A marketing strategy based on content personalization is now an unquestionable asset to any brand's efforts. It aims to provide tailored content for a specific person or group of users. In turn, the company will be able to achieve better conversion rates, take care of user engagement, while increasing profits and gaining ROI. However, in order to be able to take care of proper personalization, you need data on customer preferences, behavior, history of interaction with the brand, demographics, behavioral data and much more. These, in turn, provide the opportunity to create relevant user segments. It is thanks to them that it is possible to target advertising activities to particular groups, taking into account the aforementioned data.
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The following article will help answer a number of questions related to customer segmentation. Those concerning the different types of data needed to create audience groups, as well as presenting the benefits of doing so - including better identification of customers and their individual needs. This will allow you to take even greater care of business development.
In order for an elaborate marketing strategy to work properly, it's worth taking care of the basics. One of the key aspects is a thorough understanding of customers. This element often becomes the starting point of subsequent activities. Therefore, it is worth asking the question at the outset: who will be the brand's consumers. At this point it should also be noted that it is impossible to optimistically answer that it will be everyone. This is because in practice, when you direct messages to everyone, you often actually speak to no one, and the very nature of the brand becomes unreadable. For this reason, it's a good idea to first create a persona (or several key personas) or conduct a consumer survey to get to know more about the users associated with the brand. This will help create audience segmentation.
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Segmentation of the user base involves skillfully dividing them according to some well-defined characteristics. Grouping can be done according to demographics, behavioral data, sales data, as well as purchasing behavior or other key factors for the brand. As a result, it is possible to create segments consisting of customers with similar tastes, characteristics or needs. By analyzing such groups (instead of the entire customer base), it is much faster and easier to understand its members. Then tailor the marketing message and the method or language of communication to them. In addition, it allows you to tailor products, activities and services to the specific needs of different groups of customers. Thus, it easily supports personalization of marketing activities, taking into account the needs and interests of individual segments. As a result, it manages to increase not only user loyalty, but also conversion.
On a similar principle, segmentation takes place in everyday life. It is normal to inform people in the immediate environment, such as your partner, family or friends, about a promotion at work first, and only later to inform co-workers or further acquaintances. It's the same in business - it's a good idea to tailor your communications to your customers' needs, characteristics and expectations of your company. Therefore, also the most effective way to undertake communication with your audience, is to divide them into groups based on certain common characteristics.
Many people make the assumption that there has been a flood of marketing communications - mainly those that are sent to the audience in a mass manner. The content being sent is not tailored to the needs and preferences of users. As a result, a greater proportion of consumers now expect personalized content (at least to some extent) from brands. This gives a sense of individualized attention to the customer - including online. Of course, the best solution for some would be a 1:1 communication, i.e. one in which the brand communicates directly with the customer in an understandable and tailored way. In practice, however, such a procedure is impossible (especially for big brands).
This is where customer segmentation based on a specific key comes to the rescue. By getting to know the users in a particular group more closely, you can adopt a strategy that will allow you to establish a better relationship with them, and thus encourage them to interact as well. Of course, messages will not always be perfectly tailored to the preferences of each user. However, segmenting the audience will greatly help to increase the chances of hitting the preferences of a particular group faster and more specifically.
However, these are not the only benefits of segmentation. Additional ones include:
What's more, segmenting the base is often a better solution than trying hard to get new contacts. If you send messages to uninterested or inappropriate people, you may lose the subscribers you have already gained. Therefore, you should target messages to people who are genuinely interested in your offer. This will also increase the number of open emails.
Tailoring the message to the recipient's interests or individual characteristics also has a positive effect on the overall perception of the brand. This, in turn, makes the customer more likely to open another message and read the content. Segmentation therefore makes it possible to take care of activating those customers who have not shown any interaction for a long time.
Michael Maximoff, co-founder of Belkins used to say, "If you provide personalized customer service via email or CRM, you will always have an advantage over competitors who use a one-size-fits-all approach." This shows that both segmentation and the resulting personalization of messages allow you to go a step further than your competitors' efforts. As a result, there is an opportunity to offer customized products or services, which will be more readily digested than generic content aimed at the masses.
