How do you create and use your customers segments

How to create better customer segments for your business

What is Customer Segmentation?

Customer segmentation is the dividing of the contacts in your customer database into groups that are similar in a way that is meaningful for purposes of marketing.

Let’s say you’ve defined a 6 step sales funnel, and the six steps might be generically grouped as:

  1. Visited the website and downloaded the eBook
  2. Returned and watched explainer video #1
  3. Took the assessment quiz
  4. Returned and watched explainer video #2
  5. Returned and watched the demonstration video.
  6. Filled out the Contact Us form

You can define each of those steps as different customer segments.

NOTE: Your business might of course have different segments defined. What is shown above is merely an example.

What are the advantages of having customer segmentation in your business?

As a customer interacts with your website and your marketing automation system, you move people from segment to segment. The email messages you send them, which in turn direct people to pages on your website, depends on what segment they’re in.

Using customer’s segmentation greatly impacts acquisition and retention of customers.

The process of creating customers segments requires forethought, research, patience, and honesty (about what you sell and who it appeals to).

In this article, we show you the importance of customer segmentation and tips to improve their experience with your product.

Every business should have a customer segmentation strategy for the following reasons.

Importance of customer segmentation

You send messages that are more context dependent to your prospects and customers. Perhaps the email will be for someone at a certain stage of your sales cycle. Perhaps your business is sports memorabilia and you wish to segment people by their sports of interest. Perhaps your business car accessorie3s and you wish to segment people by the type of car they own.

Additionally since the messages you sent to people are more appropriately targeted, you get better feedback from people as you’re sending more relevant messages.

How to better create the right segments

To create a better customer segmentation, make sure it is:

Measurable

Making sure your segments allow you to effectively measure results requires you’ve put enough thought into creating segments that are appropriate for your business. From there you can measure customer interest by measuring what are called micro conversions, which are the small steps people take on your website (prompted by your marketing automation system) leading up to them becoming a customer.

Addressable

While marketing automation systems mostly use email to send messages, the concept of segmentation is not limited to email marketing and marketing automation. It can also apply to the use of business pages on social media sites (one business can host more than one business page when they segment people by area of interest).

Stable

Create a customer segment that isn’t easily affected by external factors. Since the largest external factor is competition, this has mostly to with how you position your product or service in your market.

Do you appeal to “to the masses” (Target, Wallmart) or to “high end homeowners” (country club memberships), or to “health conscious people” (organic produce, yoga classes, etc).

When you’re in a market that is “too new”, this is a moving target. When you’re in a market that is “too old” the cost of competing with a large establish brand may be too much requiring you to address a niche of that marketing that they big companies are not serving well.

In closing,

Marketing automation tools are best for defining segments and measuring activity within those segments.

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