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What is Customer Segmentation?

by | Nov 30, 2021

What is customer segmentation and how does it work?

Customer Segmentation and using big data to drive positive results in business is all the rage at the moment. Companies big and small are using some form of segmentation in their businesses through the use of technology of good ole fashioned business practices. But what exactly is Customer Segmentation, and how can it help your business? We take a quick look at Customer Segmentation in this article.

What exactly is customer segmentation?

At its core, customer segmentation is the practise of dividing the customers of a business into groups based on certain unique characteristics and qualities that customers share between them.

The characteristics or qualities that are used to group the customers can vary from business to business but generally cover 4 key areas: Geographics, Demographics, Psychographics and Behaviour. We will talk about these in detail in our upcoming article on Customer Segmentation.

How can customer segmentation help?

Customer Segmentation allows a business to tailor the way the business approaches and communicates with the various segmented groups. It helps businesses unlock hidden value in their customer data and drive highly targeted marketing and communications.

Here’s our Top 5 reasons how Customer Segmentation can help:

1. Selecting the Right Messaging Medium

Depending on the type of segment, a business might choose a communication medium that best suits the segment. E.g Email, SMS, WhatsApp or TV Ad. This can be a sure way of getting the message in front of the right segment.

2. Crafting the Right Message

Segmentation can also help a business create a highly targeted marketing message that resonates with that segment, but not necessarily others. E.g. A monthly subscriber segment could be targeted with a specific message that lets them unlock a discount if they upgrade to an annual subscription.

3. Creating Meaningful Relationships

Segmentation allows a business to establish and foster meaningful relationships with their customers. Data derived from a segment can help create a deeper and personalised interaction that drives better positive action and higher conversion rates.

4. Improving Customer Service

With data on the types of qualities and characteristics of a given segment, a business can provide a better contextual customer service experience that resonates better with the segment.

5. Upselling and cross-selling other products and services

Not everyone is a prime target for upselling or cross-selling products. Behavioural and psychographic data on specific segments can be a key ingredient in being able to do this well.

Customer Segmentation has the potential to allow businesses to engage their customers in a way that is most effective. It is a process that can be adopted by businesses of all sizes to drive positive action and get a better return on investment on their engagement and marketing solutions.

Superfluid Labs and Beem have partnered to deliver Data-Driven Marketing & Communications for Businesses Across Africa. Book a consultation with us to find out how we can help you drive your Data Driven Marketing.

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