Regardless of where you run your advertising campaigns - it could be Facebook, LinkedIn or other online forms - proper optimization of your efforts will provide a much better return on investment. This is precisely one area where segmenting the base is of paramount importance for both customers and companies. Knowing the demographics or interests of the audience and skillful grouping allows you to identify the needs, behavior, as well as preferences of each segment. This ultimately provides the opportunity to tailor advertising content even better. It gives companies a chance to gain higher click-through rates, conversions and sales. An additional benefit is the ability to reduce expenses by dropping less profitable or uninterested segments.
Differences in generations, positions or even those in terms of interests show that even within a similar place of residence, it is possible to deal with completely different audience segments. They differ not only in mindset, but also in know-how. That's why it will be easier to customize, among other things, the sending of guidance content, but also individual ads, without spamming customers with messages that are worthless to them.
Check also: How to use personalization in mailings to increase sales?
Now that you have managed to explain what customer segmentation is and why you should introduce this process into your business, it will be necessary to familiarize yourself with the most popular types of user segmentation.
Every company, before segmenting users, must answer a key question - on what basis to divide customers, so that segmentation meets the requirements of two parties. For this reason, several types of data can be specified, which are worth following when creating user groups.
Declarative data, that is,data that recipients share themselves, for example, by completing a contact questionnaire or a form to register on the site or in a loyalty program. Typically, this data includes information on age, gender, education or place of residence. Often the customer is also asked to fill in additional information, such as shopping preferences.
It should be noted that a woman in her 20s will be looking for completely different products than a man in his 70s. In this case, the differences will be due not only to a different gender or age, but also to the budget the user has.
In the case of a clothing or footwear store, it is worth asking the user about his preferred size. This will help when filtering products, favorite brands or product categories. On the other hand, when selling foodstuffs, you can ask about the diet you follow.
Sales data is extremely important for store owners. They allow you to answer questions about the products your customers buy, how often they buy, and what the average basket value is. For some, it will be important to note whether users buy novelty items or, however, focus on seasonal products. All of this contributes to a better understanding of users' shopping preferences, and then helps segment them. In addition, other criteria influencing shopping behavior can be detailed, such as:
Information on where a segment is in the purchase path (whether it is a new user or a returning user) will allow you to better adjust your marketing communication strategy.
Behavioral data is information about customer behavior. This type of data is obtained when a user is registered on a website or application. They allow tracking his behavior, such as frequency of login, pages visited within the site or length of visit. The breakdown criterion in this case is specific consumer interactions. Customer segmentation - an example of popular behaviors that will help with grouping are:
Demographic data allows you to divide customers into specific groups based on age, gender, education, place of residence, marital status, having children or social standing. In e-commerce and the fashion industry, this type of data is of great importance when creating segmentation and then personalizing marketing campaigns. These, in turn, allow for better tailored product recommendations, which will affect user loyalty. One of the easiest ways to collect this kind of data is through forms - such as newsletter sign-ups.
Customer segmentation - an example of using demographic data:
division of users by place of residence will work especially well for marketing activities of stationary stores or event promotions. On the other hand, information about having children or even their age will influence the possibility of offering discounts for families.
Geographic data allows you to segment your user base based on their location - within a country, province or even a city. This type of segmentation will work well when a brand or store has several stationary points in a specific area, or wants to take into account the interests and needs of users in different regions to gain a competitive advantage among a specific target group.
Psychographicdata is similar to behavioral data in that it rounds out user profiles, taking into account more information about psychological or emotional behavior, personality, values and interests. This type of segmentation includes, among other things:
Technographic data - allows you to group users by their use of desktop computers, mobile devices, apps or specific software. For example, if a segment of users browsing exclusively on smartphones is identified, it is worth focusing on creating scenarios that take into account push messaging, SMS or mobile application development.
To get more valuable information about customers, consider not only creating questionnaires or newsletter sign-up forms, but also introducing contests or surveys to get to know users better. Such activities will generate more interest. On the other hand, the possibility of achieving additional benefits for the user (e.g. a prize in a contest) will make the user more willing to share non-standard information about himself.
One of the best-known methods for segmenting a database is the RFM (Recency, Frequency, Monetary Value) model, which focuses on three main aspects, viz:
A proper understanding of the RFM indicator will help increase the value of e-commerce conversions, make better business decisions and apply a more personalized approach to the customer.
