In this article I’ll share the importance of customer segmentation and how it can be used to simplify and automate sales and marketing systems for your business. Customer segmentation is the process of grouping customers into categories such as psychographic, demographic, behavioral, and geographic.
A comprehensive segmentation strategy can help a business find its product-market fit, save time and marketing dollars, and attract and convert the best customers.
I will also show you how technology can be used to amplify segmentation strategies, such as using machine learning for real-time segmentation.
When it comes to technology, these days, it’s easy to feel overwhelmed with choice. The myriad of online tools for business owners just keeps on growing… (#helloAI).
One question that often came up during our online event I recently presented at, is the following:
How do I segment my leads and customers using my CRM? Where do I start? And why is this important?
So, I’ve decided to answer all these questions in this blog as a comprehensive guide small business owners can use to help them simplify and automate their sales and marketing systems.
It will attempt to simplify the process of customer segmentation for you.
Let’s dive in!
What is customer segmentation?
At a high level, segmentation is a process of grouping your customers into 4 categories:
Psychographic segmentation – personality, hobbies, beliefs, lifestyles
Demographic segmentation – age, gender, income, occupation
Behavioural segmentation – spending habits, buyer behaviour, ideal time to shop
Geographic segmentation – location, zip code, proximity to your business
A clear idea of your market segments will help you leverage this across your sales, marketing and product strategies. A good segmentation strategy will help you find the holy grail of marketing – your product-market fit.
For example, if you’re a service business and are working on your product development strategies, you’d be interested to learn more about who your customers are.
One way to do this is to run a survey to identify:
- What they want and need
- How they interact with your products and services
- Where they live
- What they do outside of work
Sometimes running customer surveys won’t reveal everything about your customers.
And this is where having a good CRM or a marketing automation platform can support you.
Why is Customer Segmentation Important for Small Business Owners?
In marketing, we have a saying that goes like this:
“… if you’re marketing to everyone, you’re marketing to no one…”
To test this theory, you can read today’s headlines in the news. The media is in the business of segmenting information that is going to result in many clicks. They have mastered the art of breaking through the noise of “information” using click-bait headlines in bite sized format to deliver the right message to the right audience at the right time.
From a sales perspective, a well segmented lead is a qualified lead that won’t require too much effort to close. This will make your sales teams happy. Happy sales people close more deals.
And from a product development perspective, a well defined segment, will ensure the product sells itself as it meets all the 4 needs of your target market. The best example of this is Apple, Google or Netflix. You can save your marketing dollars by outsourcing your marketing efforts to your customers.
As you can see, the benefit of segmentation can save you time in the long run but also help you attract and convert your best customers.
Once we define our ideal customer segments, now we have the ability to leverage our preferred marketing automation platform or a CRM so that we can make it work for our business.
The Benefits of Customer Segmentation: Why Every Business Owner Should Care
Once you have segmented your customers, you can tailor your sales and marketing strategies to each group. For instance, you can create targeted campaigns that speak directly to each segment’s specific needs and interests. By doing this, you can increase your chances of capturing their attention and converting them into loyal customers.
In addition, segmentation can help you identify any gaps or opportunities in your customer base.
For example, you may discover that you have a large number of customers who belong to a particular demographic group, but are not purchasing a specific product or service.
This could indicate that there is room for improvement in your marketing or product development strategies. Alternatively, you may find that you have a segment of customers who are highly engaged with your brand and could be potential advocates.
Another benefit of segmentation is that it can help you prioritize your resources and optimize your budget.
By focusing on the segments that are most valuable to your business, you can allocate your marketing and sales resources more effectively. For example, you may decide to invest in targeted advertising campaigns for your most profitable segments, while reducing your spend on segments that are less likely to convert.
How to Maximise Your Marketing Efforts with Segmentation and Automation
Let’s use an analogy of a retail shopper.
If you imagine yourself walking through High Street shopping, where you are presented with many different retailers. In order for each retailer to entice you into their shop, they will need to be very creative. But if they specialise in certain segments such as “male fashion” only, then as a female shopper, you may or may not want to walk into the shop.
Another analogy is once you enter your desired store, the sales assistant doesn’t have an idea of who you are – they only know that you might be interested in some products. And as you move around the shop, you might hear a sales assistant advising you about their exclusive in-store special – only available today.
This announcement would be of great interest, since you’re already browsing products and you’re in the shop – you don’t want to miss out on a good deal. So you decide to make a purchase even though you didn’t intend to.
Considering the above scenario, if you had technology setup in your business, you’d be able to quickly identify this lead and how long they took to make this purchase. If this potential customer existed in your database, but never made a purchase, you’d be able to know they were in the area using geolocation targeting.
You would also know what product they ended up purchasing and the amount they spent. If this prospect ‘lived’ in your CRM, your sales assistant would know and be able to recommend other items based on their browsing history (yes all this information can be collected with your prospect’s permission of course).
To amplify this, you could drill down further and encourage the newly converted customer to come back and buy from you not just once, but many times over.
Once segmentation is in play, your customers will feel a new found appreciation of your brand and enjoy interacting with you on a personal level because your business makes them feel ‘understood’.
It is worth noting that segmentation is an ongoing process, and it’s important to regularly review and refine your segmentation strategy based on your business goals and customer feedback. You may find that your segments change over time, or that you need to create new segments to capture emerging customer needs or behaviors.
By staying agile and responsive, you can ensure that your segmentation strategy remains effective and relevant in a rapidly changing market.
In conclusion, customer segmentation is a powerful tool for simplifying and automating your sales and marketing systems.
By understanding your customers’ unique needs and behaviours, you can tailor your strategies to each segment and improve your chances of attracting and converting high-value customers.
With the right technology and approach, segmentation can help you optimize your resources, identify gaps and opportunities, and stay competitive in today’s crowded marketplace.
You can also tune into our Podcast as we explore customer segmentation in this episode:
Here are 3 ways we can help you grow your business:
1. Check out our podcast – Marketing Automation Made Simple – Spotify | Apple | Amazon) where we share marketing tips that you can implement in your business today.
2. Done-With-You Training – With our personalized training, you can have your very own Marketing Growth System that attracts customers to your business automatically and helps you sell more products and services. Book a chat on our website at bumperleads.com if you’re interested in setting up your sales and marketing system in house, with our guidance.
3. The Bumper Blueprint™– Work with me and my team privately Our Bumper Blueprint™ clarifies your sales & marketing process so customers buy more products & services from you. If you’re a Small to Medium sized business we can help you save time and money by simplifying your sales and marketing systems. We work with you through 1:1 strategy consulting, implementation and online training.
Unlocking Profitability Through Customer Retention
All You Need to Know About Retail Sales Funnels
How To Use Segmentation to Ensure Emails Get Opened
Email Marketing: Why all leads are not created equal
Head Honcho | Marketing Automation Expert | Evil Twin Sister
Jovana is the Founder of Bumper Leads - a marketing automation agency that helps businesses simplify and automate their sales and marketing systems to help them save time and money.
She is a former body builder turned fast food junkie.
When she is not watching Cobra Kai on Netflix, she shares interesting marketing advice on our podcast called Marketing Automation Made Simple. This is where she helps overwhelmed business owners build smart marketing growth systems so they feel excited and in control of growing their businesses.
You can always follow her on social media to see what she's up to.