Customer Segmentation:
You need it for your business
and there is no way around it

We’re all entitled to our different likes and dislikes. Imagine the world if we all likes the same things
Malia Ann Haberman

You wake up one morning and you discover that you need a new pair of jeans. You go to the shops and you find out that they only stock 1 type of jeans, which is not what you are looking for, and they only have them in 1 size too small for you. Would you buy them? The answer of course is no. We expect clothes shops to stock a variety of different garments, styles and sizes that would accommodate everybody. So what makes your product or service any different? Do you target all your customers with the same message? Do you really think that one size fits all?

The truth is that we are all different, with different needs, likes and dislikes. Another truth is that in this day and age we expect to be targeted with messages that fit our needs; we expect the right products to find us.

This is where the need for segmentation arises. Segmentation is a method used to categorise customers into groups that have similar traits. It is the process of defining groups of people based on their needs, wants and characteristics. The goal is to precisely match your communication to the expectations of the customer.

Your clients are not all the same. They may be purchasing the same things but that doesn’t make them identical. Similarly to the shop example above, your customers wouldn’t stay with you unless you offer something that appeals to them specifically. So, I don’t know how to break this to you, but the need for segmenting your customers is pressing. There’s no way around it.

Benefits of segmentation

Identifying different groups of customers comes with a number of advantages. Here are some of them:

Better matching of customer needs

Based on your data about the demands of different groups of customers, you would be better able to match the person to the right message. You would benefit from a more targeted, personalised and relevant marketing which in turn would yield better results and more value for your marketing money.

Business growth

Better segmentation ultimately means more sales. Business owners who have identified 2-3 segments within their client base tend to notice and increase in sales leads and greater revenue. The formula looks something like this: customer segment + relevant message = happy, loyal and returning customers.

More effective promotion

Segmentation does bring better results. Instead of sending bland and standardised messages that are neither here nor there, breakdown your client base into distinct segments and send them relevant information. This would ultimately optimise your marketing efforts.

How do you segment?

So far so good but where do you begin. Segmentation doesn’t need to be too complex. For a small company, it could be about recognising that you have 2 or maybe 3 distinct customer types with different needs. There are different factors that you can choose to build your segments on, such as age, demographic, location etc. It could be that you have new customers, existing customers, people who buy occasionally, and people who buy in bulk.

It is highly relative to your company and your product. The key is however to choose segments that are well defined and work for you. What most owners do is dive into the deep and over-segment. You don’t need 15 different groups of people. Start small and take it from there.

Hopefully, this post shed some light on the importance of segmentation. For a more detailed and step-by-step guide to approaching customer segmentation, have a look at our Small Business Growth Formula. Let me know how you get one in the comments’ section below.