Put them in one bag - 6 advanced segmentation methods

According to the Data & Marketing Association (DMA), segmented email campaigns result in a 76%(seventy six percent) increase in revenue compared to universal campaigns. Defining the characteristics and behaviors of consumers allows you to identify groups of customers with whom your messages will resonate better. As George Schenk used to say, "Customers may come in crowds, but they feel satisfaction one at a time."

In this episode, you'll learn how to segment your customers' crowd into specific segments, and what advanced segmentation techniques to use to target your visitors and customers with more precise messages and make them satisfied.

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Traditional segmentation involves dividing your audience into smaller groups. The assumption of segmentation is that "similar" recipients will react similarly to specific messages. Most often, this division is made according to such criteria as:

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- demographic: age, sex, marital status, education, nationality.

- economic: country, occupation, income per person, source of income, property.

- geographical: place of residence, size of the city, voivodships, climate, geographical area.

- social: social class, family life cycle, lifestyle, personality traits, interests.

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But while this may be enough for traditional industries or small businesses, internet businesses are a different story altogether. Audiences are usually relatively similar, with no distinguishing features. So breaking them into segments based only on the data just mentioned may not help you much.

What key should you then divide your visitors and customers by?

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First, segment by the level of customer engagement and activity.

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Customers who actively promote a brand or product, regularly participate in satisfaction surveys or express positive product reviews, should receive different content and messages than inactive customers or customers who made a one-time purchase.

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You can divide your client's engagement into 3 levels:

• Occasional: Customers sometimes contact your brand, product, or service, but not regularly.
• Regular: Your customers interact with your products or services on a regular basis, but do not take full advantage of them.
• Intensive: Your products or services are embedded in your customer's life and they buy from you whenever possible.
  
  

Segmenting your customers this way will help you retain your customers

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Second, create segments by finding the traffic source each group is coming from.

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You can also categorize and group clients by the traffic source. This is what every marketer likes best! Thanks to this, you will find out what your customers' intentions are - whether they want to download your e-book, buy a product or sign up for a webinar to expand their knowledge. How many needs and intentions to enter your website, so many messages and content you can send to the customers. Create different messages for customers who came to your company's website from a sponsored article, other for those who came from organic traffic, and different for customers who were encouraged to take advantage of the offer by existing customers of the company.

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Third, use your purchase history to divide your customers into segments.

This will allow you to isolate different trends and patterns of customer behavior when making purchasing decisions.

Lacie Larschan in one of her articles identified 6 segments of buyers based on their online interactions:

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• A "price conscious" buyer, a bargain hunter who is looking for the lowest possible price.
• An "intelligent" buyer is a thorough, meticulous researcher who wants to understand every complicated factor before deciding on any product
• A "risk averse" buyer is a careful, thrifty customer who will not make purchases without proper insurance, such as a good, hassle-free return policy.
• A buyer "resistant to needs" is a buyer who needs confirmation that a product is popular, based on the claims of its peers.
• A "I'll get it later" buyer is a buyer who is in no rush to buy.
• A "persuasive" buyer is an impulsive customer who is very susceptible to cross-selling offers

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Do any of these customer segments also apply to you?

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Purchase history segmentation will give you insight into the purchasing stage your customer may be in, their role in the purchasing process, obstacles they face, incentives they are likely to respond to, and much more. Knowing this information will allow you to respond appropriately to the customers needs.

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As a result, customers who previously bought products from a specific category (e.g. computer equipment) will receive a different message than customers interested in smartphones and accessories.

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Fourth, segment based on the stage of the conversion funnel or the current stage of the customer journey.

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After all, if the recipient of the message is a new customer who is getting to know the brand or has just made their first purchase, then they should receive a different message than the one for regular returning customers.

Segmentation by stage of the customer journey gives direction to your business goals: to drive customers to the top of the funnel, you need strong awareness-building campaigns, use of content marketing, and more.

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To encourage your customers to buy, you need well-placed USPs, clear answers to frequently asked questions, or a good website UX. Remember that only ⅓  (one third)of carts are paid for at once, ⅔ (two thirds) are left with the products inside. In this case, remarketing campaigns, abandoned cart automation and multi-channel communication via e-mail, SMS or browser could be useful.

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Fifth, analyze customers in the RFM model.

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As a result, you will receive customer segments based on the time that has elapsed since the last purchases (R), the frequency of purchases (F) and their monetary value (M). A customer who shows increased activity from the moment of registration or who spends more money on your products will be more interested in receiving special personalized communications.

How to segment in the RFM model?

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Download the appropriate data from the CDP system, and then sort the columns with variables one by one. For each of the variables, create intervals and assign them appropriate values from the scale (e.g. 1-5). To each record, assign the appropriate value from the scale for the R, F and M variable in turn. Assign values from 1 to 5 to the customers of each group. Depending on the total result, assign companies to separate groups (segments).

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As a result of segmentation in the RFM model, you will receive the following customer segments:

- top customers

- active customers

- engaging customers

- unsteady customers

- customers at risk

- potential lost customers

- inactive customers

- lost customers

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The higher the scale value, the better. Records with parameters R, F, M equal to 5 are your best customers (the least days have passed since their last purchase, most often they place orders for the largest amounts), while records with values R = 1, F = 1, M = 1 are customers with small potential.

Your actions should be aimed at ensuring that more and more companies achieve higher and higher RFM values over time.

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The last way I want to tell you about is segmentation based on the channels the customer is using.

Both in terms of purchases and the preferred communication channels. Let's take a closer look at ecommerce as an example.

When it comes to the channel - the way of shopping, ecommerce customers can choose between purchases made on the website in a desktop browser, in a mobile browser, using a mobile app, or traditionally in stationary stores by scanning their loyalty program card. Still a fairly common pattern is to search for information online and then buy in stores.

Additional overlapping of information about communication channels through which the customer wants to receive notifications from email, smsm, mobile push, web-push, will allow you to build an omnichannel experience, be where your customer expects and needs it, and, after a deep analysis, take action to turn each touchpoint into a conversion.

By segmenting users by their behavioral data, you get a more comprehensive view of how you can customize your message, brand, marketing material, and ultimately products or services to stay ahead of the competition and reduce customer churn.

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And you? How do you segment your clients? Be sure to let me know in the comments

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