Customer segmentation is the process of dividing an audience into small groups or segments based on similar characteristics, such as demographics, behavior, interests, and needs. The goal of customer segmentation is to better understand and cater to the specific needs and preferences of different groups of customers.
By segmenting your customers, you can create targeted marketing campaigns, products, and services that are more relevant and appealing to each segment. This can help improve customer engagement, retention, and loyalty, as well as increase sales and revenue.
Here are examples of the many ways that customers can be segmented:
Examples of demographic segmentation include:
- Marital status
- Income level
For example, a company that sells products that are more popular with women could develop marketing campaigns targeted specifically at female subscribers. Likewise, if your business is currently targeting 30-35-year-olds, but those with higher incomes shop differently than those with lower incomes, it helps to separate the two. This allows you to market different products (and their price points) to each one, so you’re matching their ideal budget ranges and making each feel seen.
This involves segmenting your audience based on specific actions or behaviors that subscribers have taken, such as:
- Customer journey stages
- Service usage
For example, a business could develop separate email campaigns for customers who have abandoned their carts and for customers who have made a certain number of purchases. This helps you avoid flooding all your customers with unnecessary prompts, while also making sure the individuals engaging with your business feel valued, seen, and engaged with.
This involves segmenting your audience based on location, such as:
For example, a company that sells clothing can develop separate campaigns featuring winter outfits to people in colder climates and summer outfits to people in warmer climates. They can also make their online content geo-specific by providing news that caters to certain areas or markets to local events.
Purchase history segmentation
This involves segmenting your audience based on the products that customers have purchased in the past. For example, a company that sells clothing may create campaigns featuring similar styles or products based on the customer’s past purchase history. This provides a customized experience and encourages buyers to purchase more items that fit their tastes.
This involves segmenting your audience based on the interests or preferences of your subscribers. For example, a company that sells outdoor gear could create campaigns featuring products related to camping, hiking, or other outdoor activities, based on the interests of their subscribers. Likewise, if you have a smaller group of customers who prefer a specific product line, you can emphasize this to them without bothering the others.
This involves segmenting your audience based on the level of engagement of your subscribers, such as the frequency of opening emails, clicking on your links, attending events, or entering stores. For example, a company could create separate campaigns for customers who are highly engaged versus those who are less engaged. This makes loyal customers feel more valued, while newer or less engaged customers won’t feel overwhelmed or annoyed by your business constantly reaching out.
These tactics will help you hone your marketing campaigns and engage with customers the way they prefer. That can translate into better customer retention and improved sales overall.