3 proven areas for successful customer segmentation

Find the targets for targeted marketing with customer segmentation

Customer segmentation is the process of grouping and managing those people together.  Be it tagging, flagging or managing data, customer segmentation makes the potentially complex process of targeted marketing much easier.

Targeted marketing and marketing automation are proven ways to improve your marketing results, but targeted marketing simply can’t happen without customer segmentation.

Finding the targets within your big data

When you apply a targeted marketing strategy, then you are targeting your marketing message at a specific type of person.  But they don’t just appear by magic.  You need a process of customer segmentation in place to identify each target.

Customer segmentation is a data driven process, so the definition of your ‘target audience’ can be limited by the data you have access to within your business, and that shouldn’t be restricted by marketing information.  It should include all customer data within your business.

Once you have access to this treasure chest of information, you open a new world of valuable information.

Unlocking secrets using customer segmentation

Your customer data is an asset, but the value of the customer data you hold can only be unlocked when you have a plan for it.

So let’s look at three proven areas where customer segmentation can help unlock secrets about your customer behaviour; your customer profile information, the marketing history of your customers and the spend history of your customers.

Successful customer segmentation #1 – understanding your customer profile.

By customer profile, we are referring to the personal information you hold about each customer.  In our experience, especially in hotels a lot of personal information is requested from customers, but in reality it’s data that is never used.

So the first rule when collecting profile information from customers or your audience is only collect information from customers that you really need.  It keeps things focused.  Making it easier for the customer to respond and it making it easier for you to handle the data that’s collected.

Let’s look at three examples of successful customer segmentation in practice.

For example, if you are selling jewellery online, then you’d be interested in understanding the reason for the purchase.

Based on that knowledge you’ll be able to create customer segmentation groups based on the reason for purchase.  Allowing you to understand what % of your customers are really not your customers but are buying for someone else.

If you are a hotel, then you’ll be interested in understanding the location of the customer and if the reason for the booking is business or pleasure.   

A lot of that information is captured by default, but it’s rarely used.  Using this data and creating customer segmentation around that information allows you to understand corporate opportunities and also the potential for meeting / event cross selling to that audience.

The birthday message.  It’s a powerful marketing tool that a lot of marketers want to put into practice, but you need the raw materials.  That means you need to collect the date of birth and you need to manage it.  Otherwise you’ll be spending a lot of time in excel spreadsheets with little reward.

Creating customer segmentation based on date of birth, will allow you to create a marketing process that will ensure that your targeted birthday offer is always on time for each targeted customer.

Successful customer segmentation #2 – understanding the marketing history of your customers.

The results from your marketing campaigns move faster than ever before, so it can be hard to keep up with what has been working and what has not.  Customer segmentation based around the marketing information and history from your customers can really help you to understand where successful marketing really lives in your business.

Let’s look at three examples of successful customer segmentation based around the marketing history of your customers.

Where do your customers come from?  Obviously understanding the ‘origination point’ of your customers is really important, but creating customer segmentation around where your customers came from can give you a real long term view on which marketing channels really provide you with the most value.

For example, if you are a SaaS business you might find that lots of people sign up for a free trial from a specific advert, but hardly any of them turn into revenue generating customers.

When did your customers sign up?  How long to your customers stay for?  Creating customer segmentation based around when people first signed up can be really useful for you to understand how long a customer is likely to stay with you.  And that is invaluable information.

How are your customers reacting to email marketing?  Email marketing tends to be judged by campaign rather by individual, however if you have a complicated email marketing programme with lots going on, then creating customer segmentation based on email marketing events can be a really useful measure for your overall marketing performance.

For example, imagine if you were able to monitor how many customers opened an email in the last 30 days?

Successful customer segmentation #3 – understanding the value from your customers.

Every sale is a win, something to celebrate.  But how many sales can you expect from each customer?  Customer segmentation based around the spend history of your customers is where you unlock real opportunities for growth and also understand when a customer really is a customer!

Let’s look at three examples of successful customer segmentation based around the spend history of your customers.

What people have bought.  Creating customer segmentation around what people have bought allows you to understand the relationship between the ‘unit’ sales and the ‘customer’ behind them.  It also allows you to identify how many people could be targeted to market the next product or service within your range.   A real revenue driver!

When your customers last bought?   Creating customer segmentation based the last purchase date of a customer is the starting point of a customer retention programme.  Growth tends to focus on new customers, so creating customer segmentation based on teh time since the last purchase will help you to identify how active your customers really are.  Do they stick or do they walk away?

How much money customers have spent with you?  Creating customer segmentation based on how much money each customer has spent with you can be a real eye opener.  To be clear we are talking about the total amount that a customer has spent, not an individual spend amount.   Creating customer segmentation based the total customer spend or customer lifetime value is a create measurement of customer loyalty and an overall measurement tool for marketing effectiveness.

Getting started with Customer Segmentation

So that’s a quick overview of what you can achieve through customer segmentation.  All of the examples provided in this blog post can be achieved through our marketing automation platform.

If you’d like more information on how we can help, with software or with your customer segmentation planning then please click on the button below to book a free 30 minute consultation