When creating a user segmentation strategy, keep in mind your main business goals. They should be the direction that will help you segment users appropriately. User segmentation can be done in many ways, but the following steps can help you avoid some pitfalls.
It can be useful to define personas. These will allow you to segment your buyers based on different types of data: demographics, geography or technology. They will also allow you to help match a specific persona to a target. It's also worth considering what makes a customer valuable - information that he or she returns often, is active on social media or a specific moment in the purchase path when he or she abandons the order completion. Variables, on the other hand, allow you to determine what might influence purchases - a time of year (e.g., Black Friday bargains, holidays or the communion season). Noticing these types of variables can make a big difference when it comes to creating marketing communications.
If there are already defined goals, it is important to think about priorities. One way to organize segments is to create the largest user groups. This provides a general division of customers with whom you can immediately communicate and personalize the message - for example, by gender. Another option is to create segments by basket value, etc.
CRM systems will be necessary to collect data. Their export and accurate analysis will allow you to identify points of contact, linking users into segments - by place of residence, age, gender, site behavior or shopping preferences.
Once you have collected data on users, it's time to create specific segments. At this point, it's worth keeping a few key aspects in mind:
Segmentation is used to better reach a specific group of users, so it makes sense to use unique scenarios with different types of content, formats or personalized messages. Therefore, it is recommended to create different communication plans for different segments.
In order for segmentation to have a certain effect, it is necessary to analyze the content on a regular basis. Habits, preferences or other types of data may change from time to time. Therefore, it is worth keeping this in mind so that the segments created continue to be effective. This will keep the company aware of changes - both in the area of customer sentiment and in terms of innovating in a more customer-oriented way.
Analyzing segments alone is not as time-consuming as creating entirely new groups of customers. That's why you should take special care of it. Each of the steps below is important to make sure that segments are effective for the operation of the company.
Changes in pricing or offerings can affect the final data. That's why it's a good idea to make sure that the information used to build segments is up-to-date and accurate. Especially if they are the basis for use across multiple channels. It will be necessary to create updates to the resulting segments after product pricing changes, product assortment expansions, or to see if the groups still meet the company's goals.
When analyzing segments, it's a good idea to align them with key KPIs and compare how each group looks against overall business performance. This is an opportune time to observe whether certain segments are performing better/worse and what might be the reason for this. It can also be helpful to see if changes in segments are happening under the influence of current events that affect demographics (mass emigration). Thus, it is worth keeping an eye on changes in order to meet customer expectations in an even more accurate way.
From time to time, it is worth checking the validity of the creation of segments and the personalization built on their basis. Therefore, it is advisable to send an email campaign to make sure that the content offered so far is indeed attractive to users. Such feedback collection will be useful not only for improving click-through and open rates, but also for getting responses or collecting survey data. In addition, it will provide valuable information on the strategies being pursued.
Some people make the assumption that it is sometimes easier to create new segments than to update or make adjustments to the current ones. However, it is definitely worth taking a moment to analyze and optimize the existing activities, so that the necessary changes can then be systematically implemented.
Segmentation serves not only to better group customers and analyze them. It is also crucial when companies want to implement personalization into their marketing strategies. It is worth noting that as many as 73% of consumers expect companies to understand their needs. On the other hand, according to another study (conducted by Researchscape International and Evergage), 98% of marketers reported a deepening of customer relationships through the use of personalized content. In addition, personalization also affects the quality of leads and their number. Research conducted by Campaign Monitor confirms that personalized email subject lines increase the likelihood of an email being opened by as much as 26%. What's more, marketers have seen a significant increase in revenue thanks to email marketing campaigns that manage to leverage user segmentation.
Additional benefits of personalization include:
The key to effective personalization of both email marketing campaigns and on-site communications is properly planned, prepared and optimized user segmentation. Understanding the differences between different user groups allows you to accurately deliver content. It is also an opportunity to increase conversions by offering customers more tailored and relevant information. These, in turn, are better tailored to their individual preferences and needs. Accurate segmentation allows a company to create personalized marketing strategies that will simultaneously help increase audience engagement. The benefits outlined above, customer segmentation models and ways to analyze each group will help develop the most effective business solutions for companies.
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