Giving customers exactly what they want and need is a surefire way to boost sales and customer satisfaction. It makes it easier to drive purchases as customers don’t have to think too much about whether or not they want to buy. One way to create this immediate interest and a shorter sales cycle is by using customer segmentation.
What Is Customer Segmentation?
Customer segmentation is the process of putting your customers into categories based on their interests, activities, or past purchases. It breaks your larger customer base into smaller sections so that you can target audiences based on the specific details of their segment.
For example, a spa and salon might segment their customers into those who regularly come in for hair cuts and those who come in for massages. While they are both customers of the same business, they will be interested in different offerings from the brand.
Why Is Customer Segmentation Important?
Customer segmentation is important because it allows a business to make their marketing more effective, give their customers more of what they want, and drive more sales.
The marketing is more effective because it is more targeted.
Through customer segmentation, you can avoid using vague language and messaging that is intended to speak to everyone, but actually speaks to no one. Instead, you can use specific messaging that directly references certain needs and wants and resonates more deeply with audiences.
For example, the spa and salon could create ads for new type of aromatherapy that can be added to a massage. Instead of showing the ad to their entire customer base, they can show it only to massage customers who are most likely to be interested in the new add-on.
Customers get more of what they want and need.
Just as customers see more relevant messages, they also get introduced to more relevant products and services. With customer segmentation, you can introduce audiences to the products and services that are most likely to fill their needs and wants.
For example, customers that visit the spa and salon for regular hair cuts might need new hair products. Targeting this segment of customers when there is a deal on hair care products gives the customer a path toward what they want and need.
It increases sales and customer satisfaction.
When marketing messages are targeted and promoting things that customers want and need, they are effective. They drive purchases and impulse buys and lead to higher customer satisfaction. Econsultancy reports that when someone has a more personalized shopping experience:
- 49% purchased a product that they did not initially intend to buy
- 44% will be likely to become a repeat buyer
- 32% will be likely to leave a positive review
So, What Is Personalization?
Customer segmentation and personalization are often lumped together, but they are slightly different.
- Customer segmentation typically refers to targeting a group of similar customers.
- Personalization typically refers to targeting a single customer.
Personalization targets an individual by using their name or referring to their specific activities (such as past purchases, pages visited on a website, last time visiting a location, etc.). The benefits and tactics for personalization are similar to customer segmentation. With personalization, the tactic are simply more individualized.
Ways to Use Customer Segmentation
Now that you know the benefits of customers segmentation, let’s look at a few ways you can use it in your marketing.
Track customer data. First things, first. You can’t use customer segmentation if you have no data to allow you to segment your customers and audience. So immediately set up a system that creates customer profiles and manages customer data.
Collect customer data. Once you have a system that can manage customer data, create incentives to get customers to join your system. You can collect customer data in a few ways. Some of the most popular approaches are to:
- Collect email addresses and phone numbers when customer check out.
- Use WiFi marketing to collect data from customers when they use your free in-store WiFi.
- Create a customer loyalty program.
- Add Facebook and Google pixels to your site to track customers who visit your website and social profiles.
Create buyer personas. A buyer persona is a detailed description of your ideal buyer. Create a few buyer personas that identify the top customers that you have or want to attract. From those descriptions, identify segments that you can individually target in your marketing.
Send personalized emails. Once you segment your list, launch email campaigns that specifically talk to each audience. Take it one step further and add personalization elements such as using the customer’s name in the emails.
Launch targeted social media ads. Social media ads allow you to hypertarget audiences based on details about their interests and habits. Segment your audience and then use ads to reach that specific group with highly targeted messages.
Create campaigns for up-sells and cross-sells. As you design your customer segmentation plans, create campaigns for up-sells and cross-sells. Consider what past purchases customers have made and promote offerings that are complementary to what you already know the customers has or enjoys.
Track your results and repeat what works. Like all good marketing efforts, don’t simply launch customer segmentation marketing campaigns and never look back. Track all of your data and regularly review it to identify the strategies and segments that produce the best results. Repeat what works and drop what doesn’t.
Boost Sales and Customer Satisfaction Even More
Customer segmentation is just one way to boost sales and customer satisfaction. For more tips and insights into how you can improve customer experience, build lasting brand loyalty, and increase your sales along the way, check out our free ebook.
The Ultimate Guide to In-Store Marketing helps you design your store and marketing strategies so they “wow” customers and give them a reason to buy and come back again and again.