Customer Segmentation and Targeting

Brands these days often struggle to create effective messaging. Without the right messaging, you could be losing customers to businesses that provide a better customer experience. Customer segmentation and understanding is more important than ever. 

Rising expectations of customers and the choices they have means that you have to always be at the top of your game. Businesses need to be ahead of the curve when it comes to engaging customers. That means sending relevant messages through their preferred channels, and providing content that they genuinely want to see.

Your use of data and segmentation needs to take centre stage when it comes to creating campaigns for them to be successful.

Why You Should Segment

The goal of customer segmentation is to improve the relevance and ultimately the performance of your campaigns. The specific audiences you create can be targeted with content based on their behaviour and interests.

However, there are other things to keep in mind when it comes to segmentation that will help your business perform better.

One size fits all campaigns don’t work

Relevance is one of, if not the most, important aspect of any campaign you run. There was a time when you could get away with sending batch and blast campaigns and get some results in. But these days, that method simply does not work.

A one size fits all approach to campaigns will have a negative effect on your performance in the long run. Customers want to be communicated with personally. It’s up to you as a business to provide them with that experience. If you don’t, you will begin to see an increase in your customer churn rate.

Using segments to send campaigns gives you the knowledge that at least what you’re sending is relevant to your customers’ interests.

Generate more loyal customers

Overall, it costs a lot less to retain a customer than to acquire a new one, and repeat customers spend at least 33% more per purchase. Customer segmentation is the way to go to increase your pool of loyal customers.

Your customers will be aware of your efforts to engage with them personally. It’s something that they appreciate when it happens. In order to earn their loyalty, you have to be consistent in your interactions with them and show them you know them.

Efficiency and effectiveness

By prioritising an exact group of customers that you want to engage with, you minimise the scale of your campaigns.

The scope of your campaign becomes more specific and targeted with the introduction of segmentation. The efficiency comes through the fact that you’re sending messages to people that actually want to see them. 

Effective segmentation has substantial cost-saving implications as well. Fewer emails, SMS, push notifications, etc, need to be sent. You’re effectively cutting out the people who don’t want to receive your messages, leading to less money spent on actually sending your campaign out.

Segmenting Your Audience

Your data is important for every aspect of your marketing initiatives. However, it takes the lead when it comes to segmentation. For you to know how to group your segments, you must have a solid grasp of your data.

Whether it’s information on your customer’s behaviour, spend or interests, customer segmentation depends on precise first-party data.

Segmentation is the most effective way of putting your data into action.

Building blocks of segmentation

It gets harder to control your customer base as it grows. Alongside this, customer segmentation also becomes more difficult to get right. There are plenty of different elements that you can consider in order to make a decision on which customer enters which segment.

Here, we’ll focus on three core elements.

Conditions

The qualifying reasons for why a particular customer has been included in a segment. The range of conditions is huge and is down to how you want to set up your customer segments. 

It can include things like general behaviour, the type of device your customer is using, or the source of their attribute. The options really are up to you.

Attributes

Attributes are one of the most important things to concentrate on when it comes to segmentation. These are essentially a “tag” that is assigned to a customers’ profile. Again you choose which attributes you’re interested in, and a profile can have as many different attributes assigned to it as you want.

The attributes you choose are then used to segment your customers even further for micro-targeting.

Events

Events are usually the starting point for a campaign. They can also be used as a condition for including or excluding customers from a segment. Any action a customer carries out on your website or app is considered an event.

Making Your Segments Effective

There is some consideration that has to go into how you put your segments together.

There’s two common ingredients we see across segments. Create highly focused groups using multiple data points, and make sure each segment has a very clear goal in mind.

ROI and goals

When approaching customer segmentation, this must be your starting point. Don’t waste time and resources creating segments that won’t help you achieve your primary business objectives.

Your objectives should be measurable in some way. Whether it’s increasing traffic to your website or app, generating income directly related to a campaign, or regaining a lapsed customer. Only then should you start to apply rules to identify the ideal segment, before creating the actual campaign itself.

Having a clear goal in mind is the most effective way to find the gaps in your data. If you don’t have the appropriate data to construct the segment you want, you should make it a priority to address that.

Multiple conditions

The most effective marketers use the traditional Boolean and/or rules to generate segments based on numerous factors. For instance, you may build a section of Android device users who are interested in football and haven’t used your app in the last three months.

With this degree of detail, you can develop highly personalised campaigns that connect with the target audience and drive key business goals. When sent out, your campaigns will be relevant and interesting to the receiver. This will be because of the ability you have to introduce multiple conditions.

Effects On Your Channels

Your decision to include segmentation as part of your campaign creation will have a positive impact on your results. If you decide against it, you may end up regretting that decision.

Overall, segmentation leads to an increase in engagement. But it has different effects on different channels.

Email

When it comes to email marketing, segmentation leads to far better open and click through rates. According to Mailchimp, segmented email campaigns get just over 14% more opens, and almost 65% more clicks than non segmented emails.

The easiest place to start customer segmentation for your email audience is by looking at demographics. So take factors like age, location and gender into consideration. This can tell you a lot about a customer’s needs. However, identifying customers that respond well to emails can have a huge impact on your results. Although perceived as rather elementary, it can still be incredibly effective. The main metrics you would be looking out for here are open and click through rates. If these are low for a particular customer then you should look at alternative communication channels for them. 

You’ll find that your emails will begin to perform better with segmentation practices in place.

Mobile

When it comes to personalisation there are different groups who say that mobile is in their top two most vital mediums for personalisation. 31% of millennials, 27% of Gen Z, and 19% of baby boomers. 

You should take these groups into consideration when thinking of your customer segmentation. The younger side of your population are more likely to rely on their mobile when it comes to engagement.

Consider segmenting your mobile audience and cater to the specific needs of each segment. Also keep in mind that mobile communications should not operate as a silo. They should work in tandem with your website and be complementary.

Your mobile engagement campaign performance will be more likely to increase rather than decrease. Also, your customers will have a better experience and perception of your brand.

Web

Segmenting customers that visit your website may sound like a more difficult task than it actually is.

But you can identify which web pages your customers are interacting with and send them messages based on their behaviour. You can create a segment of customers that have spent a certain amount of time on a product page.

Identifying this and creating campaigns based on this segment’s behaviour will lead to them engaging with your business more often. At the same time, they may be reminded of products and purchases that they considered but never went for.

Test Your Segments

Customer segmentation can lead you to creating some really successful campaigns that resonate massively with your audience.

As long the data is available to you, there is no limit to the segments and campaigns you come up with. It’s up to you to come up with the rest.

If you want to hear more about how Xtremepush can help you with your data consolidation and customer segmentation efforts, get in touch with the team to book a demo today.