Proven areas for successful customer segmentation

Finding the targets within your big data

A targeted marketing strategy means you want to send your marketing message at a specific type of person.  But they don’t just appear by magic.  You need a process of customer segmentation in place to identify each target.

Customer segmentation is a data-driven process, so the definition of your ‘target audience’ can be limited by the data you have access to within your business, and that shouldn’t be restricted by marketing information.  It should include all customer data within your business.

Once you have access to this treasure chest of information, you open a new world of valuable information.

Unlocking secrets using customer segmentation

Your customer data is an asset, but the value of the customer data you hold can only be unlocked when you have a plan for it.

So let’s look at three proven areas where customer segmentation can help unlock secrets about your customer behaviour; your customer profile information, the marketing history of your customers and the spend history of your customers.

Successful customer segmentation #1 – understanding your customer profile.

By customer profile, we are referring to the personal information you hold about each customer.  In our experience, especially in hotels a lot of personal information is requested from customers, but in reality, it’s data that is never used.

So the first rule when collecting profile information from customers or your audience is only collect information from customers that you really need.  It keeps things focused, and keeps you GDPR friendly (proof you’ve adopted data minimalisation).  Making it easier for the customer to respond and it making it easier for you to handle the data that’s collected.

Let’s look at three examples of successful customer segmentation in practice.

Location of the customer

Location-based segmentation helps you to be more relevant to your audience.  For example, if you are a hotel, then local people are more likely to be interested in ‘food and beverage’ rather than stays.     

A lot of that information is captured by default, but it’s rarely used. 

Using this data and creating customer segmentation around that information allows you to understand corporate opportunities and also the potential for meeting / event cross selling to that audience.

The birthday message. 

It’s a powerful marketing tool that a lot of marketers want to put into practice, but you need the raw materials.  That means you need to collect the date of birth and you need to manage it.  Otherwise you’ll be spending a lot of time in excel spreadsheets with little reward.

Creating customer segmentation based on date of birth, will allow you to create a marketing process that will ensure that your targeted birthday offer is always on time for each targeted customer.

Why have they bought

For example, if you are selling jewellery online, then you’d be interested in understanding the reason for the purchase.

Based on that knowledge you’ll be able to create customer segmentation groups based on the reason for purchase.  Allowing you to understand what % of your customers are really not your customers but are buying for someone else.

Successful customer segmentation #2 – understanding the marketing history of your customers.

The results from your marketing campaigns move faster than ever before, so it can be hard to keep up with what has been working and what has not.  Customer segmentation based on the behaviour of your customers can really help you to understand where successful marketing really lives in your business.

Let’s look at three examples of successful customer segmentation based on the marketing history of your customers.

Where do your customers come from?

Obviously understanding the ‘origination point’ of your customers is really important. 

Creating customer segmentation based on where your customers signed up gives you an understanding of which marketing channels really provide you with the most value. 

We call that the ‘source’, as it’s where the data originated, and it’s powerful to understand.

For example, if you are a SaaS business you might find that lots of people sign up for a free trial from a specific advert, but hardly any of them turn into revenue generating customers. 

Better to focus on investing on the ad that gives you more revenue generating customers.

When did your customers sign up?

How long to your customers stay for?  Creating customer segmentation based around when people first signed up can be really useful for you to understand how long a customer is likely to stay with you.  And that is invaluable information.

How are your customers reacting to email marketing?

Email marketing tends to be judged by campaign rather by the behaviour of an individual.  However, if you have a complicated email marketing programme,  customer segmentation based on email marketing events is a really useful measure for your overall marketing performance.

For example, imagine if you were able to monitor how many customers opened an email in the last 30 days?  With Websand dynamic segmentation, that’s no problem.

Successful customer segmentation #3 – understanding the value from your customers.

Every sale is a win, something to celebrate.  But how many sales can you expect from each customer?  Customer segmentation based around the spend history of your customers is where you unlock real opportunities for growth.

Let’s look at three examples of successful customer segmentation based around the spend history of your customers.

What people have bought?

Creating product segmentation in Websand shows you who bought what!  It might be that those 2000 sales only came from 476 people.  These segments help you to easily identify how many people bought each product or service.  A great place to start for cross selling and a real revenue driver!

When your customers last bought?

Creating customer segmentation based the last purchase date of a customer is the starting point of a customer retention programme.  

Growth tends to focus on new customers, so creating customer segmentation based on the time since the last purchase will help you to identify how active your customers really are.

Do they stick or do they walk away?

How much money customers have spent with you?

Creating customer segmentation based on how much money each customer has spent with you can be a real eye-opener.  

To be clear we are talking about the total amount that a customer has spent, not an individual spend amount.  

Creating customer segmentation based the total customer spend or customer lifetime value is a create measurement of customer loyalty and an overall measurement tool for marketing effectiveness.

Getting started with Customer Segmentation

So that’s a quick overview of what you can achieve through customer segmentation.  All of the segmentation examples provided in this blog post can be achieved through Websand, our email marketing automation platform.

If you are looking to take your email marketing to the next level we can help.  Click here to book a free 15 minute consultation, or fill out the form below.