Customer segmentation is a topic that anyone involved in marketing or running a business should know. That’s because if executed correctly, customer segmentation will streamline your marketing efforts, ensuring your products and services are pitched to the right people. This is in stark contrast to trying to apply the same message to everyone, hoping for the same results which just isn’t possible or logical.

Instead, customer segmentation breaks things down on a level that is easier to understand, canceling out the noise of what doesn’t work, allowing you to focus on what does.

New to all things customer segmentation, or want to progress your knowledge further? In today’s post, we’ve got you covered either way.

Customer Segmentation Definition

Customer segmentation is the process of grouping your users according to specific characteristics and behaviours.

After all, it would be impossible to serve all of your customers as individual users. But thanks to intelligent customer segmentation, you can support users at scale while still retaining a personal touch.

You can also use this data to build out your Ideal Customer Profile (ICP) and optimise your marketing efforts accordingly. We like to use a mix of Jobs To Be Done, customer personas, and behavioural segmentation to build out our ICP.

Customer Segmentation Examples

• Sociodemographic - this includes user characteristics, such as age, gender and education.

• Psychographic & Geographic - this includes other user characteristics such as personal interests and physical location.

• Behavioural - this focuses on user habits and frequent actions.

• Needs & Values - what pain points are your users trying to solve? What do they want to achieve with your product? This comes in many different forms; our favourite is Jobs To Be Done.

Segmentation Customer Profile

Based on customer segmentation examples above, it makes it easy to use data segmentation to create an ideal customer profile.

So for example: 

Gender: Male

Age: 25-40

Education: Degree (college) level

Location: London, United Kingdom

Interests: Data, segmentation, marketing, business and analytics

Values: Professional, outgoing, creative mindset

The above is just a snapshot and is not exhaustive of our target market or your target market, since like us, your company may actually have several customer profiles. That’s because segmentation is about dividing up all your different customer bases, so that you don’t target them all with the same message, rather give each ‘segment’ what they want in terms of the product and messaging.

You can then extend segmenting far beyond personal demographics. For instance, how each customer segment has interacted with your company, ranging from your most loyal customers, to those who are dissatisfied with you. Plus those who have stopped engaging with you.

Since each segment is going to receive tailored communication, you have a much better shot at reaching your goals with them, whether that's to reward them for their custom so they don't think about heading elsewhere, or getting back onside with them.

Why Segmenting Your Email Marketing Lists Dramatically Impacts Your Success

Customer segmentation can be implemented for practically any marketing strategy, and email marketing is no exception. 

Average email ROI is currently at 4,200% as of 2022, with $42 generated for every $1 spent, according to Snov.io. But as any marketer will know, in order to reach those heady figures, you have to deliver something that your customers will be interested enough to open and actually follow up on. 

Campaigns that miss the mark, or simply appear as spam just won’t cut it. However, by applying what we’ll cover in this post in terms of customer segmentation, you can have a much clearer idea of who you are speaking to.

All of which is a sure recipe for success, especially versus sending the same generic message to everyone, expecting the same results. 

How Do You Gather The Data To Segment Your Users?

The first challenge to better understanding your users is to put the right tools in place to capture the data.

As well as being GDPR compliant, the method needs to be reliable. Plus, if using analytical software, it can't slow your website down. That's a tall order, but luckily we've got you covered with our top suggestions.

Customer Segmentation Software

Intelligent customer segmentation is crucial for SaaS businesses to operate their growth and customer success functions at scale. Once you have the right tools in place to collect your customer data, you can then segment them into the correct groups and engage with them accordingly.

Lead Capture Forms

Forms often work best when positioned in front of gated content. If you are offering a lead magnet, such as an eBook or webinar, place a lead capture form in front of it to receive users' email addresses in return. You can also request additional information; just be careful not to be too demanding or risk users quitting the page.

Live Chat

Live chat tools provide another channel to collect customer data. If a new visitor to your site has any questions about your product, they can engage with your Live Chat widget to speak to your team. Many Live Chat tools offer settings to make email address input obligatory, so you can capture your users' data when they start conversations.

FullContact

Tools such as FullContact can enrich your user data all from an email address. FullContact will collate data from all associated social media profiles. As a result, you can find detailed information such as their company position, LinkedIn profile, and Twitter handle, just from knowing your visitor's email address.

Manual Updates

Don't forget; you can add data manually too! The best CRM tools offer the ability for team members to fill out user profiles manually with additional details. This means your sales team can add any information from their demo calls, and your CS team can add notes from their onboarding sessions.

Feedback from your customers in their own words can be incredibly useful in defining your user segments, particularly those based on needs & values.

Customer Segmentation Benefits

Being able to act personally at scale is the truest benefit of segmenting your customers. This is especially true when you build in segmentation by activity and actions, not just demographics.

Most SaaS businesses don't want to build out large sales teams to move prospective customers through their funnels manually. It's just not practical.

Luckily, this is one of the core problems that led to the creation of great segmentation tools. So what can you do with this superpower?

Send Targeted Marketing

Knowing your user-base intimately, and dividing them into relevant segments, enables you to send highly targeted and personalised marketing messaging. This allows you to operate at scale while still retaining a personal touch.

You can use Automations to send Nurture sequences to segments of new Leads. You could send relevant material based on your new visitors' preceding interactions with your sales material. If they've downloaded an eBook, you could send them a follow-up message offering a link to a relevant Webinar, and a message after that to offer a demo call to the Webinar attendees.

Mitigate Churn

Behavioural analytics allows you to create customer segments to identify users displaying leading indicators of churn. You could filter according to key features of your product, which new clients have not yet activated.

You can then proactively reach out to these segments and offer refresher training sessions with your CS team. Help the clients get set up properly, and mitigate the churn risk.

Identify Your Top Customers

By analysing key activation features and engagement times, you can discover the top customers within your client base. These users can then be reached out to and converted into product advocates via referral programs. This can lead to a reduction in marketing spend and an increase in lead to customer conversion rates.

Customer Segmentation FAQ

We’ve answered some of the most common questions about customer segmentation below. 

If you’re a business owner or marketer wanting to know about customer segmentation can help you reach your goals specifically, please contact us and our segmentation specialists would be more than happy to help you.

What Does Customer Segmentation Mean?

Customer segmentation breaks down your entire customer base into individual ‘segments’ based on factors that could make your campaigns, products or services more or less likely to appeal to them. Instead of treating everyone the same, customer segmentation gets to the crux of what will work best for each individual segment, which is more likely to result in conversions for your business, because these different wants and needs have been considered. 

How To Do Customer Segmentation?

Interested in how to segment data? You're in the right place! Using a customer segmentation tool will allow you to build an audience in a way that allows you to create individual segments, such as age, gender, location and even how engaged that user is with your business. You can then start to strategise based on the data segmentation provides to make smarter marketing decisions.

Why Is Customer Segmentation Important?

Customer segmentation is important because it treats customers as individuals. It can be used to understand how to best target prospects, so that your efforts can be concentrated where success is more likely. Ultimately, customer segmentation can drive ROI and improve customer satisfaction simultaneously when done successfully.