Segment your customers for smarter selling
Segmentation is when you divide your visitors and customers into segments, or groups, based on similar qualities they share.
As a business you would find it impossible to target your entire market, due to time, effort & budget restrictions. Your business needs to have definable segments of potential customers who can be identified and targeted with reasonable time, money & effort.
The most widely used bases for segmenting:
Demographic – Simplest & Most widely used according to age, race, religion, gender, family size, ethnicity, income, and education.
Behavioural – usually based on buying patterns of customers like usage frequency, brand loyalty, benefits needed, during any occasion
Psychographic - grouping customers by their shared personality traits, beliefs, values, attitudes, interests, and lifestyles and other factors
Geographic – location based segmentation, ideal for smaller businesses that have a wide demographic base in their local area.
See how a leading Supermarket chain segments their customers based on these 4 areas:
This information points to a typical Tesco customer for this type of product. Tesco customers on average tend to be price-conscious shoppers interested in good value and a wide variety of choice.
Compare this to a target customer for Waitrose or M&S, which will differ from Tesco and most likely represent an individual who places a higher value on the quality of products, as opposed to value & choice. As a result, their marketing activity will reflect this. The so-called ‘discounter’ supermarket chains, such as B&M, will focus on price as the main driver of their customer segmentation composition, targeting consumers who are price-led rather than quality-driven.
How do you start segmenting?
Just like profiling, starting with your own business customer list is the easiest way to begin segmenting. Simply accessing your customer’s purchase history you could start creating different groups to speak to differently such as:
· New customers making an initial purchase
· New visitors who may have registered with you without buying
· Infrequent returning customers
· Single purchase customers – who have not returned in a given time period
· Regular visitors/purchasers
· VIPs – Visit often – High average transactions
Target the right people in the right way
Now you have different customer segments you can make more informed decisions on how and when you speak to them along with the most suitable channel to use. For example -
Send a new visitor to your website, who registered but didn’t buy, an email with an incentive to complete a purchase
(there’s a chance that this type of customer will not buy so use a cost effective way to communicate with them)
Send your regular Customers with a high average spend your latest product news and promotional offers
(having an indication that these customers will most likely come to shop with you given the right incentive and method of contact may allow you to invest more in how you contact them. These particular type of customers could respond better to personalised printed materials)