What is Customer Segmentation? 5 Benefits to Maximize Results

1. What is Customer Segmentation? 5 Benefits to Maximize Results Customer segmentation refers to grouping customers into various subsets based on their dislikes, likes, preferences, and demands. When businesses try to reach out to customers with an ad campaign or a marketing message, targeting the right market with the right message is crucial. Customer segmentation marketing can help you target the people who are most likely to become your customers. You can segment your customers based on various characteristics such as age, economic background, gender, and more. Splitting up an audience like this allows for more specific targeted marketing. Here are some of the benefits of segmentation for gaining higher profitability: • Determine market opportunities: Businesses can gain from market segmentation by evaluating different groups of customers and their satisfaction levels from the current offerings. If there are any gaps observed, businesses can use it as an opportunity to make improvements and introduce new products to fulfil the requirements of this segment. Also, by using customer segmentation models, you will never miss out on trends. If you keenly observe the trends, you can also gain the first mover’s advantage in a particular segment. For instance, a bank can identify an altogether new segment and introduce a new credit card offering a new service package that fulfil the emotional and functional needs of the customers in that segment. • Price optimization: If you can identify the financial and social status of your customers, you will be able to determine the right price at which you can offer your services. By optimizing the price in the best possible manner, you can even offer products and services to your customers at their desired price and generate maximum revenue for your company. • Effective customer acquisition and retention: Bys using various customer segmentation models, it is easier to tailor your communication based on customer lifecycle. It has been found that close to 50% of marketers use customer segmentation to determine their retention and acquisition strategy. For example, while attempting to convert a prospect, you must communicate by providing all relevant information. At the initial stage, they would want to know more about the solutions. Later, you can talk about other products in your communication. Also, serving customers in a personalized manner helps businesses win their trust and in return, they remain loyal towards your product. • Assist in distribution strategies: Customer marketing platform allows businesses to identify optimum distribution strategies for their new products/services. For instance, with segmentation, you can identify appropriate distribution channels and outlets for products and services that are targeted at different customer segments. • Help allocate resources better: Segmented customers make it easier for businesses to allocate resources better. You can put money in marketing efforts without thinking twice and your customers will get more attractive offers in a personalized manner. Businesses will get more opportunities to upsell while providing the best services. Customer segmentation models lets you allocate specific budgets and the sales team can be directed to work in that direction.

2. • Enhance product development and design: With customer segmentation marketing, businesses can get into customers’ minds and find out their expectations of the brand. They can identify what is working well and what is not working in relation to their offerings. They can use these insights to make the required alterations or additions to ensure that customer requests are met. • Establish a brand identity: By segmenting customers, you can make them aware of your brand. When customers easily identify your brand, it will help them engage directly with your products. This will not only enhance goodwill, but your brand value will also be established among your competitors. It will also highlight the commercial value of your products. The standards of great customer experience are being raised constantly. In fact, almost three-fourths of customers are willing to pay a premium happily if companies can offer them an awesome experience. Customer segmentation will help you grow your business by building long-term relationships with customers and offering extraordinary customer experiences. Moreover, it helps you continue to innovate, or at least stay at par with customer needs.