Customer segmentation strategy: 3 ways to drive your brand growth

customer segmentation

As children, we learned to segment at the basic level. From segmenting words, we progressed to segmenting color, food, clothes, gender, and pretty much everything around us. From social cliques in school to subjects of study and eventually your job profile at work, we began to group and define every functional aspect of life. As a brand, market segmentation assumes increasing significance. In a dynamic market battling the influx of changes wrought by a disruptive virus, your usual consumer segments are continuously shifting. This calls for periodically evaluating and redefining your consumer segments. Is it time to take a step back and take a renewed approach to your customer segmentation studies? Absolutely. 

A market segmentation study typically offers insights into consumer needs, values, attitudes, behaviors, demographic data to both B2C and B2B companies, and firmographic data, such as company size and revenue and product category details relevant to B2B companies. 

To derive accurate consumer insights to help in product/service creation, positioning, and marketing, customer segmentation is essential. Broadly, this means segregating consumers into distinct groups based on common characteristics for effective targeting. Once consumer data is collected and understood, the following segmentations among others are taken into account: 

  1. Benefit/Need-based
  2. Demographic 
  3. Psychographic
  4. Ethnographic

A 360-degree understanding of the customer’s purchase journey from need identification, the information sought and influences to the actual purchase process and post-purchase experience is important. Not only does this aid in understanding where to segment them, but it also offers you deeper insight for offering personalized products and experiences. The “one size fits all” solution never worked. Identifying the right target group helps determine their motivations and preferences. This can help deep dive into a niche audience to find the right product and marketing mix for them. Identifying the right consumer for your product can help your brand correlate your positioning to resonate with the right audience. Moreover, it will aid the post-purchase journey with targeted promotional campaigns and loyalty hooks. 

While segmenting your customers into broad categories (as mentioned above) is a good start, today’s customer requires a hybrid multi-lens approach. New-age customers are multi-layered and cannot be bracketed under one category alone. Primary segments today have micro-segments with overlapping consumer sets. In this present scenario, how can you get the most out of your segmentation studies? We offer three tips for optimum results: 

1. Leverage social media for real-time data 

4.62 billion people worldwide use social media for an average of 2.5 hours a day. Every daily occurrence- from personal to global news is out there as memes and opinions. Consumer habits and behaviors are dictated by reigning social trends. Needless to say, social media can serve as a minefield for unearthing evolving consumer data- and in real-time. A hybrid customer segmentation strategy incorporating processes like social listening combined with other structured data sources can reveal microsegments and track micro-shifts in their preferences. This can help create comprehensive customer segment profiles that go beyond primary character traits and unveil unmet needs, behavior patterns, and emotional motivators.

A well-defined segment lends for personalized, tailored experiences. Research even indicates that 87% of Americans consent to various details of their behavior being tracked as part of a personalized brand experience. Putting your consumer’s interests at the center of brand content leads to a hyper-targeted customer experience- ensuring customer retention and loyalty. 

2. Power your process with the latest automation 

Major technology companies like Alibaba, Netflix, Amazon, Facebook, and Google are already employing machine learning and AI tools to provide their customers with personalized services by making decisions based on their buyer’s intent data. AI-powered approaches such as intent analysis and personalized marketing across channels leverage data across channels to implement strategies across relevant macro and micro consumer segments. AI processes can even help streamline email marketing to deliver relevant content at the right time of day, with the right tone of voice, the right offers, and the personal touches that will encourage long-term relationships. 

In recent news, sparkling water brand Sodastream collaborated with Optimove to scale up their segmentation and personalize their customer engagement. Leveraging Optimove’s AI-mapped CRM journey, Sodastream seeks to deliver high-impact product combinations at all times- lending for hyper-personalized customer experiences at a large scale. 

3. Combine research methods to create well-defined customer segments

The standard segmentation research approach looks at the following steps: 

  • Collecting the data
  • Macro-segmentation into broad primary segments 
  • Analyzing the data 
  • Breaking the larger clusters into micro-segments based on the type of study
  • Identifying your target group

For instance, here is a snapshot from a customer segmentation study of the gaming market.

customer segmentation study
Source: IPSOS

Incorporating several methods of data collection broadens the scope of your study. Aside from automated processes and social media, conducting personal surveys is important to factor in emotional analytics.  

Every customer segment will have their emotional motivators driving them to make purchase decisions. A good customer segmentation strategy deconstructs customer profiles and maps them against a range of emotional motivators. Surveys enable you to gauge metrics beyond standard clusters. The Netscribes in-house market intelligence team undertakes the following approach in their segmentation studies:  

  • A quantitative survey based on a structured questionnaire with a wide audience. This can utilize methods such as probabilistic sampling
  • Questionnaire to have segmentation attributes – e.g. demographic, ethnographic, usage/need-based probes – These would then be run on clustering algorithms to determine segments
  • If segments are pre-identified then use a typing tool-based solution to screen segments and via a survey, check their propensities and attitudinal inclinations
  • Arrive at the SMART segment, i.e. specific, measurable and actionable, relevant, and contemporary segments
  • Check segment migrations in the category 
  • Devise segment-specific marketing interventions and tweak media mix   

These methods allow you to gain optimum returns from your segmentation efforts in today’s dynamic market. Speak to your customer segment with targeted messages. Incorporating segmentation into your marketing strategies enables you to speak to your target customers with personalized campaigns that drive better conversion. A Hubspot study indicates that email marketing campaigns that leveraged market segmentation saw 14.31% higher open rates, 101% more clicks, and an increase in revenue by 760%. 

Further, with contact segmentation, marketers can organize qualified leads into relevant groups and target email campaigns that they are likely to find valuable. 

The pandemic has drastically changed customer choices and behavioral patterns. In today’s dynamic market, blurred lines and restructured processes have led us to rethink our brand and marketing approach. At Netscribes, we provide consumer insight solutions to help you understand consumer behaviors per the latest market trends, identify their needs, and conduct segmentation studies to streamline your offerings. To know more about how we can help your brand, contact us

With inputs by Poulami Paul and Ananta Nandni, Consumer Insights specialists (Market Intelligence), Netscribes.

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