September 6, 2023
Customer segmentation is a marketing strategy that involves dividing a company’s customer base into distinct groups or segments based on shared characteristics, behaviors and preferences. The goal of customer segmentation is to better understand customers and tailor marketing efforts, products and services to meet the unique needs and desires of each segment. In this blog, we will explore types of Customer Segmentation for business growth.
Here are approaches and types of customer segmentation for Business:
1. Geographic Segmentation
This is one of the most basic types of customer segmentation. Segmenting customers based on their geographical location, like country, region, city, or area.
Why it matters: Businesses offering location-specific products or services can optimize their marketing based on regional preferences.
2. Behavioral Segmentation
Segmenting customers based on past behaviors and interactions with the company, considering factors like ticket size, basket size, purchase frequency, and payment days.
Why it matters: It helps identify loyal customers, high-value buyers, and inactive segments.
3. Need-Based Segmentation
Grouping customers based on their specific needs and problems they aim to solve. For example, a chartered accountant firm might segment customers by business lines such as Insurance, Audit, Direct Taxation, and Indirect Taxation.
Why it matters: It enables businesses to offer personalized solutions.
4. B2B vs. B2C Segmentation
Different marketing tactics apply to businesses (B2B) and individuals (B2C). This is a more strategic way to classify customers. Each approach requires different marketing tactics and communication strategies to effectively reach the target audience.
Why it matters: B2B segmentation may include company size and industry, while B2C segmentation focuses on individual preferences or behavior.
5. Segmentation by Channel
Some businesses segment customers by distribution channels like wholesalers, distributors, retailers, etc. This type of customer segmentation focuses on performance by distribution channel. It allows businesses to optimize their distribution strategies and ensure that each channel operates efficiently.
Why it matters: It helps analyze KPIs such as credit utilization, basket size, and average receipt days by channel.
Using these types of customer segmentation techniques, you can accelerate your business growth. Regularly reviewing and updating customer segments is vital to keep them relevant as customer behaviors and market dynamics evolve.
Want to see how you can apply customer segmentation to your own business?
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