Customer segmentation is the process of dividing customers into different groups based on common characteristics, such as demographics, behaviors, and affinity.
This practice is particularly vital for businesses that rely on customer loyalty or repeat purchases, such as SaaS companies and eCommerce businesses.
Intelligent customer segmentation tools let you develop clear audience groups among your current customer base, letting you enhance your future marketing efforts and sales practices.
Using an automated customer segmentation tool allows you to visualize data from multiple sources without having to manually arrange contacts in your CRM. Like Health Stages.
As with most business initiatives, the goals and outputs of customer segmentation research will likely depend on your company’s stage, market conditions, and a lot of other variables. However, there are some relatively standard schemes that coincide—or at the very least overlap—with most needs-based or value-based segmentation initiatives.
For example, here are six standard segmentation schemes that could be applied to your customer segmentation research:
It is important to note that even if a market is divided into one of the schemes above, it is still not a valid segmentation of the market unless it results in meaningful differences in customers’ values and needs, the company’s value proposition, or the go-to-market strategy associated with each scheme. In such cases, it is merely a convenient organization of the market that has no strategic or operational value.
Create a more personalized Experience for your customers
By segmenting your customers, you identify trends with each group and this allows you to deliver a more personalized message to its members. For example, if you identify one segment as most likely to churn, you may want to send them an activation email around your product and their usage or give them a call to see what they struggle with. The point is that you’re connecting with them on a personal level.
Beat The Competition
Understanding your customers allows you to provide a better customer experience which will keep consumers coming back to you. Companies who don’t segment their customers will find themselves falling behind as you race ahead. One study found that 63%-78% of new products fail to meet their revenue targets. A key reason that this happens is that the business has failed to understand what their customers really want and have gone for a one-size-fits-all approach.
Using an automated customer segmentation tool allows you to visualize data from multiple sources without having to manually arrange contacts in your CRM.
If you’re wondering which customer segmentation tool is best, you’ve probably come across a few names.
There are multiple ways to look at the benefits of customer segmentation.
We could look at a chart or a cohort between two different customer segments in their contributions to ARR and MRR. We could talk about understanding buyer personas to the granular level and creating an experience that builds trust – thus making it incapable of leaving your product.
Incorporating Product Analytics into Your Customer Segmentation
Segmenting customers by their product usage helps reveal the correlation between their behavior (login frequency, actions taken, feature usage, etc.) and your subscription metrics (ARR, MRR).
Behavior is such a critical element to effective customer segmentation because it lets you know how certain features or actions impact your conversion and retention rates.
Let’s say there is a mid-sized company that makes marketing automation software. The product managers are tempted to continue to add features but accept they have to double down on their newsletter creation experience. They are ignoring the requests of over half the new users they acquire.
The newsletter feature is one of the most used feature by their most valuable customer segment.
By optimizing their experience, they improve their retention rates, create upsell opportunities, and acquire similar customers who have the same needs.
Deciding on which customers to focus on is painful but worth it.
Now that we have covered how influential customer segmentation is in determining growth and product strategy, we can explore a powerful platform like this in a tailored product tour. Request your tour right now.
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Leverage any data without needing engineering.
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Easily create customer segments based on any product interaction.
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