Dividing your customers into groups is vital to increasing the success of any form of digital marketing. If you don’t know who you are talking to, it is unlikely you will get much of a response. Who are your potential customers? How many sub-groups should you divide them into? How do these groups differ?

When we start thinking about customer segmentation for digital marketing, the list of possibilities may seem pretty endless. Fazed by which route to take, many simply opt for a ‘bomb the base’ approach, engulfing as many people as possible with a broad reaching message in the belief (and hope) that this will deliver the highest ROI.

In some instances this can generate results and be the perfect option. However, digital marketers need to be aware that it is not the only option and that other segmentation techniques can provide a more hyper-targeted approach.

To achieve the desired impact, customer segmentation should take into account a variety of elements, including channel preference, previous behaviours and a variety of segmentation models, and should blend both behavioural and statistical data. It needs to be much more sophisticated than simply saying ‘show me all customers who don’t own x product.’

We have all been at the receiving end of the same old monthly communication that is of no interest and leaves our finger instantly hovering over ‘delete’. A targeted approach should speak directly to the customer about the products and services they are genuinely interested in. Ultimately, it should leave customers feeling closer to the brand.

Whilst we may be here all day if we were to list every customer segmentation option available, there are a few key techniques that are worth keeping front-of-mind:

Bomb the base

When you need to shout about something to as many people as possible, the best approach is to contact as many customers as we can. This is often the tactic needed when launching a new business or product.

It may initially provide the required results, but definitely should not be your standard on-going approach. It may deliver that first big hit, but for a sustained campaign, it can be too broad and can quickly leave customers feeling disengaged by not being focused enough.

Like that, want that

By segmenting your customers based on previous purchases and predicting future behaviours, you can help generate the feeling of ‘they know what I like, they’re great!’. This can be the perfect way to engage customers and maximise response rates. For example, by knowing that a customer typically buys shoes throughout the year, you will know to target them with boots in winter rather than coats.

You can create models and groups by interrogating your data to indentify purchasing trends, patterns and channel preferences. Taking this approach means that you can be confident that your message is of maximum interest to the customer, making them more likely to engage, respond and purchase.

I’ve changed

If you continually monitor customer behaviour and spending, you will notice any deviations from the norm. This will potentially help you to notice if they are thinking of leaving or are starting to feel disengaged with your brand.

By having an ‘At Risk Model’ to flag customers who are high, medium and low risk, you can then overlay customer segmentation to issue stronger messages and more engaging offers to the ‘at-risk’ group to try and retain them as a customer.

Know my limits

As part of the segmentation process, you can identify your strongest performers as well as the not-so-strong. This can be extremely helpful when it comes to spending your marketing budget in the right areas.

Adopting a RFV Model (Recency, Frequency and Value) allows digital marketers to tailor offers based on potential profitability of the customer groups, and is especially useful when promoting tiered-level offers. Tracking results against the movement in the RFV model provides an additional level of success measurement.

In summary

You need to remember that each customer segmentation technique serves a specific purpose. Taking a blended approach as part of your digital marketing strategy will make it more targeted and relevant to your different customer groups.

Be prepared to have a suite of customer segmentation methods at your disposal to meet different goals and fit in with different situations. Relying on one or two techniques will not always get the desired results.

Tooling up when it comes to your digital marketing armoury will increase both response and returns, creating improved and on-going customer relationships.

 

Barry Smith

Barry Smith

Contributor


Business Director for Partners, Sales & Marketing, IKANO Insight.