When it comes to doing business with you, 64% of customers expect a tailored experience. That means your offers and messaging must apply to their tastes or else they won’t take notice of you. Customer segmentation is the only way you can make it work for both parties.
Along the customer journey, your goal as a business is to improve open rates, click rates and conversions. Targeting specific customers with content and offers that reflects their behaviours and interests is what will make this work.
Creating your segments isn’t something that can be done off the cuff. To ensure campaign performance improves and goals are hit off the back of that, you need to spend time on it. That means digging into your customer data and understanding them on a deeper level.
The impact that comes with putting in this work requires a lot of background work from the very start. But businesses often struggle with where to start.
The Role of Data in Customer Segmentation
Modern marketing is driven by good quality data. And when it comes to customer segmentation, your data is front and centre. To group particular groups of customers together, you have to really understand them.
Segmentation requires accurate first-party data to work properly. That means having and understanding information on customer behaviour, spend, or interests. Generally, it happens towards the end of the data management cycle, as you prepare your audience for activation.
Recently, the development of the idea of the Single Customer View (SCV) has taken the digital engagement space by storm. Put simply, you should be storing the data you have on a particular customer in one place. This practice makes segmentation much easier for you to carry out in the long run. And, with multiple data sorts feeding in, your segments will be far more in-depth.
Providing the ultimate personalised experience is what keeps customers coming back. Using your data for customer segmentation opens up your ability to personalise your messages to them.
Here, personalisation comes in two forms:
- Ensuring the actual content of your campaigns is individually relevant (their names, account details, products they’ve bought etc)
- Only sending them messages that are relevant to their interests or where they are in the customer life cycle.
When it comes to using your data effectively, segmentation is the best way to put it to use.
Building your Segments
Customer segmentation can get more and more difficult as businesses begin to scale. But it doesn’t have to be overly complicated.
There are three core elements you should consider when starting off.
These are the reasons why you want to put a particular customer into a particular segment. The range of conditions are massive and essentially come down to how you want to put your segments together.
When it comes to what conditions to include, you don’t have to go too deep. You can concentrate on the type of device your customer is using, the source of their attribute, or their general behaviour with your business. Those are just a few examples, the options are really up to you.
One of the most important things to include when it comes to customer segmentation. These are “tags” that you apply to a customer’s profile. Again, the attributes are chosen by you and there are plenty of options out there. But they should be more descriptive than your conditions. You can concentrate on:
- Demographics – Age, Gender, Location
- Behaviours – Pages viewed, number of purchases, content downloaded/viewed
- Psychographic – Lifestyle, Opinions, etc
The attributes you choose are then used to segment your customers even further for micro-targeting.
Events frequently serve as the launchpad for a campaign. Additionally, they can be used to include or exclude customers from a segment. Any activity a user performs on your website or app qualifies as an event.
Creating Effective Segments
When it comes to creating effective, dynamic segments, there are two common ingredients that businesses tend to use.
Take multiple data points to create highly targeted groups and make sure you have a very well-defined purpose in mind for each segment.
Goals & ROI
You need to make sure that your time, resources, and money isn’t wasted on things that don’t help you drive your business goals. So keeping that in mind, that has to be the starting point when it comes to customer segmentation.
Ensure that your goals are quantifiable in some way. It could be directly attributable revenue from a campaign, driving traffic to your website or app, or regaining a lapsed customer. Only then should you start to apply rules to identify the ideal segment, before creating the actual campaign itself.
Once your goals are clear it will be easy to understand where there are gaps in your data, if there are any. You might find that you don’t have the relevant data to create segments that you need. If that’s the case, don’t panic, but do make sure that you address it and make it a priority.
The most effective marketers use the traditional Boolean and/or rules to create segments based on multiple conditions. For instance, you might create a segment of Apple device users who are interested in boxing and haven’t used your app in the last three months.
With this level of detail, you can develop highly personalised campaigns that connect with the target audience and drive key business goals. Layering in multiple conditions means that your messages and campaigns are hitting all the right notes when they get sent out.
The Usual Customer Segments
Most businesses will have their own ideas towards what kind of customer segmentation they create. However, here are a few examples of some common ones you’ll find from place to place.
Potential Loyal Customers
These are the types of customers that have the potential to be very important to your business. They are highly likely to become part of your loyal base, but just aren’t quite at that stage yet.
They have probably made a handful of purchases with your company and don’t show any signs of that stopping.
This segment should be nurtured into becoming loyal customers through membership/loyalty schemes. This keeps them keen on continuing to buy from you and leads them down the road of loyalty.
Risk of Churn
A lot of customers interact with you at the very start of their journey with your business, only to fall off the radar. You can identify these customers by seeing how often they use your app or website. Or alternatively, have a look at whether they are still spending with you or not.
We know it’s more cost-effective to retain a customer than it is to acquire a new one. So, it’s crucial to engage these customers with a personalised incentive to make sure they don’t disappear for good.
They make regular purchases with you and tend to spend a lot with you too. These are your high priority customers, so treat them well and make sure they stay with you.
You need to make sure they feel important. So use customer segmentation here to give them exclusive offers on things that peak their interests. Early access to new products or services usually works well here. This can be done with a view to turning them into advocates on social media or review sites.
You should also ensure you are communicating with these customers on a regular basis and make sure they don’t feel forgotten. Failing to do so might lead to them feeling as though you don’t care as much as you should. Customers won’t forget that.
Despite your best efforts, some customers just aren’t interested in sticking around. It’s part and parcel of operating in such competitive markets.
But you shouldn’t get in the mindset of them being totally gone and forgotten. There’s still a window of opportunity to engage churned or inactive customers.
You can use customer segmentation to create groups that allow you to send highly targeted win back campaigns. These more than likely include offers or discounts that you wouldn’t want going out to all of your customers.
However if a certain amount of time has passed and there’s been no activity or signs they will return, you’re better off just deleting them from your database. This is a core principle of good data management.
When you’ve gone ahead and created your customer segments, start making campaigns that apply to them.
As a business, you have free reign on what type of segments you created and what customers should fall into those particular categories. As long as you have the data to support your case.
It’s time to get creative and win your customers through customer segmentation.
If you want to hear more about how Xtremepush can help you with your data consolidation and customer segmentation efforts, get in touch with the team to book a demo today.
Xtremepush is the world’s leading customer data and engagement data platform. We work with various top brands across multiple industries. Schedule a personalised demo of our platform to learn more about how we can help your brand drive repeat customers and increase revenue.