As a business owner or marketer, you should forget about the one-size-fits-all approach. It’s a thing of the past. Now, segmentation defines customer experience (CX).
Picture this:
A customer receives an email from a retailer: “Your kids will love these new summer hats!”
Wait… Why do you send me this? I don’t have any kids!
As a result, the person has a poor experience with the brand.
Why did it happen? Because the seller didn’t have any customer segmentation strategy.
This guide will teach you how to play the segmentation game and win at it.
Need details? Let’s get to business and develop a customer segmentation strategy to revolutionize your customer experience.
Customer Segmentation Models to Choose From
Customer segmentation is a process of dividing a large customer base into smaller chunks based on some common characteristic features and targeting each group differently.
There are five basic types of customer segmentation:
- Needs-based
- Demographic
- Psychographic
- Behavioral
- Geographic
Let’s explore them one by one.
Needs-based segmentation
Main focus: a specific need or problem.
As of today, 73% of consumers want companies to understand their expectations and requirements. It’s up from 66% in 2020.
“Whether you’re a B2C or B2B business, segmenting your audience by needs is the first go-to solution if you aim at a superior customer experience,” claims Morgan Taylor, Co-Founder of Jolly SEO. “Needs and desires are internal motives that drive consumer behavior and influence interactions with brands. That’s why satisfying your customer’s needs should be your absolute prerogative.”
Demographic segmentation
Main focus: demographic factors.
When you perform demographic segmentation, you should rely on such data points as gender, age, ethnicity, religion, education, income, occupation, etc.
Example:
To create a personalized quote on life insurance, Choice Mutual offers a short questionnaire that categorizes clients by gender and other demographic variables.
Anthony Martin, Founder and CEO of Choice Mutual, believes that “No business can survive without segmenting the audience demographically. It’s a solid foundation for a positive CX. It allows you to understand your customers better and deliver more relevant marketing messages to them.”
Psychographic segmentation
Main focus: psychological factors.
It implies targeting your customers based on their personalities, likes/dislikes, lifestyle choices, emotions, goals, etc.
Example:
Some people experience the fear of missing out (FOMO) more acutely than others. It is a feeling of anxiety that arises from the risk of losing an opportunity. Brands have an ideal solution for such individuals: special offers and discounts. Look at this mystery gift from Shiseido.
Behavioral segmentation
Main focus: consumer behavior.
It is the most effective segmentation method, according to 91% of marketers.
Behavior-based segmentation concerns four main aspects:
- Buying habits
- Usage behaviors
- Experienced benefits from using a product/service
- Time-driven purchases
Examples:
Let’s say you spot cart abandoners. You may deliver real-time customer experience and retain them with a cart-abandonment email.
Then there are time-driven purchasing behaviors. Some people tend to shop more actively before and during holidays. It’s easier to convert such buyers during the holiday season.
In 2022, SocialChamp offered a special discount to create the best Black Friday customer experience.
Geographic segmentation
Main focus: location.
It means profiling your customers by the physical area or territory where they are located.
Example:
You may follow the example of Berlin Packaging. If you browse the company’s website from Spain, it looks like this.
If you switch your location to Romania, you face a different homepage with a video that immerses you into the website completely.
Speaking about videos… Video marketing is one of the hottest CX trends today.
How to Implement a Customer Segmentation Strategy for Better CX
It’s high time to take a strategic approach to categorizing customers and improving customer experiences.
1) Identify your goals and prioritize several segments
It’s a starting point in customer segmentation analysis. Here, you need to define your objectives to classify customers. Moreover, it’s necessary to visualize your buyer personas, that is, detailed profiles of people who represent your target audience. After that, you should determine which personas are the most valuable for your business. Based on this, you will be able to create targeted content with your buyers in mind and enhance CX.
Andrew Pierce, Founder of Real Estate Holding Company, provides the following example from the real estate industry:
“If you take real estate agents, they typically divide their clients into groups based on marital status (married or single) and income (high, medium, or low). Some real estate companies prioritize high-income clients and offer luxury listings in the first place.”
2) Diversify your marketing methods for each group
To employ customer segmentation successfully, you should test different marketing tactics and find the most suitable one for each segment. Consider several examples of what works well for creating superb CX in particular groups.
TikTok marketing
When it comes to social media, a creative TikTok strategy is by far the most effective cheat code if you need to market your products or services to younger generations.
E.g., Popl is one of the companies that rocked its young audience with a Branded Challenge and influencer marketing on TikTok. It resulted in a viral video (80.2M views) with TikTok fitness star Endicci using Popl’s digital business card.
