Customer Segmentation and Its Importance In Marketing Campaigns
Nowadays, audiences expect personalized marketing. As per research, 80% of customers are more likely to buy a product from a brand if they offer a personalized experience. But what’s holding many businesses back is they don’t exactly understand their target audience. Not understanding the target audience can hamper marketing campaigns leaving them directionless.
Customer segmentation works as a solution to this problem. The process goes into the specifics of the target audience making it easier for marketers to understand their ideal customer.
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In this blog, you’d find extensive tips on how to execute customer segmentation so that you can set up robust marketing campaigns that are bound to give you results.
What Is Customer Segmentation?
As the term suggests, Customer segmentation is segmenting the customer. It’s the basic principle of dividing your customers into groups, or segments based on factors such as gender, age, interests, etc.
At a micro level, customers can be better understood which is why customer segmentation is most effective. Customer segmentation helps a business understand its customers better and reach out to them in a more personalized way.
When customer segmentation is used, campaigns are much better developed. Personalized marketing campaigns can be used effectively to drive positive results.
Even former customers can be targeted with such personalized marketing attempts and new consumers can be encouraged.
Hence, customer segmentation is the best bet one can take when it comes to today’s competitive marketing. Certainly, you can’t drive each customer away from your competitor but customer segmentation holds you a good chance.
What Value Does Customer Segmentation Bring?
These are some of the benefits that customer segmentation brings for businesses:
- It Builds Loyalty: To put it simply, individuals are more loyal to brands that offer personalized solutions. For tailored marketing, customer segmentation is of utmost importance. As per Salesforce, 70% of consumers believe that a company’s understanding of personal needs influences their loyalty. This should tell you how much individuals crave personalization.
- Strengthens The Overall Marketing Process: If you have a clearly defined market audience for your business, you would have a direction and would know what to do. This improves the overall marketing process.
- People Just Shop More: If you drive tailored marketing campaigns, individuals are loyal and more likely to be happy with your efforts. Customers become more dedicated to your services, and the overall conversion rate increases over time. According to Accenture, 91% of customers say that they are more likely to shop with a brand that provides offers and recommendations that are important to them.
- Customer Support: With a better understanding of your target consumers, you’re more likely to assist or support them. Customer segmentation also helps a business understand the needs of their target consumers’ which is why they can assist them better.
The Various Models Of Customer Segmentation Analysis
1. Demographic Segmentation
Dividing the target audience based on age, occupation, gender, family status, and income comes under demographic segmentation. With demographic segmentation, you can run campaigns that are likely to render positive results.
Let’s say, your audience is aged 20-to 55. If you run an ad on Instagram, 20-40-year-olds are likely to respond to it. However, you are still missing out on a 40-the 55-year-old audience who might be more active on another platform, let’s say Facebook. This gives you a start as to where you should run your ads making your campaigns more effective.
This segmentation is easy to get started with. However, dividing the audience by demographics can also lead to false assumptions. A business can easily lose its brand or targeted voice with its audience, especially if the demographics are vast. Therefore, it’s a valuable segmentation only alongside other segmentations.
2. Psychographic Segmentation
Psychographic segmentation is dividing your target audience based on common habits in lifestyle, personality, values, hobbies, and more. This segmentation allows you to understand your target audience extensively. Hence, this type of segmentation is extremely useful to run focused, targeted campaigns. However, the tough part is gathering such in-depth data.
Reaching out with a core message is extremely complicated. However, that’s where the efficacy lies. The more micro the data gathered the more precise the campaigns can run.
3. Behavioral Segmentation
Wish to understand how your audience interacts with your business? Try behavioral segmentation. Behavioral segmentation can help a business understand what its target audience thinks of them. It’s simply grouping individuals based on behavioral patterns.
Understanding what a consumer thinks about your brand can successfully allow you to reach out to them in a more effective way at every stage of the journey.
You can use behavioral segmentation at any stage of the marketing strategy, whether it could be while sending promotional emails or running paid ads.
Therefore, by separating campaigns based on audience behavior, you can design a campaign that’s likely to be more successful. You can conveniently design marketing strategies specifically designed to how an audience interacts with your business. Hence, this type of segmentation is vital if you want to add personalization to your marketing strategy.
4. Geographic Segmentation
Every person in a specific region has certain habits. This is where Geographic segmentation comes into play. It’s a way of categorizing an audience based on how they live which is why it’s fairly simple to get started with. But again, it doesn’t reveal much about your audience. You can plan this segmentation alongside other possible models.
However, it still can be pretty useful if it does reveal some meaningful data. Driving marketing campaigns based on area habits can still help as people of certain regions do tend to have some specific preferences. So, driving marketing campaigns based on these habits can still prove to be useful.
5. Needs-Based Segmentation
Needs-Based Segmentation helps your business understand what your audience requires from you. If they use your products, is it sufficing their requirements? It’s dividing your audience based on these criteria.
People have needs and requirements, and they look for specific products that can help resolve these problems.
Consider this example of a restaurant. Two individuals have different requirements. One expects good vegetarian food from the restaurant whereas, another one wants good nonvegetarian food from the restaurant. These two individuals require different things from the same restaurant. Hence, driving the same marketing campaign won’t work as both these individuals have different requirements.
Needs-Based Segmentation is considered potent, however, the complicated part is gathering such precise data. Campaigns can fall apart quickly if the right data set is not available. Hence, only with an accurate data set, is this segmentation likely to benefit.
Some Other Models Of Customer Segmentation Analysis
There are certainly some other ways to divide your target audience as well. You can also divide your customers based on what device, or even software, and hardware they use. This data helps a business understand what device are they using to access their business website on the web.
For instance, giving your users a poor mobile experience can prove to be costly. Many users access the world wide web these days with their phones. So, if your website is not optimized for mobile that can hurt your business quite a lot. As per Google, if the website is too slow or a user can’t find the information quickly, 29% of smartphone users are likely to switch to another app or website.
Another way of segmenting an audience is based on the value that they bring. If a customer spends more money on your product, then you know that customer is important. It’s a great way to identify loyal customers. You can easily go aggressive with your marketing to these customers since they are most likely to buy.
It’s important to retain loyal customers because acquiring new customers is much more expensive than retaining them. However, this model of audience segmentation is not available if you don’t have enough data or don’t have enough customers yet. For instance, a startup is unlikely to use this model.
How EZ Rankings Can Run Your Targeted Campaigns?
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This includes conducting audience research. With our experience, we help a business go big on marketing campaigns with the correct customer segmentation Analysis. We get into the minor details of an audience and help a business get the most out of their marketing with this data.
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Conclusion
Dividing audiences based on certain factors is extremely beneficial for marketers. With audience segmentation, targeted campaigns are easy to set up and can even prove to be effective. Marketers know precisely which ad to target to a specific individual. With the right data set and analysis, a business can know what to present to its audience, and thus increase its ROI and sales.