The beauty of modern marketing is that you can reach a large audience of potential customers with just a few clicks, regardless of location. Drive them to your site, give them a reason to stay, and—voila! You have the makings of a successful marketing campaign.
If only it were that simple.
As the audience for your product or service grows, so does the variation in what they’re looking for. Without careful planning, your marketing efforts could fall on deaf ears (or annoy potential customers).
And because most people research a product or service online before committing to a purchase, your website is often the first – and last – chance you have to make a good impression.
Segmenting your strategy prevents this by dividing your market into distinct groups with shared characteristics. This allows you to target each group with laser precision, increasing the chances that they’ll stay on your site and hopefully make a purchase.
This guide shows you how to create a customer segmentation strategy to help you take your digital marketing campaigns to the next level.
What Is Customer Segmentation?
Customer segmentation is the process of dividing a customer base into groups of individuals that are similar in specific ways. Characteristics used to create segments can be demographic, geographic, behavioral, or psychological.
It’s important to note that customer segmentation is not the same as market segmentation, which divides a market into distinct groups.
The main difference is that market segmentation looks at the big picture, while customer segmentation looks at individuals. Market segmentation is about identifying opportunities, while customer segmentation is about understanding and targeting individuals.
For example, an eCommerce platform selling shoes to men, women, and children would need to create different marketing campaigns for each market segment. But, they would also need to develop separate customer segments within those groups — such as ‘men’s running shoes, ‘women’s high heels, and ‘children’s school shoes.
Marketers have recently started segmenting their customers based on psychological factors, such as lifestyle, personality, and values.
This has become possible due to the advent of big data and machine learning advances, allowing marketers to track and understand customer behavior at a much deeper level.
Whatever method you choose to segment your customers, the goal is always to create groups of similar individuals that you can target with customized messages and offers.
What Are the Benefits of Customer Segmentation?
In a world where the average person is bombarded with up to 10,000 marketing messages every day, it’s more important than ever to create a strategy that cuts through the noise and speaks to your target audience personally.
Instead of a one-size-fits-all approach, customer segmentation offers the following benefits to digital marketers:
- Better personalization: Customer segmentation allows you to create tailored messages and offers for each group of customers, making them feel like the campaign has been designed specifically for them.
- Better customer experiences: By understanding what your customers want and need, you can create a better overall experience for them, from when they land on your website to when they make a purchase.
- Improved ROI: By targeting your marketing efforts at those most likely to convert, you can increase your chances of seeing a positive return on investment.
- A competitive advantage: In a world where everyone is fighting for attention, those who can segment their customers and create personalized experiences will have a clear advantage over those who don’t.
As Steve Jobs famously said, “People don’t know what they want until you show it to them.”
By segmenting your customers, you can show them exactly what they want and when they want it, increasing the chances that they’ll stick around and maybe even make a purchase.
What Does a Customer Segmentation Strategy Look Like?
A solid customer segmentation strategy combines data from various sources to create comprehensive customer profiles. These profiles are then used to develop targeted marketing campaigns more likely to resonate with each segment.
Segmentation also involves ongoing testing and optimization to ensure your campaigns are as effective as possible.
Ultimately, a successful customer segmentation strategy will allow you to create more personalized, relevant, and effective marketing campaigns that speak to your customers on a human level.
Let’s explore a few of the most critical elements of a customer segmentation strategy:
Buyer Personas
Segmentation starts with a solid understanding of your buyers. Without this foundation, creating targeted campaigns that resonate with your audience is impossible.
The concept of “buyer personas” might be so 2010, but it’s still one of the most critical elements of a customer segmentation strategy.
A buyer persona is a semi-fictional representation of your ideal customer based on data from your existing customer base.
For example, let’s say you’re a women’s fashion retailer. Your buyer persona might include information such as:
- Demographics: Female, aged 25-34, single
- Location: London
- Income: £30,000-£40,000
- Lifestyle: Career-focused, social media-savvy, interested in fashion and trends
Once you understand your buyer persona well, you can start thinking about how to segment them.
For our women’s fashion retailer, some possible segmentation criteria might include:
- Age: How do purchasing habits differ between millennials and Gen Xers?
- Location: Do city dwellers shop differently than those in rural areas?
- Income: What do luxury shoppers want, and how can we appeal to them?
- Lifestyle: What do busy working women need from our brand?
- Context: What are the different needs of shoppers buying for special occasions versus those simply stocking up on basics?
These are just a few examples of how you can segment your customers.
The important thing is to start with a good understanding of your target audience and then experiment to see what works best for your business.
Behavioral data
In addition to buyer personas, behavioral data is another crucial element of customer segmentation.
