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Are You Segmenting Your Customers? Here's Why You Need To

  • by: Robin Johnston
  • On: 3, Jul 2018
5 min read

Every successful business relies on an effective marketing strategy, and that marketing strategy can only be effective when customer segmentation is implemented. Simply put, customer segmentation is the process in which business owners divide customers and leads into specific groups as it relates to marketing.

Why segment your customers?

Essentially, customer segmentation will narrow down your target audience, allowing you to market with more precision. Additionally, you are more likely to have a business that is successful because customer segmentation helps you understand your customers' needs and behaviors. With specific data bout your various customer groups, you can personalize your messaging and marketing for more effectiveness. Ultimately, without customer segmentation, your marketing efforts will come back void. For this reason, we're going to show you how to use customer segmentation for your business.

Types of customer segmentation

Customer segmentation can be divided into a variety of groups. However, some of the most common groups include: demographic, geographical, psychographics, and behavioral.

Demographic: This is market segmentation based on things, such as age, race, religion, gender, ethnicity, income, and education. Demographics is integral for marketing because it helps you create a profile of your ideal customer. From there, you are able to learn important things about your customers, such as their interests and preferences. This ultimately allows you to improve your marketing efforts by marketing to potential customers in a way that interests them.

Geographical: This is market segmentation based on location. You can geographically segment by areas such as cities, states, regions, and countries. Segmenting geographically has proved to be successful for many businesses. For instance, a business selling boating gear will find the most success marketing to the southern region of the U.S. Similarly, a company that sells winter sports gear will find that marketing to the northwest region will be best suited. Essentially, customer segmentation helps business owners to understand where their ideal customers are so that they have a better chance of selling their product or service.

Psychographics: This involves dividing your market into segments based on things such as social class, lifestyle, and personality traits. Psychographic segmentation is beneficial because it is one of the more personal ways to segment your ideal customers. What this essentially means is that you can gain a competitive advantage because you are placing yourself in the mindset of the consumer, which allows you to understand important things about your customers, such as their values. Ultimately, this can be leveraged to create a powerful marketing strategy to effectively target your ideal customers. 

Behavioral: This type of segmenting focuses on your ideal customer's spending and consumption habits, product and service usage, and desired benefits. Behavioral segmentation is extremely beneficial to businesses because it helps you understand why consumers buy certain products. Additionally, it allows you to tailor your product or service to meet the needs of your customers. Behavior segmentation will reveal purchasing patterns that consumers have. Ultimately, this poses a great opportunity for businesses to advertise a campaign or schedule a promotion during the time consumers are more likely to purchase. 

How to Collect Customer Data

There are various ways to collect customer data for your business. Some of these ways include, but are not limited to: 

Surveys: Running a survey on your business is an excellent way to collect valuable information on your customers. You can easily obtain a generous amount of data from a survey, such as age, gender, and location. 

Form Orders: If customers purchase a product or service from your website, you can request additional information such as contact details and their birthday. 

Rewards Program: Everyone loves a rewards program, which is why this poses a perfect opportunity for business owners to collect information from customers. 

Wi-Fi: If you have a physical location, providing Wi-Fi to customers is going to be one of the most easiest and convenient ways to collect customer data. Essentially, customers can seamlessly give information about themselves in exchange for Wi-Fi access. 

Why Customer Segmentation is Necessary for Business Owners

Customer segmentation gives business owners a better understanding of their consumers' needs. This gives them a competitive advantage because they have a better idea of who is interested in their product or service. Additionally, customer segmentation gives business owners the opportunity to revise their product or service to be more attractive to customers. Furthermore, having defined segments allows businesses to have a more effective marketing message to spark the interest of potential customers. Additionally, business owners can expect to see more engagement because customer segmentation gives valuable information about consumers that can be used to their advantage. If that's not enough, customer segmentation allows businesses to strengthen their position in the market. Ultimately, the precision of customer segmentation allows businesses to increase their customers' experience, improve their brand, and generate more revenue as a result. 

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