To sell, companies need to deliver the right message, to the right person, at the right time. But how can this be done when customers are so different from one another? Simply use customer segmentation.
What’s it all about? What’s in it for me? How do you implement it? Find out all you need to know about this essential marketing strategy.
What is customer segmentation?
What’s customer segmentation? For example, customers can be segmented on the basis of :
- BtoC: age, gender, geographical location, professional status, qualifications, etc.
- In BtoB: business sector, number of employees, sales, geographical location, etc.
In addition to BtoB and BtoC segmentation, it is also possible to divide your customer base within the conversion tunnel itself. This involves segmenting the audience according to its maturity in the customer journey (first discovery, cart abandonment, first purchase, loyal customer, etc.).
Whatever the type of customer segmentation chosen, the aim is to respond specifically to customer needs. And in so doing, build customer loyalty.
This marketing strategy is essential for companies in all sectors (retail, industry, automotive, decoration, finance, etc.) and of all sizes (start-ups, SMEs, large groups, etc.).
What are the benefits of customer segmentation?
Customer segmentation enables companies to tailor their efforts according to the audience segment they are targeting. Here are the concrete benefits of this strategy:
Both in terms of content and form.
In terms of content, it’s all about sending the most relevant message possible for your target audience. The one that will resonate with their current issues and needs.
In terms of form, it’s a question of selecting the right communication channel. Between social networks, emails, the website, radio… it’s sometimes difficult to be present everywhere. Customer segmentation makes it possible to know where each target group is.
In this way, companies can communicate more easily and effectively with their customers and/or prospects.
Enhance your offering
Customer segmentation enables us to improve our products and services to meet the specific needs of our customers. In particular, by adding new functionalities or new services.
For example: a company selling BtoB software can offer :
- complex, customizable software for large organizations with in-house technical skills ;
- turnkey software for smaller organizations that don’t necessarily have the skills to customize the software.
The idea is to improve the offer and meet customer needs as closely as possible.
In addition to products and services, companies can also test their prices through customer segmentation. This means proposing several pricing options according to customer profiles. For example, develop a low-cost offer for students, and a top-of-the-range offer for active employees.
To define the best price, companies are well advised to carry out tests with different customer groups.
Personalizing customer relations
Customer segmentation goes hand in hand with the personalization of the customer journey, which is one of the specific expectations of today’s consumers.
And with good reason: 90% of them spend more if the service is personalized. So, to win market share in the face of ever-increasing competition, companies have every interest in segmenting their customer base.
The advantages are manifold:
- Create a bond of trust: if customers feel that the company is speaking directly to them, they naturally develop greater brand loyalty.
- Increase sales: this is the direct result of the trust gained through personalization.
- Improve customer support efficiency: especially if each agent communicates with a predefined customer segment. In this way, customers/prospects speak to the same contact person every time; the one who knows the exact situation and masters the issues. Customer satisfaction is therefore optimized, as is the retention rate.
Optimize your sales
Customer segmentation can increase sales in a number of ways:
- Focus on the most profitable customers: to reduce costs while increasing sales.
- Opting for up-sell or cross-sell strategies: i.e. offering complementary or higher-end products.
This is all the more interesting as these different strategies are based on existing customers. Selling to existing customers is much cheaper than acquiring new ones. Segmentation enables companies to maximize their return on investment.
How do you segment your customers?
Customer segmentation means knowing your target. To do this, companies must use the data at their disposal.
Customer information can be collected from a multitude of sources, such as :
- social network statistics ;
- Google analytics ;
- customer feedback in the field
- satisfaction surveys ;
- surveys ;
- data providers ;
From these different sources, companies retrieve a wide variety of data (demographic data, customer purchasing behavior, market trends…).
Once the data has been collected, companies need to group their customer groups according to common characteristics. This enables the creation of models that serve as the basis for the different segments.
The next step is to define the actions to be taken for each segment:
- Which channel should be used to communicate?
- What message should be conveyed?
- What offer should be made?
- At what price?
Of course, it’s possible to run several tests to identify the best strategy.
Things to remember
- The aim of customer segmentation is to create several target customer groups with common characteristics.
- This enables you to communicate more effectively, improve your offering, personalize customer relations and optimize sales.
- But to achieve this kind of performance, you need to know how to use the available data.