A good customer segmentation can be hugely insightful; it gives you a much clearer understanding of the different types of customers in your market, what they need, what motivates them and how their behaviours and attitudes differ. By the end of a project, teams often feel they understand their customers in far more depth than they did at the start.
However, understanding your segments is only part of the job. The real value comes from using that insight to make better decisions across the business, whether that’s deciding which customers to prioritise, developing propositions and messaging, improving the customer experience or identifying where the biggest commercial opportunities lie.
Without that next step, even a strong segmentation can gradually become something people refer back to occasionally rather than something that actively shapes what the business does. So, once you’ve identified your segments, what should you actually do with them?
Decide which segments matter most
One of the first things to establish is the role each segment should play in your strategy, because not every group will be equally important to the business. Some might already account for a significant proportion of revenue, while others could represent a bigger opportunity for future growth. You may also have groups that are particularly open to switching provider, others where retention should be the priority, and some where the cost of acquisition doesn’t justify significant investment.
Looking at the segments through a commercial lens allows you to make clearer decisions about where to focus your time, budget and resource, rather than assuming every audience deserves the same level of attention.
Use the segments to shape your proposition and messaging
Segmentation should give you a clearer understanding of what different customers value and why, which can then inform how you position your products and services. One audience might be primarily motivated by convenience, for example, while another is looking for reassurance, quality or value for money; these differences can help you decide which benefits to lead with and which messages are most likely to resonate.
This doesn’t mean developing a completely different proposition or campaign for every segment. Often, relatively small changes to the benefits you emphasise, the language you use, or the proof points you provide can make your communications much more relevant.
Think beyond marketing
Marketing is often one of the most obvious applications for segmentation, but the findings can be useful across much more of the customer journey. If different groups have different needs, expectations and pain points, it’s worth considering how those differences should influence the experience you provide.
Some customers may value a more personal relationship and regular reassurance, while others would rather self-serve. These insights can inform onboarding, communications, service models, product development and retention activity; they can also give teams across the organisation a shared understanding of the customers they’re designing products and experiences for.
Understand the commercial value of each segment
Combining your segmentation with behavioural, transactional or CRM data can add another valuable layer to the research. While the segmentation tells you about customers’ needs, motivations and attitudes, your existing data can help you understand how those groups behave commercially; for example, which segments generate the most revenue, which products they buy and where churn is highest.
The results aren’t always what businesses expect. A segment that initially looks attractive because of its attitudes or stated intentions may be less commercially valuable than anticipated, while another could represent a much bigger opportunity. Bringing these different sources of data together can help you decide where investment is most likely to deliver a return.
Make your segmentation usable in the CRM
One practical challenge is that the original research will usually only cover a sample of your customers. You may understand each segment in detail, but that doesn’t automatically tell you which segment every individual customer in your CRM belongs to.
There are different ways to bridge this gap, from using a small number of profiling questions to allocate customers, through to attribution models that use behavioural and transactional data already held in your CRM. Once you’ve made that connection, marketing teams can build audiences around the segments, communications can be tailored and you can start measuring how different groups perform over time.
Keep it useful over time
Customers’ circumstances, needs, and behaviours change, and the market around them changes too, so it’s worth considering how your segmentation will continue to be used once the initial research is complete.
That doesn’t necessarily mean repeating the entire study every year. Businesses can monitor how their segments are performing, use new customer data to build on what they’ve learnt and periodically check whether the segmentation still reflects the market. Where segment allocation is connected to CRM data, customers can also be reassessed as their behaviour changes rather than assuming they will always remain in the same group.
Ultimately, a segmentation should give teams across the business a practical way of understanding customers and making decisions around them. If it’s helping you decide who to target, how to communicate with them, where to invest, and how to improve their experience, then it’s delivering value well beyond the original research project.