What is customer segmentation?
Customer segmentation, or market segmentation, divides your customers into categories based on shared characteristics. These characteristics could be anything from age, gender, and profession to more defined categories like female gamers in their 40s or doctors who chose to purchase a particular brand of medicine over another.
This type of practice helps companies market their products or services more effectively. This also enables you to be more customer-centric to grow your business. This is why customer segmentation is a beneficial tool for startups.
Compared to large companies, startups have fewer resources. This means that you need to be smart about where you spend these resources as a startup.
Segmentation tips for startups
The first thing you need to do is learn how to segment your customers adequately. There are four main types of customer segmentation: demographic, psychographic, behavioral, and geographic.
Learn to do proper customer segmentation research
Demographic Segmentation
When we talk of demographic segmentation, we consider the observable differences in people regarding age, gender, marital status, income, race, education, religion, nationality, and family type and size. This is the most basic segmentation type and usually gives you a somewhat broader result. This is useful when you are just starting to identify your target audience. Or when you are just targeting one broad demographic. For example, let’s say you target married men with two to three children. Then, using demographic segmentation to pull the data from your database and running analytics on the results, you can come up with a list of customers to whom you can market a particular product. For example, an SUV is big enough for the family and “cool” enough to drive alone.
Psychographic Segmentation
Psychographic segmentation is similar to demographic segmentation, but the focus of psychographic segmentation is customers’ mental and emotional characteristics. These include lifestyle, attitudes, and personal beliefs. You can use this segmentation type together with your demographic segmentation to come up with targeted customers. For example, you have a gym and want to attract more customers to your newly opened branch. You can start by using demographic segmentation to map out the type of people within that area. For example, maybe there are a lot of parents with school-aged children who have some free time during the day. You then learn about their lifestyle and how your gym would fit into it.
Geographic Segmentation
Geolocation advertising has become an essential part of digital marketing in recent years. It allows you to target customers based on their geographic location, and this is where geographic segmentation comes in handy. This is useful when you want to run ads for a specific location. For example, you can’t sell winter gear to your customers in the tropics, but you can sell them something to keep them cool.
Behavioral Segmentation
Behavioral segmentation is something you can see from your customers’ shopping habits. Do they shop more when there are sales? Are they partial to a specific type of product? Behavioral segmentation will also provide a good barometer for monitoring customer health scores. Do you see an uptick in customers, or are they dropping off? How are they using your products? Do they derive value from them?
Talk to your customers
The best way to find out what your customers need is to talk to them, and you can do so by conducting surveys. Just make sure that you have sound content management systems in place so that sifting through your results would be easy.
If your startup is low on resources, outsource customer interactions.
Tomorrow night we would have been hosting a quiz at our beloved home @thehopeandruin…
We will be back when the time is right, but in the meantime – would any of you like to see us try some virtual/live stream quizzes whilst we’re all staying safe indoors?
Barney IMQ x
— Ink Mathematics (@ink_mathematics) March 22, 2020
Chatbots are an excellent tool to invest in, especially for startups. They help you provide round-the-clock service without needing additional FTEs to man the chat line after hours. You can arm these chatbots with answers to frequently asked questions, empower them to help customers set appointments, and help your customers with basic troubleshooting. Then, you can utilize your customer service representatives for live chats during working hours for a complete and robust service.
You can also do after-sales calls for your customers, asking them how they are doing and if your products are helping them in their daily lives. In today’s online world, getting a call from an actual human can be a refreshing change that will stick to the minds of your customers.
Once you find out what your customers need, you can start marketing your products to the right people instead of blindly shooting your ads and email blasts, hoping to hit your target.
Online advertising
Once you know your target customers, start investing in online ads. Google ads, Facebook ads, there is a plethora of places where you can drop your ads and have them be seen. To ensure effective marketing strategies, integrate Google Analytics with Salesforce or another CRM to get valuable insights into customer behavior and conversion rates. This integration allows you to monitor and analyze the performance of your ads, enabling you to make data-driven decisions.It’s also essential to leverage SEO and make sure that you stay on budget. The cost per click of Google ads versus Bing ads is quite a lot, so do your research. Make sure the sites are not oversaturated with ads as well.
Use social media
With almost everybody on a social media platform, you can create social media groups exclusive to your customers with your target audience. For example, are your customers on Facebook? Create a Facebook group for your customers where they can learn about your new products about to go on sale.
For B2B clients and customers, you could also use LinkedIn’s hyper-granular targeting capabilities and LinkedIn automation tools.
Drive more in-store foot traffic 👣👣👣 and increase buyer spending. pic.twitter.com/L3wlWvj6Oh
— Twitter Marketing (@TwitterMktg) August 8, 2017
Use witty commentaries on your Twitter to engage your customers in some light-hearted banter. Set your Twitter posts in advance with a good tweet scheduler available in the market. Or use Instagram to post photos of your products and announce sales or exclusive activities around your brand. You can even start a TikTok trend if you want. The best part of this is that it’s all free.
Customer Segmentation for Startups
Customer segmentation is a must for startups. They can help you draft a successful marketing campaign based on customer segmentation research and provide you with a better picture of your customers, their behaviors, and their needs for your business.
