Top 10 Segmentation Strategies and How to Execute Them

Customers come in all shapes and sizes. No two customers are the same with any number of factors that can change a customer’s perspective and purchasing patterns. This leaves marketers with a big question - how do we create an effective marketing strategy when customers are so diverse? 

The answer is segmentation. Segmentation allows you to group customers based on commonalities and create an effective marketing mix that speaks to the segments that exist within your customer base. 

So how does a firm segment its customers? While there are many different methods, we have made a list of the most important and most popular customer segmentation strategies to help make your firm’s marketing strategy more effective and you as a marketing expert shine.

B2C Segmentation Strategies

B2C segmentation strategies are what most people think of when they think about customer segmentation. For any firm that is directly selling to the general public, these strategies are the ones that will take your marketing to the next level.

1. Demographic Segmentation

Demographic segmentation is one of the most valuable forms of segmentation. It takes a macro look at your consumer and breaks them into easily definable groups such as age, gender, occupation, and more. While you can’t learn everything about your consumer from demographic segmentation it does make it easier to find common behaviors amongst people in the same demographics. Which you can then capitalize on to make the most out of your marketing strategy and sales efforts.

2. Geographic Segmentation

Geographic segmentation is important for any B2C company. Whether a retail location or an online store, knowing the area that your customers reside in allows you a familiarity with your customers that you can use to develop a connection with them. 

Dealing with American customers you might want to run a 4th of July sale, if you’re helping Canadians you might run a Canada day sale, and so on. Your sales efforts can even move to a larger scale offering separate summer sales for people in the southern and northern hemispheres based on the beginnings and ends of their specific seasons.

3. Psychographic Segmentation

Psychographic segmentation allows you to group your customers based on common beliefs, values, and thought patterns. Since psychographic segmentation is so much more nuanced there are many different ways to approach psychographic segmentation. Such examples include:

  • Social media presence – What are your consumers saying on social media? What are they saying about your brand? What social issues do they care about? Which influencers do they follow? Answering these questions will allow you to be more targeted when speaking to your customer base.
  • Customer Satisfaction Levels – Run a survey, see what your customers want to tell you about your business. It may seem obvious, but there is no better person to tell you what will attract more customers than customers themselves. You may even find solutions to problems you didn’t know existed.
  • Lifestyle Segmentation – What does your customer’s day-to-day look like? What kind of jobs do they work? The marketing strategy for someone in the trades in comparison to a banker can be entirely different. Segmenting your customers based on the lives they lead allows you to create a closer bond with your consumer base.

4. Behavioural Segmentation

Behavioural segmentation breaks consumers up into different groups based on their purchasing patterns and other observed behaviours. Behavioural segmentation allows you to predict more effectively what your customers are going to do as you’re analyzing the behaviours that you already know that they partake in. Some different types of behaviours that you can analyze within your customer base include:

  • Adopter Status – Where do your consumers fall in the adoption cycle? Are they early adopters or are they laggards? Knowing this allows you to know how to communicate more effectively to your consumers.
  • Loyalty Status – Is this your customer’s first time at your business? Are they switching from a competitor? All of this is valuable information when knowing how to approach individual customers as it allows you to present them with different offers to keep them coming back.
  • Attitude to Product or Service – Is your consumer enthusiastic about your product? How much does price matter? Are they very price-conscious or is money no object? By assessing the different needs of your different customers in this regard you can focus on developing your product offering in the areas where your consumers tend to focus.

5. Online Customer Segmentation

As online shopping becomes a bigger and bigger market that shows no signs of slowing down marketers are now able to access a whole new dimension of customer segmentation. The amount of data that is accessible to marketers working with online stores allows more precise and targeted marketing efforts. We now have access to data like the amount of time customers spend online, the types of websites they visit, how long they spend on your website, and what parts of your website that they are drawn to. 

The online customer segmentation strategy lends itself to the digital age, allowing marketers to make direct changes to websites and marketing communication strategies based on exact data coming in from consumers.

B2B Segmentation Strategies

B2B sales, in general, are much harder than B2C sales. The decisions that need to be made are on a much larger scale and the factors that go into a purchasing decision are much more complex. This is why B2B segmentation needs its separate list of segmentation strategies. These strategies will help you create a more effective B2B sales funnel.

1. Firmographic Segmentation

Firmographic segmentation is exactly what it sounds like. Segmenting your customer base upon the criteria of firm-specific factors. These factors can include the size of the firm, the industry the firm is in, and the location of the firm. 

The beauty of firmographic segmentation is that the data required is easily obtainable. This allows many marketers to use firmographic segmentation without having to use up too many resources and without using up too much manpower. Allowing marketers to do what they do best, implement their marketing strategy, and boost sales.

2. Segmentation by Decision-Maker

Some organizations make their purchasing decisions as a firm, but other organizations make their purchasing decisions through an individual. This allows you to decide how you wish to market your product towards each firm and has a great impact on your sales strategies. 

You can communicate and build a relationship with an individual, but not an organization. This allows you to aim your salespeople towards individual decision-makers whom they can talk to and your marketing communications can be put towards firms that make organization-level decisions where they are more effective.

3. Needs-Based Segmentation

Needs-based segmentation is a form of segmentation that is entirely focused on making sure that your firm is providing exactly what your customer needs. This method revolves around analyzing your business’ offering and figuring out which needs it addresses. Once you have identified those needs, it’s time to identify which customers have these needs and group said customers upon this basis. This method is one of the most accurate but also can be one of the hardest to define without large levels of market research.

4. Tier-Based Segmentation

Tier-based segmentation is a style of segmentation that revolves around how well your customer fits the needs of your firm rather than the other way around. This approach involves your firm ranking soon-to-be and existing customers in terms of what they can bring to your business. This segmentation strategy allows your firm to prioritize new consumers that will bring in high profits as well as existing customers that have a higher customer lifetime value.

5. Behaviour-Based Segmentation

Behaviour-based segmentation is a segmentation strategy that helps you predict the future behaviours of your current customers by analyzing their past behaviours. This strategy allows your firm to recognize opportunities for upselling and expansion of your services with existing customers. This provides an opportunity for your firm to make the most out of existing customers as well as recognizing which customers aren’t providing a great enough return for your business. In the end, behaviour-based segmentation leads to a better-optimized sales process within your firm.

Of course, if you don’t have the resources to do in-house segmentation then you can contact gigCMO today. Our expert team of fractional CMO’s has the knowledge and readiness to help you make the most of your customer base so that you can get the sales to boost you deserve.