Customer Segmentation

Focus your business on the customer and what they want by using reliable information to achieve the best possible results. A good starting point is customer segmentation, a marketing term for dividing your customers into manageable clusters or groups. This process allows you to target customers with messages, products and offers which are specific and relevant to them. There are various ways to segment your customers. Here are a few examples:

• Gender
• Age
• Location
• Affluence
• Historical spend
• Loyalty / frequency

It is not difficult to obtain customer information, the trick is to understand why you want it and what you can do with it. Not knowing how to segment your customers doesn’t mean you won’t have a successful business – but guaranteed, knowing and utilising the information will dramatically improve your marketing and in turn your sales and profitability. The most successful marketing campaigns come from knowing your customers, both existing and prospective. So to explain why customer segmentation is important: Thomas started working for a national builders merchant who didn’t segment customers. This meant, that whatever marketing material was produced, every customer on the database of 250k+ received it (the Scattergun approach). One of the first things he implemented was customer segmentation in order to target the right people with information that was relevant and of interest. ___________________________________________________________________ EXAMPLE Brick Brochure What would have happened with scattergun approach?

	Scattergun	Customer Segmentation
Target customers	Everyone – including plumbers, plasterers, painting and decorating, etc	Customers with historical spend on bricks and associated products Customer classifications linked to brick usage
Quantity of customers	250k+	30k
Printed brochures (including quantity for branches)	300k	60k
Mailing costs @ 25p ea	£62,500	£7,500
Saving on mailing alone		£55,000

Just by segmenting the customers Thomas managed to:

• Deliver the right message to customers interested in bricks
• Save money on printing
• Save money on postage
• Focus the company marketing so customer started to receive information applicable to them
• Allowed marketing campaigns to be measured

Just by applying customer segmentation improved the overall marketing output, the quality of the material, the relationship with customers and the accurate measurement of campaigns versus cost. Effective marketing should improve sales and profitability. If yours doesn’t, then speak to H1 Design and make sure your marketing is making a positive impression to your bottom line.

customer segmentation, marketing advice