Understanding your target audience is the first step to effective marketing and sales strategy. It’s simple – if you know who you are selling to, there is a higher chance that you can offer them the solution that they really need.
This is where customer segmentation comes in handy as an extremely powerful practice that can drive sales and improve your relationship with customers.
In this article, we will explore how you can implement it in your own sales strategy.
What is customer segmentation?
It is simply the process of grouping your customers based on the common qualities they share – it can be their buying behavior, demographics, or preferences.
Customer segmentation allows businesses to personalize the experiences and tailor products to suit the needs of the specific customers’ groups. This can yield much better results than trying to sell to a broad audience.
To be successful you should, at least, adjust your messaging and your offer to where your leads or customers are in their buying journey. If you don’t, they will most likely do business elsewhere.
In fact, according to Hubspot, “over 50% of customers have left a brand for a competitor who was able to stay more relevant and better satisfy their needs”.
Traditional segmentation criteria
There are a few ways you could segment your customers. We won’t go into great detail, but here are the 4 types of criteria that are traditionally used:
Data-based segmentation (CRM)
Nowadays, the advanced technology has allowed businesses to segment their customers based on their own gathered data. This could include creating the following segments based on:
- Stage of the customer journey
- Past-purchase behavior
- Customer lifetime value
- Average order value
- Satisfaction level
- Product browsing history
- Cart abandonment
- Customer acquisition cost
Data-based segmentation is way more insightful and allows sales reps to understand their prospects on a much deeper level.
Benefits of customer segmentation
Before we move on to ways you can leverage the power of customer segmentation, here are a few benefits of customer segmentation:
- Increased customer retention (and satisfaction)
- Improved customer lifetime value
- Competitive advantage
- Price optimization
- Sales process automation
- More effective channel distribution strategy
As you can see, customer segmentation can help your business save time and money, at the same time bringing in more cash and keeping customers happy.
4 ways to use customer segmentation to drive sales
Now, let’s take a look at how businesses can use customer segmentation for increasing sales in the long run. Here are four strategies to leverage the power of segmentation to grow sales.
- Improve customer experience
First of all, customer segmentation is great for helping you improve the customer experience which can then translate into more sales. This can be done in several ways:
- Use chatbots to qualify leads and automate the sales process
By qualifying your website’s visitors right away, you are able to provide them with the experience they are looking for. To do that in an automated way, you can make a chatbot for your website.
Using chatbots, you can get to know your visitor’s needs and wants. By using tags, you can group them and guide them in their buying journey depending on their answers.
Here’s what qualifying users with chatbots can look like:
With that information, you can either offer them a solution on the spot or sign them up as a lead to later nurture them and eventually sell.
- Get 1:1 with qualified leads and customers
Another way to use customer segmentation to increase sales is to get on them 1:1. This can be done either via phone, a private product demo, or via a live chat.
You can also use something called a “conversational landing page” which is simply a chatroom where you can invite your prospects to chat privately about your product or service.
- Target with personalized offers, upsell and cross-sell opportunities
Lastly, you can boost your sales to chosen customer segments by displaying to them personalized offers. This is a common practice especially in terms of Facebook retargeting ad campaigns.
By segmenting your users based on their behavior (using a pixel), you can, later on, retarget them with ads that correspond to what they are looking for. It’s an extremely effective PPC strategy used by many companies that wouldn’t be possible without smart visitors’ and customers’ segmentation.
Upsell is a quite popular technique in a B2B niche since marketers are always interested in upgrading their users. Tools like SocialPilot that are capturing their users by giving them 14-day free access and more.
Another way to do it is to cross-sell your products or services will be using product recommendations.
That’s an example from PoochBandana, an eCommerce store, that shows complimentary or recommended items on top of the viewed product.
- Create personalized email campaigns
Next, by segmenting your website’s visitors or your customers into groups, you can launch personalized email campaigns.
For example, you can offer different lead magnets on different blog posts (depending on the theme) and then create lead nurturing email sequences with adjusted messaging.
For example, this is an email workflow with 3 distinguished emails aimed at converting a prospect into a customer. Depending on the lead magnet requested by the website’s visitor, they will become a part of this lead nurturing flow.
To launch and automate your email campaigns you can use tools such as Moosend.
- Rescue abandoned carts
Once you segment your customers-to-be based on them abandoning their carts, you stand a pretty good chance of rescuing them.
This is especially important for B2C or B2B eCommerce.
For one, you can set up chatbots that will be engaging visitors who have abandoned their carts but stayed browsing the website. This can help you understand their reasons for doing that and offer a solution right away.
You can also create a separate chatbot flow for offering a special deal to encourage visitors to come back to their carts and finish a transaction.
A more traditional approach is to set up an email campaign to be sent to leads who have started a transaction but never completed it and abandoned their carts.
Here’s how this kind of email can look:
Rescuing abandoned carts can help you save tons of cash and increase your sales exponentially. All you have to do is identify those users or website’s visitors using customer segmentation techniques.
- Build customer retention strategy
As the going says “a customer that bought once will likely buy again”.
By segmenting your customer base you are able to build a powerful retention strategy. This can be done by launching nurturing campaigns which are personalized to each of your segments.
For example, you can start with sending your customers a “thank you” email and asking them about their experience doing business with you. It can be both – in B2C and B2B business and it’s also a great way to collect feedback.
This is a good start that will make your customers feel heard and help you improve customer satisfaction.
Later, you can offer special deals and discounts to build trust and loyalty based on chosen qualities or criteria. This will ensure the repeat business and higher customer lifetime value.
For example, in times of covid-19 it is quite common to see companies offering promotions and deals to their existing customer base. It’s a good opportunity to work on your relationship with your customers and earn their loyalty.
Another way to boost your sales is also by rewarding this kind of loyalty (segmentation based on customer satisfaction) by setting up a referral program. This is a win-win solution where you turn your customers into walking advertisements for your business by giving them a chance to make extra money.
Tools for customer segmentation
Truth is, there is an abundance of sales tools you can use to segment your website visitors and later customers. Many of them help you to automate the process and at the same time integrate with 3rd party apps creating a fully functional sales funnel within a few clicks.
Here are some of the analytical tools that gather your website’s data and
- Google Analytics
- Tidio (chatbots)
There you have it – an overview of four ways you can use customer segmentation to drive more sales in 2020 and beyond. There are plenty of strategies you can implement once your customers are segmented into groups.
Just to recap some of those I mentioned:
- Improve (by personalizing) customer experience
- Offer personalized deals and retarget
- Create lead nurturing email flows
- Rescue abandoned carts
- Build a solid customer retention strategy
All in all, data is king. The better you know your target audience, the better chance you have to convert them into loyal customers. Use tools for segmentation to your business’s advantage and automate your sales process today.