How Can Customer Segmentation Improve Your Marketing Campaigns?

If you’ve read Aesop’s Fables, you’ll have certainly come across one of the Greek fabulist’s most famous sayings, “If you try to please all, you please none.” This is such an important life lesson for everyone. However, it's particularly pertinent to marketers.

When you try to build a brand image that’s for everyone, it won’t be for anyone. That’s why it's important to create marketing campaigns that are designed specifically for groups of people who share certain traits that you can appeal to. These appeals will then land more powerfully on the target audience, creating opportunities for conversion.

One way to make this happen is through customer segmentation. This article explores how customer segmentation benefits your brand and why you need to do it.

What is customer segmentation?

Customer segmentation is the process of segregating your target customers into various sub-groups. The individuals of each of these groups share a specific trait or collection of traits.

Examples of customer segments

Companies segment customers on 7 basic criteria –

• Demographic features
• Geographic residence
• Psychographic traits
• Technographic preferences
• Buying behaviors
• Distinct needs
• Value sought through the purchase

Stripped down into simpler terms, your customer segments typically are –

• Age of buyer
• Gender & sexual orientation
• Profession/occupation
• Language spoken
• Political affiliation
• Family type
• Household income
• Type of transport used
• Eco-consciousness
• Disability
• Religious/cultural attitude
• Price sensitivity
• Risk aversion tendency
• Location of work/home (country/state/city/neighborhood)

….and so on.

As a brand marketer, you’ll be clubbing people who share the same traits so as to market your products and services to them most effectively. For example, let’s say you’re a used car dealer. You segment your customers and you find your prospects fall into two groups –

• 20–27-year-old single parents, with kids under 5 years, earning under 15K a year.
• A couple whose median age is 30-35 years old, with white-collar jobs and earning 70K a year.

Now you’ll know that the former will be more likely to buy used cars than the latter. You can focus your marketing resources on the right target group, ensuring you get the most sales.

Marketing advantages you get through customer segmentation

Apart from the obvious benefit of getting the highest number of sales closes, customer segmentation also offers other benefits to your brand campaigns.

These include –

You find out what is most important to your target customers

Customer segmentation helps you find out what your customers actually want from you. Low price? More features? Subscription-based memberships? Better discounts? That way, you can customize marketing campaigns and offers that will be enticing to them.

You are able to identify and introduce product updates that prospects will love

Different customer segments will want different product features. For example, people who are price conscious may be okay having only the core features available in products. On the other hand, those who’re value-seeking would want you to give a tech-savvy product chockful of features. Customer segmentation can also help you pinpoint how the feature should function, look, or benefit the users, enabling you to design your product more mindfully.

You can create marketing content that will appeal to the sensibilities of the target audience

Not everyone responds positively to the same type of ad content. With customer segmentation, you can learn about the psychological triggers they respond to, what drives them to certain actions and what the archetype behind their needs is. That way, you can create an ad copy, write a blog post, or curate a social media wall that aligns with their sensibilities.

You reduce the time and resources wasted in filtering out poor quality leads

When you don’t segment your target audience, you may end up attracting leads that aren’t of the best quality. While the leads may seem interested in your product, they may not be the right long-term customers for your company. You may end up spending too much nurturing the wrong leads. Customer segmentation can prevent this from happening.

You will be able to identify smaller or niche markets that otherwise may be invisible

Sometimes, when our target markets are large, we may not be able to identify niche markets that are nestled within these larger markets. Customer segmentation is all about a series of permutations and combinations, involving different categories. You may chance upon a target market that is small and has high potential, but which has been neglected by other brands. You can then cater to these niche and invisible markets, perhaps even gaining the first-mover advantage in that niche.

You can find out if a particular target group offers high CLV or not

Remember how we discussed how customer segmentation can help nurture qualified leads? Well, it can also help you identify the lifetime value a particular type of customer can generate for your brand. By mindfully choosing cash cow prospects, you can ensure the longevity of your company.

You can learn how best to reduce customer attrition over time

Customer segmentation gives a great picture of what customers want and expect from the brand. You can then create a customer profile/avatar, that you can use as a mold to create and test products for. That way, you’ll always be ahead of the curve, developing content, products, and services that will always keep customers coming back. This way, you can reduce customer attrition.

You can increase the longevity of your brand by evolving with your target audience

Finally, customer segmentation also gives you a direct look at how a particular group of customers engages with your brand, your competitors, and the industry at large. You can identify new social media trends or buying behaviors that are unique to them and may threaten your current marketing strategies. You will then be able to react to them smartly. That way, you evolve with your customers and withstand the test of time.