Customer Segmentation

TARGETING CUSTOMER – TIPS AND ADVICE

How do I segment my customer database?

THE PLACE TO START IS THE CUSTOMER

HOW WELL DO YOU REALLY KNOW YOUR CUSTOMERS?

Imagine your customer base is an orange. You can speak about the whole orange with broad segments, for example:

“It’s orange”.

“It has a feel”.

“It smells delicious”.

Remove the skin and suddenly you have a lot more to see – different textures, types, colours and flavours. You have many different types of customers, the more you know about them the better.

SEGMENTATION

Customers (or potential customers) are not one big homogenous group but a number of distinct groups or individuals with different needs.

STUDY THE MARKETING CUSTOMER DATABASE

INPUT EXAMPLES MAY BE

• • Enquiry data.

• • Order data.

• • Demographic data.

• • Geographic data.

• • Customer feedback.

• Complaints.

USING THIS INFORMATION WILL HELP YOU DECIDE WHETHER OR NOT THERE IS THE OPPORTUNITY TO

• • Target offers.

• • Design specific offers.

• • Cross-selling.

• • New product development.

• • Relationship marketing.

• Loyalty scheme.

Who exactly is buying from your company?

Who is close to buying?

Who could be encouraged to buy?

Usual customer database information

• Name and contact details.
• Status – where are they on the loyalty ladder?
• How committed are they to your brand/business.

 STEPS TO CUSTOMER SEGMENTATION

• • Start with an analysis. 

• • Agree on objectives.

• • Identify the key values.

• • Develop each segment’s profile.

• • Evaluate each segment’s profile.

• • Select the segments to be targeted.

• • Implement the positioning.

• • Develop a marketing mix strategy.

• • Each segment must be alike in some way, for example all women, however each segment must also be different e.g. age groups.

• • Make sure you give each segment a meaningful description.

• • Ensure a new customer can be easily placed into a segment.

• • Ideally, you should be able to take any database and divide it up into your segments.

• You must be able to measure the size of each segment (number of individuals) and its profit and potential growth.

It needs to be possible to

Cost-effectively target the members of each segment via communication media channels and effectively deliver them the product/service once they’ve bought it via distribution channels.

DURABLE

Each segment needs to be a stable group (over time) so that the profit potential from their lifetime value to the brand can be maximised.

TOP TIPS

• • Identify the differences between each of the customer segments, in terms of demographics, lifestyle, product, service usage.

• • Good targeting will save you money as it’s the basis of your Marketing Communications Plan – define your strong groups who are really interested in what you have to offer.

• • It’s a good idea to create personalities for your customer profiles – bring them to life.

• • Draw pictures of the different types of customer/purchaser (a great warm-up to a meeting). This will help you communicate who your target audience is to the rest of the company.

• • Give the groups character names to help identify them and give them personalities.

• Customers need to feel that you understand them.

Streets Marketing offers a consultancy and project management service for Customer Segmentation projects.

Contact us to discuss your Marketing plans 01485 779454

M: 07855447968

or email Maddie@streetsmarketing.co.uk.

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OR connect with Madeleine Lillywhite on LinkedIn.