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Making Better Customer Segments and Why it Matters

In today’s digital deluge, marketers face a formidable challenge: information overload. Consumers are overloaded with emails, SMS, push notifications, in-app messages, and advertisements all day, every day. According to Harvard Business Review, the average person receives over 120 emails daily, while push notifications and SMS stats paint a similarly crowded picture. It’s no wonder brands are struggling to capture customers’ shrinking attention spans.

For this reason, batch-and-blast campaigns don’t cut it anymore. To capture some of that diminishing attention and be heard over the noise, brands must lean heavily into relevance and personalization in their marketing campaigns. To customers, anything else feels disingenuous, alienating, and can lead to unsubscribes. What’s more, your competitors aren’t sitting still, waiting for you to get it right. They’re leveraging best-of-breed marketing automation and segmentation tools to craft hyper-personalized experiences that build genuine connections.

Segmentation: Your Key to Rising Above the Noise

The key to breaking through the clutter and forging meaningful customer connections lies in effective customer segmentation. But what IS customer segmentation? Perhaps it might be easiest to start with what it’s not. It’s not taking your entire customer list and sending them the same message, regardless of demographic or firmographic attributes, the products or services they’ve purchased, or how they’ve engaged with your brand.

Essentially, best practice segmentation is about moving beyond broad demographics and diving deep into your data to truly understand the details of your various customer groups, or cohorts. This means identifying shared characteristics, behaviors, and preferences to create distinct groups with specific needs and interests.

Customer Segmentation in Action

An example of a best practice segment for a company in the productivity software industry might look something like this: All 90-day trial users who have been active within the last 30 days, who’ve indicated (through surveys or other interactions) that their primary use case is for scholastic organization, who’ve used features A, B, and D, but not C.

In this example, the company might use this particular segment to send a cross-channel marketing campaign to educate these users on how to get the most out of the software for scholastic users, with emphasis on the benefit of feature C—a feature that has proven to increase initial conversions and renewals once customers start using it. Messaging might also include some dynamic content snippets that talk about some of the additional benefits of converting to a paid account.

This is why segmentation is important. Any users who have an entirely different use case, or already use feature C or are already paying customers would immediately see this messaging as irrelevant and alienating. So, taking the batch-and-blast approach and sending the same message to all users would not only be less effective, it would cause a pretty big disconnect for many.

Segmentation in a World of Strict Data Policies

Now, you might be concerned, especially in the current environment of increased privacy legislation, that capturing quality data to use in best practice segmentation might be quite difficult. The good news is that the data powering the best customer segments doesn’t have to come from some outside source. It’s probably information that you already have, that your customers have provided to you. This information is known as first- or zero-party data.

First-party data, gleaned from implicit customer interactions and purchases with your brand, can be far more powerful than any third-party source. Analyze purchase history, website behavior, event registrations, email engagement, support requests, and even social media interactions to uncover hidden patterns and affinities.

Zero-party data is information such as preferences, interests, and feedback that customers proactively provide to a company. Unlike first-party data, customers explicitly share this information through surveys, polls, product customization options, loyalty programs, or even casual interactions. Zero-party data unlocks hyper-personalized experiences by directly tapping into customers’ own preferences and desires.

Best Practices for Powerful Segmentation

Now that we’ve discussed what powerful segmentation looks like, let’s dive into some practical steps that you can take to improve your segmentation capabilities.

1. Capture Where You Can

The first, and most crucial step to creating effective customer segments is ensuring that you’re capturing all relevant customer interaction data from every interaction point possible. Think of everywhere your customers engage with you and then work to ensure that all relevant data points are being captured and stored.

2. Activate the Data

Capturing customer interaction data is useless if your marketing automation tools don’t have access to that data. Make sure your data is actionable by getting it into your customer communication platform in a timely fashion.

3. Accuracy Matters

Your data needs to be clean (accurate) and refreshed regularly. One sure-fire way to ruin a good customer segment is to use inaccurate data or allow your good data to become stale. A solid data governance practice will help immensely here.

4. Go Beyond the Basics

Age, gender, and location are just the tip of the iceberg. Consider psychographics, purchase patterns, life stages, and even sentiment analysis to paint a richer picture of your customers.

5. Choose the Right Tools

Ensure that your martech tools make it easy for you to use this valuable data to create both static and dynamic customer segments that can be used across targeted campaigns, website/mobile app personalization and predictive modeling.

The Power of Meaningful Connections: The Segmentation Impact

Investing in better segmentation isn’t just about avoiding the unsubscribe button. It’s about unlocking a world of possibilities. These include:

  • Strengthening Customer Relationships: By fostering a sense of understanding and relevance, you build trust and loyalty.
  • Boosting Engagement: Segmented campaigns resonate better, leading to higher open rates, click-throughs, and conversions.
  • Maximizing ROI: Targeted messaging delivers a higher return on investment for your marketing spend.
  • Building Positive Brand Affinity: When customers feel seen and understood, they become brand advocates, spreading the word organically.

In a World of Information Overload, Segmentation is Your Winning Strategy

In today’s marketing landscape, segmentation isn’t just a nice-to-have, it’s a requirement. By leveraging the power of data and insights, you can create targeted campaigns that truly resonate with your customers, forging meaningful connections that drive engagement, loyalty, and ultimately, brand success. So, ditch the batch-and-blast approach and embrace the art of segmentation.

To learn more about how Iterable can help you succeed in your segmentation endeavors, schedule a custom demo today.

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