, location, gender, and life events. Today, that’s just not good enough. Unless you’re retailing skateboards or anti-aging cream.
Don’t get me wrong, this information is still valuable. It’s just the tip of the data-mining iceberg. You can do better.
Customer Segmentation Examples
You can segment your lists in many different ways, and demographics might be the least effective, especially when it comes to B2B customers.
Here’s what you really need to be looking at, and why.
Firmographic data is business and industry based data, where customers are classified by the company or organization they are associated with, and the industry where it belongs. Relevant data points include:
- Job title
- Company size
- Company revenue
This reveals quite a lot about your visitor. Is this a decision-maker at an enterprise global company, or a brand-new small business owner with two employees? A recent study showed conversions increased 11% by personalizing with firmographic data.With this information, you can tailor your marketing strategy. The small business owner might need to understand what your most basic service can do for his business, while the giant company exec wants to cut to the chase and find out how well your product scales to meet growing needs…two distinctly different objectives.
This dovetails into “value segmentation.” You may find it valuable to segment customers by transactional worth. For existing customers, you can look at past transactions, frequency of purchases, and how much they spent in the past. Use that to guide their customer journey by anticipating future needs, without showing them CTAs for things they have already seen.
Digging into the psychology of your customers is a bit intrusive, but let’s face it. Facebook sailed that ship into the sunset long ago.
Psychographic segmentation uses information customers post on social media for public view. Social media data analysis gives you a treasure trove of information about what segments of your customer base value. You’ll be looking at:
- Personality traits
Depending on your industry, knowing what your customers value can help you align your company values and ethics, and even develop a company voice.
Location, location, location! Even if you’re not in real estate, where your customers are located can be valuable knowledge. People in different parts of the country have different needs. If you’re marketing to Florida Man, snow shovels won’t fly, but you might sell more tiger cages.
If you’re microtargeting by segmenting customers by several different criteria, things can really get interesting. What if you could identify types of customers and then provide social proof in the form of other buyers who live in the same area?
Behavioral segmentation requires a deep understanding of your customers based on their behavior. What they have done in the past tells you what they are likely to do in the future.
Your goal is to identify actions that indicate specific needs of wants for a group of customers and use that information to personalize every customer touch and visit to your website. ShipBob confirmed a 123% increase in content downloads when they personalized call to actions based on behavioral segmentation.
It will help you build stronger customer relationships and inspire customer loyalty.
You can measure behavioral data based on all kinds of criteria:
- Past purchases
- First time purchase
- Returning customer
- Value of purchases
- Purchase frequency
- Offer response: What offer enticed them to visit your site or convert?
- Customer journey:
- What steps have they taken so far?
- What pages have they visited onsite?
- How often they visit
- Customer satisfaction/feedback
- Have they taken a survey?
- Left a review?
- Customer loyalty
- Length of relationship
- Have they endorsed your business in any form?
- What info do they search for?
- Are you connected on social media?
- Do they respond/like/share your posts?
- User status
- First time visitor (potential customer)
- Downloaded gated content
- Signed up for newsletters/promos
- Created an account
Another good use for segmentation is A/B testing. To ensure that everything about your landing pages are effective, try it out on small groups within your target audience.
The heart of marketing success is providing value to the customer. When you know who they are and how they behave, you can better anticipate what they will want next…and show it to them.