How Businesses Can Use Customer Segmentation in 2021

How Businesses Can Use Customer Segmentation in 2021

Trends | Mar 17, 2021

Did you know that 80% of customers expect a personalized brand experience? Customers are more likely to buy from a brand that tailors their shopping experience to directly target them.

What is customer segmentation?

Customer segmentation refers to the process that divides consumers into their own groups based on shared characteristics and traits so that businesses can correctly market to each group most effectively.

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Some of these shared characteristics can include age, gender, location, occupation and even relationship status.

Why customer segmentation is important for businesses

Customer segmentation allows businesses to be more efficient when creating strategies to market towards their consumers, benefiting both communication processes and product development.

Overall, it helps businesses:

  • Construct and deliver specifically targeted marketing messages to target customer segments to increase retention rates and sales.
  • Choose the correct channels to communicate with specific customers (email, phone, social media, television, radio, etc.).
  • Determine what products can be improved on or discover new ideas for upcoming products or services
  • Build better relationships with customers
  • Test options for product and services pricing
  • Focus on more loyal and profitable consumers
  • Improve customer service
  • Upsell or cross-sell other products or services

Below, we’ve listed some of the most important elements and types of customer segmentation for 2021, so your business can start benefiting from this useful process!

Flexible segmentation

Many businesses choose to rely solely on instinct to distinguish between groups, despite the massive benefits of customer segmentation. 

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A fairly newer trend called “flexible segmentation” relies on more real-time data, which lessens the chance of disruptions that regular client segmentation might have. The examples below are all elements of flexible segmentation.

The influence of social media

Businesses can gather relevant data and send corresponding messages based on customer social media engagement. 

It’s impractical to scale and personalize marketing based on a single customer’s engagement, so segmenting in relation to social media behavior is much more practical since it often mimics offline behavior as well.

Tracking customer behavior

Following a consumer’s behavior is critical for customer segmentation to be effective. There are multiple options for behaviors to track including website browsing, product reviews, repurchases and more. 

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Also remember that prioritizing profitable and loyal consumers can help your business raise its profits and improve its consumer relationships. 

The rise of automation

Sorting and organizing data can be a long and time-consuming process for businesses. Machine learning can streamline the process, allowing for more accurate content and a higher chance for customer retention. 

Automation removes the possibility of complications occurring during traditional customer-based segmentation and provides more methods of strategy.

How to segment customers

Firstly, it’s important for businesses to define their objectives and goals. One of the first steps of customer segmentation strategy is collecting as much data as possible, and it’s crucial to understand what type of data you and your team are exactly looking for, along with what criteria cannot be used to create a custom segment.

Collected data should be analyzed for patterns and organized into separate groups to create customer segmentation models. Information can come from field entries when a consumer purchased a product, or even from just how a consumer came to be in your system.

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On the other hand, important data such as consumer demographics like age and gender will most-likely need to be collected in other ways.

Some examples of this include:

  • Over-the-phone or face-to-face consultations
  • Optional or required surveys
  • Focus groups
  • Generic research using already published information about market segmentation

Looking to segment your customers? Our digital marketing experts can help devise a plan! Let’s talk!

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