Customer segmentation is a process that seeks to identify different types of customers and the best way for you to market your product, service or brand to them. Segmentation helps you create a customized marketing plan that specifically targets those who are most likely to buy from you.
For example, if you’re a travel agency, you might want to target people who have traveled abroad or who want to go on an upcoming trip. Or if you run a restaurant, you could target people with specific dietary needs.
Customer segmentation helps marketers improve the performance of their marketing campaigns by identifying the right audience at the right time. By understanding your customers’ preferences and behaviors better than anyone else, it’s possible for marketers to generate more qualified leads, higher conversion rates and lower costs per sale.
Here are some steps you can take to improve the performance of your marketing efforts:
Step 1: Define your customer segments
The first step to using customer segmentation is to define your audience. This can be done by understanding the demographic information and psychographic traits that make up your target market. By doing this, you will be able to build a clearer picture of who exactly your customers are and what they want from you. You can also identify which marketing campaigns are most effective for reaching these groups or your target market. For example, if you’re selling products that cater to men aged between 20 and 35, then it’s important that you use a marketing campaign that targets this age group.
Step 2: Create a segment profile for each customer segment
In this step, you will create a segment profile for each customer segment so that you can track the performance of your campaign and identify customers with different preferences. For example, if you want to sell more widgets to women over 30 years old, go ahead and create a segment profile for that customer group.
Step 3: Test your messages and ads against each segment profile
Once you have identified the most likely customers, it’s time to test your messages and ads against each segment profile.
To do this, you need to perform a split-test. This is where you send out different versions of your message to different groups and track which message performs best.
For example, let’s say you have just identified that your target audience is men between the ages of 21-30 who earn more than $50,000 per year. You can then create messaging that targets these people and test them against the same group who earn less than $50,000 per year.
Step 4: Continuously collect and analyze customer data to update segment profiles
The most effective way to keep your customer base up-to-date and fresh is by collecting customer data. The more you know about your customers, the better decisions you can make for them.
For example, if you notice that a particular customer’s needs change on a regular basis, it’s important to adjust your products or services accordingly. This is where segmentation comes in handy.
Step 5: Measure the performance of your campaign against your segment profiles
Measure the performance of your campaign against the segment profiles that you have created. This will help you see which segments are performing best and which are underperforming. If you notice that a particular segment is underperforming, then you should re-evaluate what you are doing to ensure that they have an opportunity to convert.
Step 6: Rank each segment in order of importance, from 1-10 (10 being most important)
It’s time to put the segments together and come up with a list of key messages for each. In other words, you’ve now got a list of individual segments that have been identified and ranked by importance. Now it’s time to take all this data and put it together into one cohesive message.
Step 7: Refine your strategy based on feedback
This is where you start to see the real power of segmentation. It enables you to identify, understand and prioritize what matters most to your customers. This is critical for establishing a successful marketing strategy, because it allows you to focus on the right things at the right time.
For example, if a certain segment of customers responds well to offers on social media channels but another segment prefers email newsletters, these two groups can be catered for separately.
Step 8: Continuously improve
Customer segmentation is an ongoing process, so be sure to revisit your segments and refine your approach over time based on new data and feedback from your customers. This will ensure that your marketing efforts remain effective and relevant over the long term even after you are done with product development.