What is customer segmentation?

Customer segmentation is a crucial marketing strategy that helps firms increase sales and accelerate revenues instantly by targeting the right audience. It also enhances customer engagement and improves resource allocation.

However, to reap all such benefits, it is essential first to understand its true meaning and how it is done. So, keep reading. The forthcoming content will discuss customer segmentation for beginners and tools you can use.

What is customer segmentation?

Customer segmentation is the process of dividing the whole market into different groups that have similar characteristics or interests.

These traits can take multiple forms, such as behaviors, demographics, etc. By segmenting the total customer base, the company aims to create more personalized marketing strategies to better convince the audience that it is most closely related to.

For instance, a dog food company would be wasting its resources if it tried to convince people without pets to purchase its products. Hence, it will segment its consumer base, specifically focusing on dog owners.

Types of Customer Segmentation

There are four basic types of customer segmentation discussed as follows:

1. Demographic segmentation; It is based on demographic factors like age, gender, income bracket and education.
2. Geographic segmentation: It considers the geographic factors, including country, region, city, etc.
3. Behavioral segmentation: Behavioral segmentation focuses on the purchasing behavior of customers.
4. Psychographic segmentation: It is based upon the potential consumer base's lifestyle and mental phenomenons.

How to do e-commerce customer segmentation?

Customer segmentation can be done in a few simple steps, including:

1. Data collection: At the first step, you need to collect data from as many resources as possible, including website analytics, customer surveys, and purchase history.
2. Data analysis: Now, analyze the collected data and identify patterns and common traits of the customers.
3. Segment: Clearly segment your consumer base based on data collection and analysis.
4. Strategy development: Develop marketing strategies for each segment.
5. Execution: Implement the strategy and monitor to see how effective your customer segmentation is.

Tools for segmentation

From data collection to strategy execution, customer segmentation requires multiple tools at every step. Here are some provenly effective tools you can consider in this process.

1. Google Analytics: Helps to gain insight into customer behaviors and demographic information.
2. Hubspot is a comprehensive CRM tool that helps users gain detailed segmentation information and approaches to target marketing.
3. DataDripper: An emerging tool that offers insights into e-commerce businesses for more effective customer segmentation.
4. Mailchimp: Social studies and surveys show that personalized emails enhance the open rate by 29%. For designing such campaigns, you can consider Mailchimp. It provides a set of tools for email marketing based on the customer behavior and preferences you observe from the data collection.

Things to consider while segmenting your customer base

Here are some crucial things you must consider when preparing the customer segmentation plan for your industry.

1. Data quality: Always ensure that you take high-quality data because lower quality can lead to inaccurate judgment. If you are confused, join the DataDripper beta waitlist, which can help you improve data accuracy and insights.
2. Resource intensiveness: The process can be resource intensive. Collaborate with tools, as mentioned above, to streamline the segmentation process.
3. Dynamic market conditions: Market conditions can fluctuate at any time depending on competitors' entry, climate changes, etc. Hence, it is crucial to stay updated on current trends and continue conducting market surveys and customer data to ensure staying in the race for a longer period.

Conclusion

Bottom line, customer segmentation is an effective marketing strategy that can accelerate your business if you know how to do it right. That is why we have formed this guide, which not only discusses customer segmentation basics but also all the other crucial information.

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