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Strategy

3 Customer Segmentation Models Every Marketer Should Consider

Personalization of the shopping experience is a proven method to increase sales and retention, but without segmentation - nothing can be personalized properly

Ben Jacobson
March 29 2018

The best marketing interactions are those that resonate with audience members, taking into account who they are as individuals, right? We create buyer personas and give them real-life photos and names, we talk about them as if they are real people when we’re planning our strategies, and all that’s great. But once you’re clear on the specifics of whom you’re trying to reach with your marketing, you still need to make sure they can feel it. You want your customer to feel like you’re addressing her and only her – like you actually understand her. But not in a creepy way, of course. According to data from Wunderman, 56% of customers feel more loyal to brands that show a deep understanding of their priorities and preferences.

And that loyalty is valuable in terms of your customer retention. Some 44% of consumers say that they will likely become repeat buyers after a personalized shopping experience with a particular company.

(Source)

You can’t provide that personalized experience when you’re marketing to your whole audience and customer base at once, talking to them all as one large mass. That’s not how you make them feel like you “get them,” even if behind the scenes, you really do. Segmented messaging is key to making sure your understanding of your customer comes through in your marketing. It’s what allows your customers to feel the extent of how much you care about keeping them around. Once you build out usefully disambiguating segments for your customers and identify the traits and patterns that correlate with each group, you can cater all your marketing to that.

For example, if you know the industry a given customer works, you can talk much more specifically about their goals and situation in benefit-driven copy. You can customize your SaaS product’s in-app messaging or ecommerce site’s product recommendations. You can target specific groups in your CRM with Facebook ads and email campaigns, honing in on their pain points or lifestyle preferences with your messaging.

There’s plenty of great content out there already about why segmentation helps customer retention, as well as the different categories of segmentation:

  • Demographic
  • Geographic
  • Behavioral
  • Psychographic

Today, let’s take those concepts a bit further and talk about specific ways to use those categories, start building out segments, and propel your customer retention strategy with a personalized experience.

#1 Segmenting Based on Touchpoint Engagement

You can learn a lot about how to retain a customer by examining how he continues to interact with your business post-purchase. Whether that’s heading to your website or app, using your product, engaging with your website and online content, messaging you for support on social media, or email and offline interactions, these interactions are like a crystal ball. Details are often objectively helpful on their own – for example, how frequently they interact with you can point to retention insights. Watching how they change over the course of the customer lifecycle is also important for understanding their intentions in terms of retention. Study what different touchpoints people have with your business after their initial conversion. Segment them and trigger marketing campaigns based on those behaviors.

By layering different behaviors and types of segmentation together, you can predict (and then deliver on) a customer’s wants and needs at a certain point in their lifecycle. The more granular you can get, the better. Optimove has found that there’s a strong correlation between sales performance lift and smaller segment sizes.

(Source)

For example, if someone made his first-ever purchase from you last week and spent more than 20 minutes today scrolling through all of your help articles, it doesn’t matter if he has yet to call or email you for help – these signals are still big retention red flags that you’ll want to address. A segmented email campaign focused on successful onboarding, customized to his specific use case, can prevent him from giving up on the product too soon and provide him with the content-based helping hand he’s after. To find other retention red flags you can use for segmentation, look at people’s behavior patterns in addition to interactions themselves. An increase in browsing product pages, for example, can indicate renewed interest in your business and a hot opportunity for upsells.

#2 Segmenting Based on Purchase Patterns

In addition to spotting interaction patterns, sales patterns can help you further build out profiles for segmentation. If you can gain a better understanding of what, when and how your customers bought in the past, this can yield predictive models for the future. You can find your most frequent shoppers, identify highest value customers as well as savers, and learn about what motivates each group. When you know all that, it becomes infinitely easier to guide them towards the offer, next step, or product most perfect for them. This is the shortest path to retaining that customer. What that path might look like and which patterns to look at will depend on the segment and the product. For example, people generally reorder consumable products like coffee regularly. In that case, try segmenting your customers by how frequently they buy and what their flavor preferences are to guide them towards their next purchases.

Customers of virtual products like downloadable files or software, as well as durable goods, are more likely looking to upgrade, add on, or accessorize the original product. In that case, tempting them with the right offer at the right moment is your segmentation goal.

For example, mobile link tool Branch announces new premium features with message alerts that appear within their dashboard interface to different audience segments. Customer segments deemed unlikely to opt for upgrades like this are less likely to be served up the alert, because it is irrelevant to them.

#3 Segmenting Based on Customer Goals

Earlier, I mentioned the common practice of creating customer personas that are built out in enough detail that when you use them to create messaging, you’ll have a much easier time resonating with recipients. This tactic requires bringing multiple types of data – demographic, geographic, behavioral, and psychographic – into a wider profile centered around the customer’s specific goals.

You’re at no shortage of data, between your own data on things like behavior and additional information pulled from sources such as Clearbit or LinkedIn’s Website Demographics tool. You can create rich profiles for your customer persona-based segments, incorporating information that shapes their use of your product, job title, location and hobbies. With LinkedIn’s onsite tracking tool, B2B companies can get helpful info like company industry and job seniority.

(Source)

Segment by different use cases and personas, or use them as a layer in your overall segmentation strategy, with parameters that speak to their goals and their “why.” Since that’s what you’re really selling – not your product – focusing your segmentation strategy around this is a great way to add more impact to any retention messaging.This is a chance to really hone in on more unique and individual traits of your customers, such as personality and psychographics. Done right, this type of messaging can feel much deeper and resonate more.

Start Building Layers

See how segmentation lets you go deeper into your customer’s individual wants and needs with your marketing and retention? It’s like each trait or behavior you’re segmenting by is another layer of your customer’s personality you can recognize and cater to. You already have much of the information. Start building out segments and layering things together. The deeper you go, the more personal your marketing will get. When you’re trying to build a long-term, recurring relationship with your customers, that can make a world of difference to your bottom line.

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Ben Jacobson

Ben Jacobson is a marketing strategy consultant who specializes in content, social media and influencer marketing for B2B firms. He contributes regularly to publications including MarketingLand, Search Engine Journal and the Orbit Media blog.

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