What is Customer Segmentation?
Customer segmentation is a core pillar of personalizing your marketing strategy. In essence, customer segmentation is grouping your customers into segments based on similar preferences (likes and dislikes) or user attributes (geography, demographics, etc.). Once you have identified your segments, you can tailor your messaging to more closely personalize the customer experience.
In practice, customer segmentation has been in use for decades to enable more personalized marketing. Modern marketers, however, have access to a multitude of data points and touchpoints across channels and devices that allow for even more granular customer segmentation.
A core aspect of customer segmentation is progressive profiling, in which marketers gradually collect more data on customers to create more refined segments for future personalization. Consumers today expect a more individualized, human customer experience. Through progressive profiling and customer segmentation, marketers can create a conversation with consumers that aligns with their interests, values, preferences, and sentiment towards the brand.
Before sending that first message, all marketers should be looking to customer segmentation for more insight.
How to Get Started With Customer Segmentation
There are a few key steps you need to take before getting started with segmenting your customers.
Identify Your Audience
In an ideal world, your core customers are already purchasing from your brand and keep coming back over and over. But that’s rarely the case. When first starting out—or even further down the line‚—it’s important to assess the market and identify your core audience.
What does the ideal customer look like for your brand? Customer segmentation is not limited to the customers you already have; it’s closely tied to the customers you want, too. Create personas based on attributes you think would lead to long-term, high value customers.
Choose Your Segment Parameters
Once you have identified your audience, it’s time to look at your data. Are you collecting the right data to accurately segment your audience into groups that let your ideal customers shine through?
The primary data buckets to choose from for your customer segmentation strategies are demographic (who they are), behavioral (what they do), or lifecycle data (where they are in your lifecycle journey). From there, you can further segment your customers based on similarities across each data type. The more you can fill out the user profile, the better the personalization becomes.
Test, Test, Test
The good news about customer segmentation is that it’s not a “set it and forget it” strategy. Data is constantly coming in, so your segments can be refined and changed as much as makes sense for your brand’s marketing strategy.
When you have your core segments established, send out a few test campaigns. In doing so, you may find new data that shows some customers more closely align with a different segment. You will also learn what messaging aligns best with each segment.
Analyze Your Segments
Successful marketers regularly look at campaign performance metrics to understand what is working and where adjustments are needed. Customer segmentation is no different. After each campaign, your team should be analyzing the results to identify new opportunities to refine, test, and execute at a more granular level next time.
Customer segmentation is at the heart of personalization. Customers expect a personalized experience where their values and interests are not only taken into consideration, but also actively utilized to improve their interactions with your brand.
After identifying your core audience, segmentation is a must-have starting point for your marketing strategies. Get started—or improve your existing customer segmentation strategies—using Iterable centralized data capabilities, Workflow Studio, AI, and more.