So You’ve Segmented Your Customers, Now What?

Posted by Martina Mercer 31 Jan 14

Summary: What strategies and tactics can you employ to utilise your segmented customer data

If you’ve already segmented your customers into particular demographics, you’ll know that this method promises to boost profits, increase loyalty, retain custom and maximise your marketing

orange_segmentIn a world where we embrace the faceless technology for everyday activity, as consumers we are nostalgic for the personalised approach and as such appreciate those retailers that go the extra mile. 

Understanding the psychology behind your customer’s buying behaviour is the key to uncovering the tricks to entice them to buy, revisit or engage. 


Narrowing the Field, Increasing the Budget

The results you can expect to see from segmentation marketing increase as you narrow the criteria for each customer group. The more specific a certain customer group is, the more likely you are to appear to roll out bespoke offers and incentives. Of course the narrower the margins, the more specific the characteristics, the smaller the groups, the larger the number and the bigger the budget.

If you’ve found your happy medium you probably have three to five groups according to factors such as age, location, loyalty, buying history and gender.

Another way to segment is to sort your customers into groups of engagement, such as:

1. Those that visit and buy weekly

2. Those that need prompting to visit and further prompting to buy

3. Those that have visited a handful of times but really aren’t bowled over by what you offer

The latter could cost you money on marketing whereas the middle group has the biggest potential for converting into loyal customers. The highest group may already buy ample (and is where you’d like the middle group to be) but you can easily encourage higher purchase values as your quality and value is already sold.

A good CRM system can help you to identify the areas along with adding other variables such as household income, interests and profession to further personalise your marketing. With a good system in place, information can be added by any member of a sales team and anyone can make personalised contact with the customer which in turn increases loyalty.

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The Next Step

The next step is to exploit the benefits that segmentation promises, such as:

  • Identifying the opportunities with gap analysis
  • Improving retention group by group
  • Implementing marketing plans, segment by segment
  • Improving the product or service in line with segment feedback or requirements

Closing the Gap with Analysis

Now you have your groups, you’ll be easily able to identify the “qualified” customers. These are those who regularly interact, visit and buy. In any group there will be differences of buyer behaviour, the easiest way to explain is by using a scale.

  • Those that score a 10 are those that have reached their potential, the trick is to retain these and if possible encourage them to shout about your products.
  • Those that score a 1 have little interest and need some persuading to subscribe.

 

In each segmentation you will have varying degrees of customer, gap analysis identifies these and aims to close the gap, in this extreme example, the ideal result would be to make those 1 customers score a seven, eight or even a nine.

It’s a way of showing the differences between those in the segments and of comparing other factors such as buyer behaviour based on location. It allows you to easily identify opportunities to create leads or close sales.


Improving Retention with Segmentation

The importance of customer retention is not lost on any eCommerce owner as loyal customers have the ability to increase profits considerably. You can identify segments by their engagement and then increase the retention by delivering rewards to those who buy regularly. You can also identify those who you would like to engage more and deliver incentives to make them act.

However you segment your customers it’s always good practice to differentiate between the regular customer and the occasional customer. A regular will not appreciate email marketing that sounds generic or doesn’t appreciate their loyalty to your brand. It’s essential that those who spend the most regularly are treated like VIPs. They need to feel special and they need to feel as if their cash has earned them exclusive privileges.

Try not to assume that this segment has reached their maximum potential as there is always further to go. For instance, the loyal customer can invite friends, refer or even be tempted to buy more.

Marketing Strategies by Segment

If you have a handful of segments you can now adapt your marketing to suit each one, making each strategy different according to the segment criteria. Assessing all areas, you can identify the right price, right product, right promotion, right place and right medium for each group.

Remarketing

Remarketing and email marketing will be much more effective with segmentation, you can now close that gap by appealing to those personally who have abandoned a cart at checkout or browsed but not converted. Each email must appeal by group showing that you understand the reason they’re not converting and you have a solution to their problem be it a discount to make it cheaper, a free trial to ensure quality or express delivery so your customer can have it sooner.

Improving Your Product or Service

Once your target market is segmented you can identify areas where there are high churn rates and little retention. You can include the segment in your research by asking them for feedback on the reasons they’ve lost interest or gone elsewhere. Enhancing your product or service based on their feedback will show that you value your customer input while promoting your brand as one that constantly adapts to the customer’s needs.

Measure and Monitor

Whichever route you take for enhancing retention and engagement, make sure you monitor its success at all times. The results from your marketing efforts are just as valuable as the original analysis as long as you act on what you find.

 

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