Customer Segmentation: How To Perfect Your Segmentation Strategy For Real Growth

Trying to target 60-year-old Larry and 22-year-old Harry in the same way, is often a recipe for disaster.

Marketing in the modern age needs to be quite personal to be effective; it has to feel like it's made just for you.

Which is where customer segmentation comes in. 

Customer segmentation is how you create marketing efforts that are not just broad strokes trying to target anyone who would be interested in your business. It’s personal, and it’s targeted, which is why it’s effective.

Customer segmentation can be one of the most powerful tools for growth, giving you the power to target each segment of your customer base in a way that is cohesive and congruent with them.

Used correctly, customer segmeantation can drastically improve the ROI of all your marketing efforts while also improving customer loyalty. But before we get into it, let’s answer a really important question:

What is customer segmentation?

Hubspot defines Customer Segmentation as the following:

Customer segmentation is the process of separating your customers into groups based on the certain traits they share.

Segmentation offers a simple way of organizing and managing your company's relationships with your customers. This process also makes it easy to tailor and personalize your marketing, service, and sales efforts to the needs of specific groups. This helps boost customer loyalty and conversions.

The process of segmenting your customers is centered around four different key areas:

1. Demographic
2. Geographic
3. Psychographic
4. Behavioral

Utilizing a combination of these four categories you create different segments that customers fit into. This allows you to narrow the wide range of individuals that interact with your business frequently into smaller categories. It may be obvious by this point, but customer segmentation is not only useful for marketing efforts. Through the process of understanding these four areas, you gain a deeper and sharper awareness of the market you operate in, the clients in that market, and your competitors.Let's look at the actual process of segmenting your audience.

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Customer Segmentation Process Overview

The process of customer segmentation is a 5 step process (unless you're a Gameball user, in which case we make it so simple and efficient that it's basically a 2-step process 😉).

Let's break them down:

Collect customer data

This process can take various forms, and instead of making this article super lengthy, we'll refer you to this excellent Shopify article summarizing the process. Some of the recommended ways to collect customer data are:

• Sign-up Forms
• Social Media Monitoring
• Loyalty Program Data
• Email Marketing
• Third Party Data
  
  

Create main customer profiles

Once you have your customer data, you can see the information about each customer from the four key areas. This can then be used to create in-depth customer profiles. An excellent article to check out on the process of creating customer profiles is this one from Hubspot.

Determine main segmentation characteristics.

Once you have your customer profiles, determine the characteristics of each segment. Ask yourself the two following questions as guiding points:

A) What different customers are similar enough to be in categories together?
B) What customer segments are most aligned with your business goals?

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Divide customer base into different segments

Once the criteria for the segments have been determined, manually segment your customer base or use an AI-Powered tool Like Gameball to do it effortlessly and effectively. Our AI-assisted segmentation allows you to define the criteria for each segment and allow the AI to segment your user base into those automatically.

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Target customers based on segments for more growth

Let's dive a little deeper and explore the ways you can do this:

How customer segmentation can be used to grow

Saving the best for last. What do you do with these customer segments now that you have them, and how do you leverage this powerful tool to grow?

Segment-Based Marketing

The first way to utilize segmentation is to tailor different marketing campaigns to different segments. This allows you to fully customize the campaign to the exact specifications of that segment, everything from; the tone of voice, imaging, product shots, and literally anything imaginable. The power of this cannot be understated. It allows for a completely customized marketing experience that will boost sales and conversions across the different segments dramatically.

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Segment-Based Rewarding

Going layers deeper, you can begin to offer different rewards and benefits to different segments. Each segment will have different needs, wants, and desires; by tailoring the rewards and benefits offered, you will improve customer loyalty and, ultimately, conversions. Not to mention, when customers feel like they're getting the royal treatment, they'll be recommending all their friends to your business!

Segment-Based Messaging

Last but certainly not least, the power of sending segment-based messages that really focus on the type of language that each segment will respond to cannot be overstated. The difference between formal and sophisticated messaging for a segment of Baby Boomers vs. a laid-back and casual tone for Millenials. This change can be the difference between messaging that generates massive sales and conversions or messaging that flops completely.

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How To Use Customer Segmentation For Growth: 

1. Collect customer data 
2. Create main customer profiles
3. Determine main segmentation characteristics
4. Divide customer base into different segments
5. Target customers based on segments 
   

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Conclusion

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In conclusion, customer segmentation is pivotal in modern marketing, offering personalized approaches tailored to diverse consumer groups. By leveraging demographic, geographic, psychographic, and behavioral insights, businesses can transcend one-size-fits-all tactics, driving targeted campaigns that relate to customers and create powerful relationships. 

Gameball is a loyalty marketing tool designed to help you create personalized experiences for customers through segmentation. You can sign up today and start effectively targeting your customers for better, impactful results.