It’s a common understanding that you need to know who your customers are before you start your marketing. Part of this is customer segmentation. When you know how they’re grouped together, and what things they have in common, you can start to get a lot more bang for your marketing buck.
We’re not marketing experts, but we can help you get to grips with the basics. So, let’s get you started on customer segmentation.
What is customer segmentation?
Customer segmentation is the practice of dividing a customer base into groups of individuals who are similar in specific ways, relevant to marketing. This could be through age, gender, interests and/or spending habits. Nailing this is the start to narrowing down how and where your marketing should be focused.
There are four main ways to segment your customers, which we explore below. Sometimes a fifth is included as well – firmographic. This is useful for when you’re targeting businesses, so it includes characteristics such as industry, number of employees and financial standing. Most of our customers are B2C businesses, so we’re looking at the four main segmentations for now.
What are some ways I could segment my customers?
This is “the who” and it’s often the one people think about first, as it’s probably the most common and basic way to segment your customers. You’re splitting your audience up based on observable, non-characteristic traits. These can include:
- Age (try to keep these in brackets of 10 years, for your own sanity)
- Education level
- Marital status
You’ll easily be able to come up with some products that are specifically targeted for certain demographics. Men’s and women’s toiletries are a prime example. The blokes get an all-in-one, hair, body, car, bike wash; whereas the women have wash for your face, for your feet, for your hair, for shaving…
Some companies also segment based on income, such as car manufacturers. The makers of Rolls Royce probably aren’t targeting a 17 year old with a part-time job in the local village.
The demographic segment is most powerful when combined with another. But it’s not just about you targeting the right people more effectively – it’s also about your customers seeing messaging that’s more relevant to them. So they’re more likely to engage!
This is “the where” and it really is what it says on the tin. Whilst it’s quite easy to identify (it is as simple as your customer’s physical location) there are a few ways to do it:
- Postal code
Whilst this may seem basic, it is quite critical. Think about if you’re targeting different countries, for example. A clothing company may choose to target summer clothing to Australia, whilst showing hats, gloves and scarves to the UK. Different sports have differing levels of popularity across the world. Make sure to take these geographical preferences into account when planning your marketing.
If you’re a small business, who’s not on the global market, geographic segmentation still applies to you. You can narrow your marketing down to those within a certain radius of, say, Liverpool, Plymouth or Redruth. This will obviously allow you to promote yourself locally.
Particularly useful for e-commerce businesses (those with an online shop), this does need a little data to really be useful.
Behavioural customer segmentation looks at a customer’s online habits, such as spending and online shopping. It also crosses over into what they actually do online – what actions do they take on your website? What websites do they visit? I.e. “how does my customer behave online?”
Tools like Google Analytics really come into their own in this segment. Analytics will let you see how customers find your site, how many times they view it, and what they engage with when they get there. You can then tailor your messaging off the back of this – for example, say “hello John” to a new visitor, but “welcome back” to someone who’s visited before.
We wrote an article on how to understand analytics last year, read it here.
Psychographic segmentation is fairly similar to demographic segmentation, but it’s looking at characteristics that are more emotional or mental. Trickier to identify, but incredibly valuable if you can. We’re talking about interests, hobbies, lifestyles, values, attitudes etc.
Let’s put this into context. You’re selling a moisturiser for women to use before bed. You’ve targeted women in the 30 – 40 age bracket, but are finding only some are converting. The missing conversions could be from environmentally conscious customers, who are looking for a vegan and planet friendly cosmetic.
Understanding this will allow you to create content that really resonates with your customer. They’ll feel like you’re talking to them on a personal level.
Why use customer segmentation?
There are a number of reasons to segment your customers, and customer segmentation really does touch on every area of your business.
We suspect that you’ve caught on by now that it will allow you to produce more relevant, targeted marketing. But what does this really mean for you?
Well, you can properly tailor your messaging based on your customer’s preferences and needs. And you can communicate with those more likely to be interested in your offering. This means your campaigns will be more effective, and your sales (and business!) more likely to grow.
Segmentation can also help you plan your business growth and development. If your eco-friendly alternatives are picking up in popularity, then you know that’s an area you need to invest more time and money in. This then leads into your brand identity and niche specialisms.
When you’ve really got to know all of this, it helps you understand what to do with your website and social media. You know who you’re writing to, when, where and how you should do it. This is where we come into our element, so talk to us for help with your website or getting started on social media!