As your customer or client base grows, it can be difficult to keep up with each of them on an individual level. Often, it helps to segment your clients with similar needs to maximize interaction efforts and increase retention. As a reminder, the main benefits of customer segmentation include:
Improved Customer Understanding: Segmentation helps businesses understand the diverse needs and behaviors of their customer base.
Enhanced Marketing Efficiency: Targeting specific market segments allows companies to tailor their marketing efforts, making them more relevant to customer pain points and needs. This leads to higher engagement and conversion rates.
Forbes Council (2022) offered some ideas on segmenting clients for optimum results. Remember, effective customer segmentation enhances both customer experience and business outcomes. Today CPR offers some thoughts from the experts for your consideration:
1. Identify Pain Points
Segmenting clients based upon their pain points or desired outcomes can help you to maximize your efforts. Once you have segmented appropriately, you may then develop attractive solutions that create both short- and long-term value to increase client retention.
2. Consider Psychographics
Segmenting clients is a fundamental part of an efficient business structure. When segmenting, we often think of demographics, such as age, gender, profession. However, psychographics (e.g., phases of life, desires, pains, behavioral patterns) are even more important. Two individuals with the same profession and same gender, but opposite behavioral patterns can be vastly different. One could become your best client and the other your worst client.
3. Start At The Level Of Entry
Begin segmentation at the level of entry into your business. Whether it’s a prospect making their first touch on your website for an initial free offer or a customer who has just made their first purchase, it’s valuable to automate segmentation questions. Many integrated tools will allow you to build this into your forms, creating instant segmentations to best communicate with your list.
4. Create Customer Personas
Go one better than segmenting by developing or designing personas. Segments are too high level and too far from the actual customer. Personas delve into customer needs, expectations, pain points, problems to solve and jobs to be done as well as what they hear, see, say, feel and more. Only when we understand the customer at this level can we design an experience that adds value for her and ensures she buys again.
5. Determine Where You'll Derive The Most Value
Customer segmentation is often key to better business success. Segmenting them can vary by industry or by the nature of the company (e.g., a startup versus a mature business), but the best answer I think is to determine where you can derive the most value. It can be by sector determination, size or maybe customer potential. Once you know your goals, then the model will follow. Be rigorous!
6. Pick A Niche
The most successful strategy for segmenting customers is to choose a niche market that really needs the product or service you have. The next step is to create a retention strategy through techniques that enable loyalty and recurring sales.
7. Forecast Ahead
Customer segmentation is based on a variety of data points from psychographics to demographics. Yet, a novel strategy for segmentation is to cast your nets into the future. Based on your current customer niches, what else will they be interested in purchasing from you two to five years out? Forecast ahead and ask who will be a new customer avatar for a current or new spin-off product.
8. Go Beyond The Data
A customer segmentation strategy isn't just about data. Yes, segment your customers based on data but once you have that, what do you do with that data? Ensure your strategy includes engagement activities that are relevant and truly speak to the customer. There should be a "they get me" moment when the customer receives communications from you or experiences of "delight” during touchpoints with you.
9. Review Your Client Portfolio
Routinely review your customer portfolio, one client at a time, to identify what their top challenge is at this moment. If you can't answer that based on recent communications, it's time to reach out for current insight. Then, segment those with similar answers. Use this information to develop new programs and products or to reposition spot-on solutions with highly customized marketing communications.
10. Create A Personalized Approach
By segmenting your clients, you can create a personalized approach with each of them. The best way to create this strategy is to determine all of the different client types that you currently have. By starting here, you can reverse engineer a custom spin on your ask for them and attract more clients for each segment. Personalizing the approach for each client will give a special touch and make them feel valued.
11. Think About How Valuable Your Product Is To Them
We help clients create a differentiation strategy by first listing each of their products and services. Rank the list by what customers care about and how valuable the product is to them. This allows you to determine the right interaction strategy for each customer segment. While you may sell the same products to different segments, they differ in their "why buy" and "why stay" reasonings.
12. Utilize Analytics
Even if needs are similar, purchasing habits differ from customer to customer. Some may prefer to buy online while some would like to visit in person. Every buying process would need a different strategy to engage. Use analytics to segment customers as per demographics and purchase habits. This will allow businesses to implement targeted marketing
13. Use The Three-Bucket Approach
Segmenting the customers into a short-, medium- or long-term time value bucket will allow your business to identify how many resources and how much marketing and engagement is required for each segment. The time value of customers will change depending on the season. If businesses spend all their time on just short-term customers without much time spent on long-term ones, they will lose greater returns in the long run.
14. Interview Your Best Clients
Interview your best clients and provide them with an incentive to tell you why they chose you. Sometimes we leave our best clients alone because they have provided us so much insight and have been positive for our business financially and otherwise. If you court them more as raving fans, they may help you build a customer segmentation profile. You then have the basis for knowing your new strategy.
As you consider leveling up, the above recommendations are viable options to knowing your customer needs, preferences, and value.
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