One of the challenges I frequently encounter when onboarding new digital marketing clients is helping them understand, and often redefine, their target demographic by breaking it down into customer segments.
As I guide my clients through a series of activities and workshops to get a better, more granular idea of who their target customers are – their needs, their status, their behaviours – I hear the same questions repeatedly; What’s the point of this exercise, what is the value, why is this important?
Understanding your target demographic means dividing them into smaller groups based on common traits or behaviours – this is where customer segmentation comes in. Building out detailed customer segments gives you much greater insight into what the goals and parameters of your marketing campaigns need to be in order to be effective, with the added bonus of helping you identify new opportunities for growth and product development.
Here are some reasons why customer segmentation is so important:
Better understanding of customer needs and preferences
When you create customer segments, you are essentially dividing your customer base into groups that have similar needs and preferences. By doing this, you can gain a better understanding of what your customers want and how they want it. This can help you create marketing campaigns that are more effective in targeting each segment and meeting their needs.
For example, if you are a clothing retailer and you create a segment for customers who prefer sustainable and eco-friendly clothing, you can tailor your marketing efforts to focus on the environmental benefits of your products. This is more likely to resonate with this segment and lead to more sales.
More effective use of resources
Creating customer segments can also help you allocate your marketing resources more effectively. By tailoring your marketing efforts to each segment, you can focus your resources on the areas that are most likely to generate the highest ROI.
Improved customer retention
By tailoring your marketing efforts to each segment, you can create a more personalized experience for your customers, which can help build loyalty and increase customer satisfaction. This drives results and helps to improve your customer retention rate.
For example, if you are a hotel chain and you create a segment for business travellers, you can offer special perks such as free Wi-Fi and breakfast to this group. This can help build loyalty and encourage repeat business.
Identifying new growth opportunities
Analyze your customer base and identify new groups, habits, and trends, you can uncover new markets that you may not have considered before. There are alway emerging opportunities. Whether it’s new technology, retro coming back in, or a blue ocean strategy, find the time to think outside of the box.
In conclusion, spending the time to create and understand your customer segments is a critical aspect of any successful marketing strategy. It may seem like a time-consuming task in the beginning, but tailoring your marketing efforts to each segment will help you create more personalized and effective marketing campaigns that are more likely to resonate with your customers.
Author
Aaron Kerr
Funnel Strategist at Hook + Ladder Digital
