Whether you work for an up-and-coming startup or an established corporation, you have to ask yourself if you know who your customers are. No matter how successful a company is, if you don’t understand how to market to the people who buy your product, you’re losing sales.
What Is Customer Segmentation?
Customer segmentation is the practice of dividing a company’s customer base into similar groups for marketing purposes. Types of market segmentation include age, gender, interests, spending habits, income, and more.
Marketing segmentation is a way to discover your customers’ unmet needs. By targeting groups whose needs are not currently being met by your competitors, you can fill the void with new products or services that the customer base is looking for, creating effective niche marketing.. If a business can customize its marketing for specific audiences, they not only gain once missing opportunities to draw in more shoppers but they also realize an increase in sales.
A Basic Customer Segmentation Process
Customer segmentation depends on creating groups of individuals that are looking for things that have yet to be offered. By finding these niches, a business can create a marketing campaign promoting tailored offerings to these groups.
To do this, you need to find the customer segments by doing the following:
Understanding the target markets interests and needs
Defining subgroups within larger groups, for example, age, gender, income, and location
Discovering the needs of the subgroups
Naming the customer market segments
Creating marketing strategies to promote products that suit the needs and interests of each segment
Going back and revisiting the target audience’s behavior on a regular basis to determine is marketing strategies are working and adapt marketing to changes in the targeted segments
Market Segmentation Benefits
If market segmentation is done properly, the positive impact for a business comes on many fronts. Not only does it help with the allocation of marketing resources but also pointing product development in a more beneficial direction. It can lay the path for maximum value for all customers through targeted marketing and pricing.
Using market segmentation also offers up-sell opportunities if you can discover buying trends within a group. Perhaps a certain customer segment is known to bundle items, allowing you to work in marketing that takes that into account. It can also wean out problematic groups of customers such as those with high product return rates. If you have a demographic of customers who are constantly buying then returning, that isn’t helpful for you as a seller.
Market segments can also be tagged according to the types of products sold, allowing you to assess the success of your product line. If there are a lot of cheap shirts sold and no one comes back to buy them again, consider the feasibility of that particular line of sales.
A top segment that is often missed is the idle customer. It costs more to get a new customer on board than it does to bring existing customers back so finding those who have already bought something but are now idle is an easy sell. They offer growth in sales with more profitability since less capital is required to get them to purchase.
So, watch out for negative segments and jump on the chances that are offered in the positive segments. Specific market segmentation examples include:
Customer lifetime value (LTV), profit potential with a long term customer
7. Remesh – Offers the ability to talk to a live audience then analyze answers for a better understanding of the audience.
8. Perka – Now under the umbrella of Clover provides loyalty marketing answers for businesses
9. Fixel – Focuses on determining the customers that matter through ranking website visitor’s engagement.
10. Justuno – Captures, personalized messaging, and visitor analytics letting you convert visitors into customers.
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Segmentation marketing is easy in theory but finding and analyzing the data takes some work. Having a community to offer opinions and commentary on the process may take some of the guesswork out of it.
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