Influencer marketing has an immense potential to revive CX for Millennials and Gen Z if these are your targeted groups.
Interactive content
When you bring interactivity into play, you engage “doers” or people who prefer to act and take part in different activities. At this rate, passive consumers become actively engaged and feel a sense of belonging to the community.
Try some interactive content from the below list:
- Quizzes (product finder quiz, personality test, etc.)
- Games
- Surveys
- Calculators
- Image sliders
- Interactive forms
A spin-to-win wheel has become a popular interactive tool among e-commerce businesses.
You may also try AR, VR, or other Metaverse customer experience innovations to target those who hunt for cutting-edge technologies.
Trendy content
Following trends is the best-fit solution for businesses that prefer to target their customers by the common interests they share.
Let’s take Wednesday, a Netflix series that revived an interest in all gothic among Gen Zers. Many brands hopped on this trendy wave immediately to fulfill customer expectations and keep up with the enthusiasm of their audiences about Wednesday Addams-inspired goods.
Foter is one of them. The magazine followed the Wednesday fashion trend and featured corresponding designs and interiors in its articles.
Some clothing companies started selling Wednesday outfits and accessories.
Limited-time offers
Time-bound offers are driven by two psychological forces: a sense of urgency and FOMO. They work best for impulse buyers.
Email marketing is a great direct avenue for such promotions. Below are some examples of emails with limited-time offers from e-commerce brands:
- Free Overnight Shipping 📦 Order By 1PM EST! – Dolls Kill
- Earn a $25 Credit for a Limited Time – Bloomscape
- Knock knock… Just Hours Left! – Soylent
- Flash Sale: 40% Off White Lucent – Shiseido
- Ends tomorrow! 25% off everything – TOMS
- LIMITED TIME: Theragun Pro (RED) $200 off – Therabody
- Extra 15% OFF Is Only Here Until Tonight! – BLUEFLY
You can also embed a time-bound promotion on your website or create a pop-up for it. Foundr, for example, spiced up the customer experience on Christmas with a holiday sale.
3) Strive for personalized communication
Back to email marketing.
It still remains the best way to communicate with your leads and customers and stay in touch with them all the time. It’s also worth knowing that the open rates of segmented and personalized emails are typically 14.31% higher than those of non-segmented campaigns.
How can you achieve customer experience personalization via email?
Tip #1. Start classifying your leads with an email subscription form.
See how Neutrogena does that. When subscribing to the company’s newsletter, a website visitor should indicate a skin type, birthday, and primary skin concern.
Tip #2. Why not call your customers by name?
Using your buyer’s name enables you to build trust, mutual respect, and loyalty. In the below email, for example, Butternut Box uses the person’s name twice: in the subject line and the email body.
4) Tap into new segments
“In the ever-evolving business landscape of today, brands should re-segment their audiences regularly and try out new segments,” recommends Ken Savage, Owner at Ken Savage. “For instance, you can go with sustainable and eco-friendly solutions to support the lifestyle choice of today’s consumers.”
Indeed, sustainability is one of the unique customer experience trends that will shape 2023. Such brands as ZARA, H&M, Nike, and others have already embraced it in their customer segmentation strategies. See Nike’s sustainability page below.
5) Collect customer data and analyze it regularly
Customer data becomes a defining factor in collecting insights for your customer segmentation strategy. For example, you can accumulate customer feedback, notice dissatisfied clients, and direct your CX campaigns to this group specifically.
Here’s how Bank Gaborone collects feedback from clients on social media.
Once you’ve gathered all the necessary information, there’s one more step to take before acting on it. It’s the customer feedback analysis stage.
How do you analyze tons of comments, answers, or reviews from your customers?
The easiest way is to use an intelligent CX analytics platform that will do the job for you. You can analyze buyers’ opinions in real time with Clootrack. It will help you grasp the genuine needs of your audience and respond fast to the ever-changing customer priorities.
Don’t forget about regular analysis of other data that will later help you break your customers into groups:
Segment Your Customers to Play the CX Game Well
Customer segmentation and customer experience transformation may seem tough if you don’t know the main rules (and hacks).
Hopefully, this guide has given you all of them to put a customer segmentation strategy in place and ensure the best CX possible. Segment your customers and understand each of them like never before to deliver an unsurpassed customer experience.
Guest Blog Author
Roman Shvydun
Roman Shvydun is a freelance writer. He writes informative articles about marketing, business, productivity, workplace culture, etc. During 10+ years of content creation experience, his articles have helped numerous entrepreneurs to scale up their businesses.