A Beginner’s Guide to Customer Segmentation

For anyone who is trying to step up their marketing in today’s economy, finding the right target market is vital to the success of the marketing campaign. Fortunately, new technologies and strategies are making it easier than ever to follow user engagement metrics and find members of your target audience within your existing customer base. This practice is called customer segmentation, and it has the potential to radically transform your business.

In this article we are going to take a look at customer segmentation, along with the benefits of segmenting your audience and best practices for doing so. It has been said that “marketing to everyone is synonymous with marketing to no one.” Our hope is that through customer segmentation, you will be able to market to your exact target customers instead of no one at all. Let’s get started.

What is customer segmentation?

So, what exactly is customer segmentation? Simply put, segmentation is the process of dividing your customers into distinct groups based on their needs and characteristics. By dividing up our customers, we can better serve each group with messaging particular to them. For example, you wouldn’t want to treat customers about to churn the same as newly acquired customers.

On a larger scale, however, customer segmentation is designed to find your core audience or ideal customer base. Typically, this core audience is loyal to your company and as long as you treat them well, they will return the favor. Keep in mind that even those these are your ideal customers, each segment plays a part in your overall strategy. Let’s take a look at those different segments now.

Creating buyer personas

When you divide your audience into segments, you should also create buyer personas for each distinct group. These buyer personas are fictional representations of each segment, each with different characteristics and preferred methods of communication. For instance, while your millennial audience might respond well to a text blast, older customers might prefer a good ol’ fashioned email.

Each of these personas will value different aspects of what you offer, and thus will need different marketing messaging to attract and retain their business. Part of creating these personas will putting together a plan of action for each. After all, it’s one thing to begin customer segmentation, it’s another to use it to make a difference.


No such thing as “one-size fits all”

Unfortunately, for businesses who have until now subscribed to the “one-size fits all” approach to marketing, that strategy will no longer work. In the same way that advertisers no longer have to guess which members of their audience are receiving their messaging, marketers can no longer treat all customers the same. Thankfully, tools like marketing automation can make this process less complex and easier to tackle.

That’s not to say that certain tools like social media and blog posts can’t be used to make a difference since they are more general knowledge. However, even with these tools, customer segmentation improves the process and makes more of a difference to your customers when you are targeting them specifically instead of lumped together.

customer personas

Benefits of customer segmentation

Now that you understand a few basics about customer segmentation, let’s talk about the benefits of segmenting for your company. Each of these benefits is possible if you are able to properly segment your audience based on analytics and then use those segments to better serve your customers. Let’s take a look.

Increase engagement

Customer segmentation increases engagement from your customers across the board. Since you are now able to provide catered experiences to different segments of your audience, you can deliver deals that they love directly to them. You can even use customer segmentation in combination with your customer loyalty program to help your customers earn rewards.

This is something that many companies are desperate for in a market where customer engagement is hard to come by. One of the best ways to keep customers engaged is to provide value to them at every turn in the customer journey. By segmenting your audience, you can better serve each part of your audience, leading to a better overall strategy.

Targeted marketing

Which leads us to the next benefit of customer segmentation: targeted marketing. Although targeted marketing has been popular before, with the internet and mobile app analytics, targeted marketing has reached new levels. Now, not only can you deliver deals that your customers will love, but you can select your time and method of delivery that best suits them.

As we mentioned earlier, a powerful and popular means of communicating with your audience is SMS marketing. Not only are you able to reach most of your target customers within minutes, but you can craft particular messages to strike the deal home. Use mobile marketing tools like this to boost customer segmentation and take your retention marketing plan to a whole new level.

Retain more customers

Finally, the last benefit of customer segmentation is the goal of most marketing plans: to retain more customers. By focusing on treating your customers well with different customer retention techniques, not only will you save money on customer acquisition, but you can grow your business through word-of-mouth referrals as well.

Customer segmentation is simply one tool in a series of others when it comes to customer retention. However, when you are able to put each of these tools together into an overarching plan, your marketing is that much more potent and powerful.

segmenting customers

Final thoughts

Through this beginner’s guide to customer segmentation we have been able to take a closer look at this exciting customer retention strategy. We have also been able to see some of the benefits of customer segmentation, as well as best practices for using mobile marketing tools for success. By segmenting and then treating each of these customers well, you might never have a problem with customer churn again.

We’ll leave you with this thought: if you were a customer, would you want the same messaging as everyone else, or would you want something just for you? Seems like a simple choice, right? Well make that choice for your customers. Commit to customer segmentation and give your audience the experience they deserve.

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