A strong, relevant segmentation is the cornerstone of business strategy. Understanding what makes your current and prospective customers tick allows you to tailor brands, products, pricing and communications to specific groups, so you can make best use of limited resources. Here’s why segmentation is key…

Customer-centric growth

Today’s customer is empowered with product reviews, price comparisons and a global choice of brands at their fingertips. They expect seamless omni-channel experiences, personalised to their changing needs. Brands have leveraged big data in order to try and understand the complexity around consumer’s lives, yet most companies struggle under the sheer weight of data available to them. Turning that data into a practical tool which they can use everyday is a major roadblock in getting closer to customers and improving performance.

Every organisation says they have customers at the heart of their business. If they don’t have functioning segmentation…they’re lying! Segmentation facilitates the creation of detailed personas of both current and future customers. Deep understanding around customers should inform every element of your business, from product or service development, customer acquisition, account growth and retention.

Establishes a framework

The customer journey has never been more fragmented than it is today. Consumers interact with brands on multiple platforms and expect 24/7 instant communication in many cases, As such it can be extremely difficult for brands to provide a consistent tone of voice, consistent experience and consistent resolution to issues. Segmentation establishes a framework, a single language that ties together multiple business units and allows the company to speak with one voice.

It provides clarity on which customers you’re focusing on, what their needs and motivations are, how best to approach and serve them and more. It’s important to remember that while you are focusing on some customers, that does not mean you are ignoring others who may fall outside of these prime targets.

Personalised Communication

Targeting the right people, with the right message, at the right time sounds simple, but is anything but. With so many different marketing channels and brand interactions, its becoming increasingly difficult for brands to identify buying behaviour and act upon it. Segmentation allows for personalised marketing and communication at scale, leading to greater returns from your investment. Through the layering of different analytical lenses you can better understand not only what your key customers look like, but also the likely actions they will take when they are about to convert, and most importantly the reason behind these purchases.  Armed with this information you can match your highest paying customers to your most expensive resources (1-to-1 sales) and drive conversion. Even if you’re selling a product with broad appeal, customer segmentation can help you tailor your messaging to different groups to better engage with them.

Identifies White Space

As well as fleshing out your current and future customers, segmentation facilitates the discovery of gaps in your current audience in which you might expand. Secondary markets are becoming more important as brands look to broaden their appeal and audience base. We have already seen a noticeable rise in unisex clothing and the dissolvement of ‘boys toys’ and ‘girls toys’  as an example. Segmentation shouldn’t solely be about today’s customer and your first party data. By looking at category trends and understanding your brand position and the needs your brand is fulfilling, it makes it a lot easier to identify products and services which would also fulfil these needs and compliment your offering.