What Is Customer Segmentation?
Customer segmentation is a modern approach to marketing that focuses on the audience rather than the product. The goal is to deliver relevant messages to specific audiences. To do so, you need to segment your market and make a digital marketing campaign tailored to your target audience’s preferences.
Every business has different groups of customers with different demographics, interests, buying behaviour etc. And these factors affect your digital marketing approach in Singapore
To captivate them, you need to approach them differently. You should not treat your customers as a monolithic group. LawnStarter’s findings reveal that the vast majority (90%) of customers favour companies that go the extra mile to provide personalised customer service.
Think of it this way: How you spend time with the people around you differently depending on the similar interests, lifestyle, habits and activities that you all enjoy doing together.. That is the same as how you should treat your customers, and the best way to do that is through customer segmentation.
But how does customer segmentation work? Let us learn more about customer segmentation for better digital marketing here.
Benefits of Digital Marketing Customer Segmentation
Customer segmentation in digital marketing may take a lot of hard work to perfect the implementation. But it is worth it if you get it right. To begin with, brands and marketers can use their resources efficiently. Instead of running campaigns on the entire market, brands can roll out personalised marketing campaigns to a smaller yet precise targeted audience.
Digital marketing segmentation catapults stronger customer retention. Since customer segmentation helps brands to identify their market, it also guides them to give products and services their audience wants. It boosts brand’s customer retention.
Moreover, audience segmentation in digital marketing also helps brands to identify potential niche market segments that they have not considered yet. These new market segments promise growth opportunities. But before jumping into it, a business must research, test the waters, position its brand, and craft a message that appeals to your prospective customer.
9 Customer Segmentation Models
1. Demographic Segmentation
Demographic segmentation is all about knowing “who” your target audience is by identifying specific traits, such as age, gender, profession, education, and ethnicity.
You will segment your target audience into different groups based on the mentioned traits so that you can personalise your digital marketing strategies targeted for specific groups of customers you have segmented.
Here is an example of demographic segmentation from Nike:
2. Geographic Segmentation
Compared to the other types of market segmentation, geographic segmentation is the easiest. All you have to do is identify and group consumers based on location. You can define your target market’s segments by knowing their country, region, and city.
Here is an example of geographic segmentation from OETEO, a children clothing store in Singapore. In this digital marketing campaign of OETEO, they are offering free local shipping for orders above $S20!
3. Psychographic Segmentation
For psychographic segmentation, the goal is to understand “why” your customers might be interested in your products or services, depending on their personality, hobbies, values, and beliefs.
This step of the customer segmentation model is probably the most challenging since you will need to identify each consumer with in-depth research. It requires you to analyse different personalities and see how they affect your marketing.
To make things easier, here is an example of psychographic segmentation. It is a digital marketing campaign from Omni Hotels & Resorts, and their goal is to target comparison shoppers and convince them on how they can get the most out of their purchase decision.
However, the rewards are worth achieving. Once you have understood your customers on a deeper and more personal level, which means you can deliver the right message and create content tailored for them.
4. Technographic Segmentation
This customer segmentation model identifies a group of customers based on the following,
- The type of device a customer uses when visiting a website (e.g., desktop, mobile or tablet)
- Which browser does a customer uses when browsing online (e.g., chrome, safari, opera)
By knowing which one a customer is using, you can curate a better digital marketing campaign that suits their interest. For example, if you own a smartphone accessory store and one of your potential customers visited your website using an iPhone, you can use retargeting marketing ads to appeal to them with iPhone accessories.
5. Behavioural Segmentation
Behavioural segmentation tackles “how” your customers interact with your business. Vital factors to consider for this type of market segmentation include browsing habits, purchasing decisions, attitude towards brand loyalty, and product reviews.
For instance, by distinguishing first-time website visitors from those who have already visited your website before, you can personalise the customer’s experience more effectively based on how your customers will interact.
Notice the difference between the two messages. One is for new visitors who might want to know more about your business, while the other is for existing customers who are more likely to buy again. The new visitors are more likely to get enticed by the discount for new users, whereas consumers loyal to the brand are more likely to be encouraged by the loyalty points. Gather behavioural data to personalise each visitor’s experience and increase their chances of making a purchase.
6. Needs-based Segmentation
Needs-based segmentation refers to the process of categorising a group of people based on their shared experience of a certain need or problem. By determining your audience’s needs, you can create and offer them the right product that will address their needs.
But how does a brand identify your customer needs? Brands determine the needs by asking the audience their motivations in purchasing a product, emotional advantages, and wants and needs. This digital consumer segmentation begins with qualitative and quantitative research.
Need-based segmentation segments products consumers’ preferred product attributes, service needs, and delivery method.
7. Value-based Segmentation
Value-based segmentation refers to the segmentation that acknowledges the consumer’s financial or economical values when considering a product. In order for a digital marketing company in Singapore to be able to roll out an effective marketing campaign, they must first segment their audience based on their value. To illustrate, it will be ineffective for a brand to market an expensive product to a cost-sensitive audience.
Customer satisfaction scores, number of purchases, and average purchase value help segment the audience based on the value.
8. Firmographic Segmentation
Firmographic segmentation is similar to demographic segmentation. However, instead of individuals, its target is companies, groups, and firms, hence the name.
To illustrate, a digital marketing services company in Singapore looks into firms and companies and offers them services based on their employee number, customer number, and revenue.