Behavioral data includes everything from purchase history and web browsing behavior to email engagement and social media interactions. This data can be precious in understanding how your customers interact with your brand and what they’re looking for.
For example, let’s say you run an eCommerce store selling handcrafted jewelry. Using behavioral data, you might segment your customers based on:
- Recent purchase: Customers who have purchased in the last month, six months, or year
- Web browsing behavior: Customers who have visited your site multiple times but have not made a purchase
- Email engagement: Customers who open and click through your emails
- Social media interactions: Customers who mention your brand on social media
You can even take things further by segmenting your customers based on their “engagement score.” This metric takes into account all the different ways a customer interacts with your brand, including website visits, email clicks, social media interactions, and more.
The idea is that the more engaged customers are, the more likely they will make a purchase. By segmenting your customers based on their engagement score, you can create targeted campaigns more likely to result in a sale.
Personalization
Segmentation and personalization go hand-in-hand. After all, segmentation aims to create more personalized, relevant, and effective marketing campaigns.
Personalization is more than just using a customer’s first name in an email. It’s about sending the right message to the right customer at the right time.
For example, let’s say you have a segment of customers who haven’t purchased in six months. You might send them a personalized email with a special offer or create a targeted social media campaign for this group.
On the other hand, if you have a segment of customers who frequently engage with your brand, you might want to create a loyalty program or VIP customer group just for them.
The possibilities are endless, but the important thing is to think about how you can use segmentation to create a more personalized experience for your customers.
Marketing automation
Not just segmentation and personalization can help you improve your marketing campaigns. Marketing automation is another powerful tool that can take your campaigns to the next level.
Marketing automation isn’t a specific platform or software but a term used to describe the process of using technology to automate marketing tasks.
Marketing automation can include everything from sending email campaigns to creating targeted social media ads.
The idea is that by automating these tasks, you can free up your time to focus on other aspects of your business. And by using marketing automation, you can create more personalized, relevant, and effective marketing campaigns.
For example, let’s say you want to create a segmented email campaign. With marketing automation, you can set up the campaign to automatically send the right email to the right customer at the right time.
You can even use marketing automation to create dynamic content. That is, content that changes based on the customer’s interactions with your brand.
For example, let’s say you have a product page on your website. Using dynamic content, you can create a page version specifically designed for customers who have visited your site multiple times but have not made a purchase.
This page version might include a special offer or a specific call-to-action designed to convert. By using dynamic content, you can ensure that each customer sees the most relevant and effective version of your product page.
Recommended: What is Marketing Segmentation & Why It’s Important Marketing?
A typical segmentation strategy might require platforms like:
- Marketo
- HubSpot
- Pardot
- Eloqua
- Marketing Cloud
- Zapier
Depending on your needs, you might also need a CRM (customer relationship management) system like Salesforce, Zoho, or SugarCRM.
Diverse buying journeys
It’s important to remember that not all customers are the same. This means that there is no one-size-fits-all approach to marketing. Instead, create various marketing campaigns to reach customers at different stages of their buying journey.
When we say “journey,” we’re referring to the path a customer takes from becoming aware of your product to making a purchase. This journey is different for every customer, so creating a diverse range of marketing campaigns is essential.
For example, let’s say you have a customer in the early stages of their buying journey. They might not be familiar with your brand or product and might not be ready to purchase.
In this case, you might want to run an awareness campaign. This type of campaign aims to introduce the customer to your brand and product. You might do this with a display ad or a social media campaign.
If you target this customer with a purchase-focused campaign, they’re likely to be turned off by it. That’s why it’s crucial to create a customer segmentation strategy.
Robust analytics
Segmentation without data is like trying to hit a moving target. That’s why it’s so important to have robust analytics in place before you start segmenting your customers.
There are a few key things you’ll want to measure:
- Website Traffic
- Engagement metrics (e.g., time on site, pages per visit, bounce rate)
- Conversion rate
- Customer Lifetime Value (LTV)
You’ll also want to make sure you have a way to track customer behavior. This might include tracking their journey from awareness to purchase.
You can use a few different tools to track this data, including Google Analytics and Mixpanel.
These platforms will give you the insights you need to create a successful customer segmentation strategy and improve your marketing campaigns.
Segmentation is the future of marketing
In today’s competitive landscape, creating a customer segmentation strategy is more critical than ever. By segmenting your customers, you can make more personalized, relevant, and effective marketing campaigns.
To create a successful customer segmentation strategy, you need to have robust analytics in place. You also need to create a diverse range of marketing campaigns that are designed to reach customers at different stages of their buying journey.
The right tech stack will also play a vital role in your success.
Ultimately, the goal is to create a strategy tailored to your specific business needs. Hopefully, this article has given you the insights you need to get started.