One of the main reasons why many new products fail is because marketers fall prey to the concept of “one-size-fits-all.” It simply doesn’t work in marketing. 65 to 75 percent of new products have failed to generate the anticipated revenue or profit due to a one-size-fits-all approach.
So rather than approaching all of your customers in the same way, it’s always better to put them in separate groups. You can group them based on their behavior, psycho-graphics, demographics, or geographical information.
This will help you create a more personalized messaging for your customers that connects better and drives greater revenue.
In this post, we’ll take a look at how customer segmentation can improve your marketing results.
Increases Customer Retention
If you want your customers to keep coming back to you and select you over your competitors, you need to win their trust. Customer segmentation can help you devise strategies to gain the trust and confidence of your customers and increase your customer retention rate.
Segmentation of data helps you to make adjustments to your services or products and offer the best to your customers. Such adjustments or tailoring of services or products can help you meet the specific desires or needs of your customers. This can help you win the trust and loyalty of your customers.
When customer segmentation is done correctly, you can stay in touch with your customers even after a sale.
Perhaps you can ask them to fill out a customer satisfaction form. You can give them some additional useful information about the product they have purchased. Or ask them to sign up for your newsletter to get all of the news and information about your services or products.
Old Navy offers an incentive to encourage more people to sign up to their newsletter. Once a customer signs up, they receive an email with a coupon code that gives them a 20 percent discount on their next purchase.
Along with this, they also provide you an option to update your preferences. This data is used for segmentation so you can receive information that truly matters to you.
Segmentation of customers will give you an overall idea of their wants and desires. And it will allow you to go the extra mile and show them that you really care about them.
As a marketer, your utmost priority should be to focus on the needs of your customers. Segmentation will help you focus on the right people for the right reasons.
Knowing your customers better will help you cater to their needs more efficiently. This will also improve your relationships with your customers.
Properly-analyzed customer segments can give you a much better understanding of a customer’s perspective. It will guide you on what your customers want from your services or products.
In the process, you can tailor or upgrade your products or services according to the needs of your customers. And then you can make them feel special.
Additionally, the segmented data can be used to create personalized advertising and marketing campaigns for various sets of customers.
One of the best examples of personalized advertising is that of L’Oreal Paris.
The beauty and make up world keeps evolving with the introduction of digital media to it. To help users leverage the digital experience and make a purchase, L’Oreal created an application called MakeupGenius.
This allows prospects to get a better feel of the products by applying them virtually. Prospects need to download the app and scan their faces to see how they may look with the makeup on.
Segmentation increases the possibility of converting target audiences into potential customers, and potential customers into actual customers. Without segmentation, you may be simply throwing stones in the dark and hoping for the best.
Helps with price optimization
Customer segmentation can help you in optimizing the prices of your products or services. The segmentation exercise will give you an idea of the socio-economic status of your customers. Then you can leverage this data and offer your products or services at a price which is affordable to your customers.
Optimizing the prices of your services or products will ensure that your customers are encouraged enough to make a purchase. And they get the maximum benefit from their investment. This will also make sure that your business generates maximum profits and revenue.
Helps to expand
Through customer segmentation, you can expand your business in two different ways.
First, you can expand your company geographically. Segmentation will allow you to tap into audiences with demographics similar to your existing customer base. This way you can strategically expand your business to newer geographical locations.
For example, Uber initially started their business in San Francisco. During this time, they collated and collected data and created customer segments. And once it was financially viable, they started venturing into other metropolitan cities of the country.
Second, through customer segmentation, you can expand your business by adding new offerings or upgrading them. You need to find out the pain points of your existing customers and provide effective solutions. This will help you win their trust and confidence.
Once their trust and confidence has been established, you can try to find a solution to another key pain point. Your customers will be open to trying out your solutions and will trust you more.
One of the best examples of this strategy in use is that by Apple.
As you are probably aware, Apple started off by creating computers. However, they went on to diversify their product portfolio and introduced many new products such as mobile phones, smartwatches, and even TVs.
Apple has won the trust of their customers because they uncompromisingly work towards what their customers want.
With the help of customer segmentation, you can understand your customers at a personal level. And this will guide you to expanding and growing your business.
Are You Ready to Give it a Try?
The most important objective of customer segmentation is to get to know your customers and their behavioral patterns. This will help you provide them with the best of your services and products.
For effective customer segmentation, you will need high-quality and accurate data. It is the foundation of your segmentation process. Proper customer data will guide you in providing a more personalized experience to your customers. This will ensure that your customers keep coming back to you.
If you can make your customers feel special by offering exclusivity, they will always choose you over your competition.