The company may offer customisable suites and packages to giant corporations while offering fixed-rate services to small and medium enterprises.
9. Social Media Segmentation
Social media segmentation refers to the division of the audience based on the social media platform they are most active on. This segmentation process is advantageous for a digital marketing agency in Singapore that specialises in social media and influencer marketing.
The example image below shows which app a specific audience likely to use and which one they use the least.
A report showing social media segmentation groups of audience by platform. Image from the article Types Of Consumer Segmentation by audiense.
Customer Segmentation Models
|Demographic Segmentation||Age, gender, income, education, and marital status|
|Geographic Segmentation||Country, state, city, and town|
|Psychographic Segmentation||Personality, attitude, values, and interests|
|Technographic Segmentation||Mobile-use, desktop-use, apps, and software|
|Behavioural Segmentation||Tendencies and frequent actions, feature or product use, and habits|
|Needs-based Segmentation||Consumer’s preferred product attributes or service needs e.g delivery method|
|Value-based Segmentation||Customer satisfaction scores, number of purchases, and average purchase value|
|Firmographic Segmentation||Employee number, customer number, and annual revenue|
|Social Media Segmentation||Preferred social media platform|
8 Digital Marketing Customer Segmentation Strategies
1. Identify Goals
When it comes to customer segmentation, you should know that it is not a one-size-fits-all concept. That means customer segmentation is unique to each business. So, ask yourself, what are your main business goals?
You can only develop your strategy by answering these questions to identify your goal and determine your desired result in customer segmentation. As such, you can create a better digital marketing campaign for your customers.
2. Segment Customers
Once done and you have created your customised segmentation plans that match your business’s objectives, you can divide your potential customers into multiple categories. There are no predetermined rules for determining whether you are correct or incorrect. You have complete control over how your consumers are segmented as long as you segment them according to your strategy.
You can segment your consumers based on their shared interests. For example, if you want to target your digital marketing campaigns towards young millennials, target trending topics on Instagram and TikTok—social media platforms where the younger generation is more active.
3. Determine your customer’s needs
Identifying the needs is the foundation of needs-based segmentation. If you are applying this segmentation in digital marketing campaigns with the help of a digital marketing agency in Singapore, you can do it by asking for your consumer’s feedback.
You can send survey forms and follow-up emails. Another method is by determining the keywords, terms, and frequently asked questions your audience search related to your products.
4. Social Media Segmentation For Ad Positioning
Ad places matter when rolling out your digital marketing campaigns. In social media, an award winning digital marketing agency can benefit from social media segmentation by determining the best platforms to amplify their ads.
For example, if their audience is more active on Facebook than Instagram or Twitter, they can place and amplify their ads on the platform, especially during the window times their audience is most active on the app.
5. Reach Your Customer Segments
After you have segmented your customers, decide how you will approach them with your digital marketing campaign. Guarantee that all of your employees know and understand so your message will reach your targeted customer effectively.
6. Re-Evaluate Customer Segments
To make sure your customer segmentation of the digital marketing campaign works, you should evaluate it by running an analysis. Doing so will give you an idea of how to improve your approach even more and nudge them to take action.
The following are the tools you can use to run a customer segmentation analysis:
7. Analyse Your Top Segments
Whatever customer segmentation models you use, there will be a segment that will rank higher than the other. These top segments are the group of people who respond and are receptive to your digital marketing campaigns.
In order not to lose this high response, a digital marketing company in Singapore must evaluate the top segments.
For example, after your demographics segmentation, you discovered that most of your customer base is teenagers. However, through value-based segmentation, you noticed that although the frequent buyers are teenagers, they happen to spend less on the products, while the older consumer makes the big purchases.
Hence, your digital marketing agency must focus on amplifying their ads on older people to captivate high-value consumers.
8. Analyse your competitors
Top digital marketing agencies are not new in analysing their competitors. Fortunately, you can utilise customer segmentation to get insights from your rivals. Investigate how your competition categorises itself in different consumer segments through its ads and digital marketing campaigns.
Using the data, you can craft your strategy on how to make your brand stand out in every customer segment.
How To Identify Customers Through Digital Marketing Platforms
If you have been in digital marketing in Singapore, perhaps, you already have in your hand digital marketing, SEO, and SEM platforms and tools that you can utilise to begin digital marketing customer segmentation.
These tools and platforms are:
- Google Analytics
Google Analytics is a free tracking tool that provides real-time statistics and analysis of your website’s user interaction.
- Meta Business Suite
Meta Business Suite is a free social media management tool for Facebook and Instagram that allows brands to manage pages and create ads on the platform.
- LinkedIn Analytics
LinkedIn Analytics is a free social media management tool for LinkedIn that allows brands to manage their page, evaluate page performance, and measure campaign performance.
- TikTok Business Centre
TikTok Business Analytics is a free social media management tool for TikTok that allows brands to manage the page and visualise account metrics, such as engagements.
Customer segmentation is a revolutionary approach to digital marketing that every business should start implementing. Since your target audience is the priority, you can promote your products or services in a way that will resonate with potential customers most effectively. By targeting customers with high profitability, the likelihood of boosting conversions and sales will increase over time. Engage a digital marketing agency that can assist you with your digital campaigns.
Get in touch with an award winning digital agency in Singapore like OOm to know more about digital marketing. Contact OOm at 6391-0930 or leave a message on our website.