People like it when they’re interacting with others. Gone are the days when marketers talk to their potential customers with a memorised line that can apparently ‘help’ them make sales. Today, people want to communicate with other people that are like them. Someone that can understand them and the dilemma they’re currently experiencing. Personalisation is one of the keys that can help you make sales. However, with the variety of customers you have, how are you going to personalise each experience? This is where customer segmentation comes in.

What is Customer Segmentation?

Customer Segmentation is the act of grouping customers and clients together according to their demographics, location, or their behaviour. This way, you can further personalise your products and services according to what your customers want and need.

4 Types of Customer Segmentation

1. Geographical Segmentation

This is ideal for businesses that are localised and is targeting a specific country, city, or town. Segmenting based on your customer’s geographical information gives you the liberty to personalise your products and services according to the customs and tradition of the locals of your targeted place.

An excellent example for customer segmentation through the customer’s geographical information is the McDonald’s fast food chain. Although they offer common foods that are available everywhere in the world, they also provide food that is only available in a specific country. McDonald’s Singapore has a Red Rice Porridge as a breakfast menu that is unique and is only available in Singapore. McDonald’s Japan also offers a variety of teas such as Sogyaku Tea and Hot Teas.

With a localised menu, they can reach a broader range of customers. This same idea applies to the market segmentation according to their geographical information in your marketing strategies. You are targeting your market according to your customer’s location to know your customer’s preferences.

2. Segmentation via Demographic Information

The most common type of customer segmentation, especially to businesses are targeted to a specific age range, gender, educational attainment, marital status, income and occupation. Through grouping your customers according to their demographics, you will be able to customise your marketing strategy.

Imagine yourself as an owner if an online clothing shop and you want to expand your reach, instead of targeting locals from a specific city, you shift into targeting your customers according to their gender and age. For women, limited edition dresses and blouses are shown on Ads. An Ad for men, suit and button up long sleeves is shown. Now compare this to posting an ad that both has a dress and suit in the same picture. The possibility of the ad getting ignored is high. Your customers want contents that are relevant to them.

This can also be applied for digital marketers that use marketing automation software and CRM in Singapore (or any country) for sending their newsletters and updates to their customers and subscribers. You can personalise the contents of the emails you send through segmenting your customers.  Personalised emails have a higher open rate and click-through rate than the one-size-fits-all emails.

3. Behavioural Segmentation

This is the method of segmenting your customers according to their spending behaviours, buying patterns, and their interactions with your business. Through segmenting your customers according to their behaviour, you can cater your services and products according to what your customers want.

This is highly applicable to email marketers especially because email list segmentation is one of the email best practices. By grouping the people who have a high open rate, and are not opening the emails together, you can easily create email campaigns that are a perfect fit for people from your list. You can even set up an email campaign that is targeted for your customers and subscribers that are unengaged with the emails you’re sending them.

With behavioural segmentation, you can create marketing campaigns that are specifically targeted to customers who have the same spending and buying behaviour.

4. Psychographics

This is where you are segmenting your customers and contacts through their personality, social class, interests, and lifestyle. This way you’ll be able to personalise the experience your customers will have with your business. The purpose of this type of segmentation is to get your customers to buy your product or services by giving them excellent customers experience.

Segmenting your customers according to their psychographics is similar to creating a customer persona. However, with psychographic segmentation, you are no longer thinking of what your target customers are because these customers already exist, which means need to know what your customers value, their problems as well as how you can address it through the products and services you offer.

This way, you’ll know which time of the year your customers buy a lot and which time do they lie low when it comes to spending their cash. You can then create your marketing strategy based on your customer’s psychographics.

Benefits of Customer Segmentation

• Increase Return Of Investment

Customers love it when you give them exactly what they want. Giving them what they want will earn your customer’s trust. And earning their trust means they’re going to keep on buying your products and services more. Say for example, if your customers are people who work on a night shift. They may want something that can prevent them from sleeping during their shift. Coffees that are strong can prevent people from sleeping. However, not everyone likes their coffee strong. By segmenting your customers, you can cater to their needs by making a sweeter variation of the same coffee.

• More Room For Expansion

Segmenting your customers makes ample space for you to expand. This is because segmentation makes it a lot easier to know what your customers want especially because they have similarities. Using this information, you can create a marketing strategy and customise your products and services. With these personalised products and services, you can broaden your reach, from your specific group of segmented customers, you can reach more people who are similar to your segmented group of customers.

• Retain Your Customers

With segmented customers, you are able to personalise your customer’s experience with your business which brings your relationship with your customers a lot closer. You, giving your customers what they want will make them trust you and your brand. Through customer segmentation and personalisation, you can improve your customer’s quality. Through customer segmentation, you can stay connected with your customers and nurture them, even after your customers have made their purchase.

Final Thoughts

Customer Segmentation is just a way to help you give your customers a more personalised content.  Personalisation is an ingredient that can help you gain your customer’s trust. Not only is it able to increase your return of investment, but it also gives you more opportunity to expand, plus it can help you retain your customers.