Who are your customers, and what exactly do they need? Not everyone has the same tastes and needs, but how can you find out? These are some of the many questions that businesses like yours ask themselves every day. Your clientele is so diverse that you cannot standardize it and send them the same promotions or offer the same services to everyone.

In order to personalize your service offering, you must segment your database and design different customer profiles, where you group them by age, gender, needs, and preferences. Today we will tell you how to do it in the right way. Here we go!

What exactly is segmentation, and what is it for?

This functionality tries to help you better understand the audience of your actions, as well as your menu of services and products. If you don’t know what type of clients make up your database and what their most recurring needs are, you will go in blind. By segmenting your database, you will be able to extract different customer profiles or clients segments that meet certain requirements.

For example, you can know:

• Which clients have already purchased some of your services and/or products, but have not yet tried other related ones, which they might like and complete their experience.
• Which clients have spent the most this year?
• Which clients have not come for X months and you want to prevent them from abandoning or going to the competition?

This information will help you focus on what really matters: offering your clients a range of tailored services and products, adapted to their tastes, needs or budget.

Thanks to this detailed segmentation of your database, you will not only be able to get to know your customers better but also use this information to launch specific marketing actions with promotions and information of interest, as well as automated welcome, follow-up, recovery messages, loyalty and even sales push with personalized proposals. This will help you connect with your client and always keep them On while achieving their loyalty and recurrence, which translates into more appointments, sales and profitability for your business.

Forms of segmentation

The great thing about customer segmentation is that you can classify your contacts in all possible ways. Generally, the limiting factor is the amount of data you can collect. Here are some examples of segmentation forms:

Segmentation by sector: Not all business sectors function in the same way. If you have clients from different professional areas, you can distinguish them to offer specialized products.

Geographic segmentation: if your products are very conditioned by areas, it may be useful to classify them by regions or even cities. An example of this is real estate agencies, which depend on geographically fixed products.

Behavioral Segmentation: Another way to segment customers is based on the actions they take. For example, if they make a certain number of Support requests, or if they visit your website. This form of segmentation is more complicated, but at the same time, it is a very powerful tool.

Demographic segmentation: In some cases, it may be useful to distinguish by age or group. For example, a clothing store can greatly benefit from distinguishing between men and women, or young people vs. older people.

This is how you carry out your customer segmentation in five steps

If you haven’t yet divided your customers into individual segments, follow this plan:

Step 1: Goal and Target Market

The first step is to define why or what you are doing customer segmentation for. For example, are you launching a new product to promote or are you refining your marketing concept?

Then think about what market you are looking at. This can be defined spatially, according to demographic characteristics (e.g. only men over 40) or type of customer (private customers vs. business customers).

Step 2: Characteristics for segmentation

There are various ways to identify suitable characteristics. A basic distinction is made between one-dimensional and multi-dimensional segmentation – depending on whether one characteristic or several are used for the classification.

One-dimensional features can be:

• Business or private customers
• ABC model (three customer groups with decreasing importance, for example, measured by sales)
• Purchase frequency (low, medium, high)
• Demographics

Your customers can be defined more precisely using multidimensional methods that are more complex. Examples are conjoint or factor analysis.

Step 3: Identification of customer segments

In the third step, you identify the individual customer segments. Customer surveys are ideal for this, with which you can query your existing customers about the characteristics defined in the previous step.

After the analysis, you form clusters with recurring answers and insights and assign respondents accordingly.

Step 4: Description of customer segments

Then describe in your own words what characterizes the defined customer segments. What problems and challenges do they face? What are their specific characteristics? What is the best way to reach them? 

Step 5: Measures to achieve goals

Now come full circle to your original question: What was your goal at the beginning of the customer segmentation process? Make the information obtained available to all relevant people and derive the right measures for your marketing.

Examples of customer segmentation

To get a better understanding, I will show you a simplified example from the private and business customer sectors.

An online candle shop sorts its customers according to one-dimensional characteristics such as products purchased and their age. A customer survey conducted by the owner shows that women over 40 regularly buy classic candles, women under 40 buy scented candles, and men gift sets. So you define these three customer segments, differentiate them from each other and actively use them for your social media marketing.

A professional sports club, on the other hand, classifies its corporate partners according to more complex characteristics such as the quality of the customer relationship or the motives for the sponsorship in order to evaluate the sponsorship structure. To do this, he draws on past experiences and individual surveys. The result flows into three customer segments. Each sponsor focuses either on advertising, the use of tickets or non-material support. Based on these findings, it is possible to focus on sales and marketing activities without wastage.

Eager to learn more effective methods that you can use to boost your digital marketing results? Join our digital marketing course today and unlock the full potential of personalized marketing strategies tailored to your business needs.