The fact is that customer segmentation is like sex in that it’s really easy and comes naturally, but you need to know just a few basic things. Oh, and nothing really substitutes for real world experience.
What Is Customer Segmentation?
Customer segmentation is the practice of changing your communication with your customers or leads based on personas developed by looking at behaviour, demographic status, engagement levels, purchase history, sales cycle and other similar factors.
Performing customer segmentation on your contacts (leads or customers) allows you to personalize your message, to start conversations at the right time, to receive more data on your business, to improve sales and customer success or any number of other goals. And it all starts with deciding what that goal is for each message. It’s easiest to start with customizing segments for your email communication, so let’s assume this is your first task. The way to tackle this is to ask:
What Is My Goal?
The first thing you need to do when it comes to Customer Segmentation is to decide what your segments are: what are the points at which a person receives Communication message A versus B or C or D. And to let you guide that, you should think about what your own goals are with regards to the message. Do you want to:
- Inform someone about your product?
- Convert from trial to purchase?
- Renew their subscription?
- Upsell their subscription?
- Cross sell another product?
- Get feedback?
- Send useful content?
- Promote new features?
- Promote a new product?
Another way to do this is through the use of personas, or imaginary avatars that represent each segment above. So you could have ‘New Trial Nancy’ or ‘Sign Up Sameer’ as examples. The difference between creating personas and segments as I’ve described above, is that personas have more information clustered around them. Segments just tell you what stage they’re at in your lifecycle. A persona is a representation of your ideal customer at that stage. The development of personas is a deep topic and affects far more than just messaging, it also leads through into all your marketing efforts, product design and even pricing. However from a communication point of view and especially when you’re starting pout, it’s probably best to begin with a goal-based system as noted above.
Each of the goals above needs a separate, unique message to be delivered to a separate audience that’s a sub-set of the users your company interacts with. Speaking of which, our next question is:
What Is My Audience?
Every company has customers or leads at different stages of the sales cycle, different demographics, different interest levels. You need to decide up front how to slice these audiences into manageable chunks.
As you can see in this diagram, the message types and user types both come together to determine what sort of message gets sent.
Let’s Go Deeper
Once you’ve mastered the art of sending communication according to user types and needs, why stop there? Why not start to use all the data you have at your fingertips to really hyper-target your users? For example, you should be utilizing usage data from your app or product to determine which features are not being used and send emails / communications highlighting those features or asking if there’s something wrong. Or, you could track cart abandons (for an e-commerce application) and send automated discounts to incentivize a purchase. Or… Well, the sky is the limit. Or rather, your imagination is the limit.
Now Go Wide
Email is, of course, just one means of communicating with your user. Once you’re used to sending them email messages based on their situation and who they are, you should look into things like in-app notifications (again, targeted to situation and user type) as well as sharing this information on user type with other verticals within your business structure, like customer service, so that they too can change the way they interact with users based on their segments.
The author Dennis P. Reed possesses a vast experience in the IT industry, especially in the domains of website and mobile app development and digital marketing. He writes on topics encompassing the above mentioned domains and is considered a maven in his chosen field – Information Technology.