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How do you segment customers?

Customer segmentation allows you to work on your communications schedule, product pricing, place, and promotion.

It’s important to segment customers appropriately for your business needs. Here are a few easy rules to follow:

  • Find the right balance of segments; too few and there may be too much variation within segments, too many and things can get over-complicated and hard to implement.
  • Each segment must be distinct.
  • You should be able to clearly describe the make-up of the people in that segment.
  • People in a segment should look like other people in that segment, based on criteria that do not change over time.
  • Segments generally need to be large enough to justify marketing activity.

How does data influence channel selection and messages?

Without any information on your customers, you’re forced to communicate with all of them in the same way. This means that you will treat customers who have never bought anything from you the same way you treat your best customers, those who buy from you every week. This is a simple, but effective, model that many companies follow:

An example of how your customers base can be divided into segments according to how often they buy

Thinking about these three basic buying stages, you can and should tailor the communications to each category.

For example, the information required for a contact who has never bought will be different to a customer who has already tried the product.

The product or service offers will likely differ across each of the three areas. You may need to buy more expensive media, more often, to cut through with the ‘never bought’ contacts. An email may suffice with a regular purchaser expecting and trusting your content.

Segmentation allows you to work on your communications schedule, product pricing, place, and promotion.

Adding to the customer personas, you can then understand the content you need to create for each customer type, as well as what tone of voice and channel communications to use.

Be aware that for organisations with low-value products, it might not be cost-effective to manage and market to individual groups. In these circumstances, it’ll probably be better to rely on broad awareness generating campaigns.

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Introduction to Marketing: Understanding your Customers

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