Customer Segmentation Strategies for Growth
Ginny Grimsley, Dec 10, 2021 8:00:00 AM
Customer segmentation is the process of grouping your customers together based on the factors (e.g. demographics, industry, income) and traits (e.g. personality, interests, habits) they share so you can serve them better.
When you seek and maintain consideration for your customers in this way and actively tailor your marketing, sales, and customer service for them, all of your customers benefit.
Here’s everything you need to know to create a customer segmentation strategy that works—plus a few whys for good measure.
Top 5 reasons to invest your time on customer segmentation
- Understand exactly what your customers need so you can create the right content for them.
- Improve your customer service and support by preparing for what customers need in advance.
- Increase brand loyalty through custom interactions.
- Communicate with customers via their preferred channels and platforms.
- Identify new opportunities for products, support, and service.
6 most common types of customer segmentation
Grouping customers based on their basic human traits like age, gender, income, education level, occupation, and marital status is helpful in determining how to provide them with the best sales and service experience.
Bonus: here are some helpful thoughts on inclusive language.
- Know which populations within your audience have fewer advantages, are marginalized, and/or receive bias.
- Use words that acknowledge people’s humanity.
- Language is constantly evolving. Try your very best to use language preferred by the group you’re creating content for.
- Universal consensus on terminology may not exist. Learn how distinct groups in your audience/customer base prefer to self-identify.
- Describe a person specifically only when it’s appropriate to do so.
- Use adjectival forms (e.g., older adults) or nouns with descriptive phrases (e.g., individuals living in poverty) rather than labels (the elderly, the poor). Remember, people first, descriptions last.
Your business may decide to group customers by the country, state, city, and town in which they live. This can help you understand the region, what needs people have there, and how you can best reach them.
The psychographic model of grouping customers places people in groups based on personality, attitudes, values, and interests. Though this is harder to identify and understand than “hard fact-based” information like age or geographic location, the act of empathizing with your customers in their way makes your business stronger all on its own.
Group your customers by which of them use mobile, desktop computers, or don’t use computers at all. If you provide apps and software, group them by which ones they prefer. This helps you understand how to design your website better, and how to get your products to people who love them but don’t use computers, etc.
Group customers by their frequent actions, feature or product use, and the habits they’ve exhibited in regards to what your business offers.
Groups customers by which products or services you offer that they require.
4 steps customer segmentation strategy
1. Set your goals.
Think about which outcomes you’re hoping to achieve so you can develop the rest of your strategy in a way that will help you accomplish them.
Ask yourself why you are spending time on segmentation and what you hope to derive from the process (see the top 5 reasons above for ideas).
Remember: this is unique to YOUR business.
For instance, the number of goals you have should be based on your business’s size, type, and industry as well as your overall buyer personas/customer avatars.
Your specific goals could be relevant to RevOps (e.g. marketing, sales, service) or for one department. Definitely use your company’s specific traits and business needs to begin sketching out your customer segmentation goals.
2. Choose which customer groupings apply to your business.
Look back at the 6 common customer segmentation models to determine what kind of groups work for your business and the goals you outlined in step one.
For example, if you want to create targeted ads for your UK followers and customers to increase conversions in that region, you can geographically segment your customers to help you understand how to create those campaigns to the utmost success.
Bonus: here’s extra knowledge about organizing and segmenting your contacts using HubSpot’s list tool here.
3. Reach out to your customer segments.
Once you have all your customers segmented according to your business’s goals, decide how you’ll create content, ads, and campaigns for them.
Make sure that all the departments in your organization (e.g. marketing, sales, and service) understand why and how your customers are segmented in this way so that they can benefit from this strategy, too.
- Marketing can tailor and customize content to increase leads and brand awareness.
- Sales can reach out to and communicate with potential customers in the right way, at the right time to increase conversions.
- Service can prepare materials and resources for customers based on specific challenges they are most likely to experience.
4. 3 ways to run customer segmentation analysis.
- Analyze data from your CRM reports from before the beginning of your segmentation strategy to provide insight into the way you’ve organized your customers. Use it to shift and update the groups you’re focusing on and how they’re organized.
- Ask your teams how they think it’s working and experiment with new ways to group your customers for the most value to them.
- Gather feedback from your customers by conducting surveys to improve segmentation itself. Asking customers about which of your product features they use most. Information you gather from them will allow you to provide them with what they really love about your business.
Customer Segmentation Software
There are a number of options when it comes to customer segmentation software — here are five of the most popular to help you get started.
When you understand exactly who your customers are, it’s much easier to attract, engage, and delight them, and a customer segmentation strategy works to help you organize and manage your company’s relationship with them.
The best way to make sure you serve your ideal customers is to show up for them exactly where, when, and (especially!) how they need you to show up.
To do that, you have to know the traits, pain points, expectations, etc. they share, but also how they’re unique from each other so that you’re not leaving anyone out.
If you think about all the ways you shift the way you communicate with people in your lives—and how effective that is—you realize that your messaging is more effective when you adjust in the very same ways for your customers to meet their expectation regarding communication, support, and more.
Want more great ways to reach your customers exactly where they are? Ask us! It’s what we do.