Customer Segmentation for Better Marketing Results

It’s almost impossible to sell to someone if you don’t know what they truly desire. That’s a simple fact in business, especially for restaurant and retail store owners.

Getting to know your customers used to be a matter of talking to them. In the digital age, the variety of ways a customer can first become aware of your business - and the variety of data you can collect on them - has made the process more complex, but also more reliable.

At the center of all this is customer segmentation. It involves separating customers into groups that have similar characteristics. That makes it possible to plan marketing efforts, such as email campaigns, that are more targeted to the needs of specific consumer groups.

What is Customer Segmentation?

Like anything else, you can group large groups of people along with many different lines. The same applies to restaurant and retail chain consumers.

Overall, the idea is to tailor marketing messages to specific demographic groups, rather than take a “one size fits all” approach. To put it another way, a 40-something suburban mother needs to be approached differently than a 20-something professional.

But that’s just an easy example. Segmentation can be broken out in many ways. They include:

• Age
• Location
• How they first initiated contact with your business (i.e., visiting your site, signing up for an email, social media, etc.)
• Behavior, such as the last items purchased
• Returning customers vs. new customers
• Frequency and time of visits (for example, a person who visits your restaurant for business lunches as opposed to dinners)
• Technology used (smartphones, tablets, laptops, and so on)

Essentially, with the power of data collection and data analytics, you can segment customers any way you want. The key factor is setting a strategy and collecting the right kind of data that helps you identify the consumer behavior that proves most significant to increasing your business.

This is key because a nurtured lead - one that you approach with the right marketing message for their demographic - is far more likely to make big purchases at your restaurant or retail chain than an unnurtured lead.

Effective Segmentation Tools

Once you know the kind of data you need to properly segment your customers, the question becomes one of finding the right tools to gather that data.

The goal is to build customer profiles around whatever characteristics you decide to collect data on. This can include demographics, geography, buying patterns, and creditworthiness.

One method involves Wi-Fi data point collection, which allows brick-and-mortar restaurants and retailers the opportunity to collect data on customers the moment they enter your establishment. An algorithm such as the one provided by Bloom Intelligence can collect data on customers through Wi-Fi sensors, social media, the point of sale system and other behavior both online and offline.

This information, in turn, can drive deeper insights for customer segmentation through predictive analytics and attribution models driven by machine learning and artificial intelligence. The system understands how to segment customers along the perimeters you have set, as well as look for other trends that can create specific customer profiles.

Data analytics on a website can also provide a wealth of information. This can range from free services such as Google Analytics to higher end systems that delve even deeper into analytics. Such systems can provide insight into issues such as:

• Which pages customers clicked through before making a purchase
• Which pages have proven the most popular
• Which pages have led to people leaving your site
• Buying patterns that align with certain ways people entered your site
• Whether you are attracting web traffic through search engine results
• Whether advertisement you’ve placed is attracting the customers you expected it to attract

There’s truly no limit to the insight these tools can give you if you know what you are looking for. All of this can lead to marketing campaigns that have extremely high success rates.

Examples of Segmentation Success

The business world is full of examples of how basing marketing efforts on customer segmentation has proven effective.

Perhaps the most known example is how online retailer Amazon and the streaming service Netflix use past purchases and viewing habits to predict other products a customer might want. Amazon has now gone beyond this, shipping predicted next purchases to warehouses and distribution centers near you based on their predictions of your next purchase.

Retail giant Walmart now collects more than 2.5 petabytes of data every hour from 1 million customers both online and through a point of sale systems in traditional stores. One way they use this information is to segment customers in certain geographic locations, then ensure that the right amount of inventory is available ahead of time. That avoids the ‘sorry, we are out of that item” moment that can significantly hurt retail sales.

Media giant Time Warner collects data through TV boxes and online behavior to better target advertising, predicting what customers will want to watch.

Banks also use customer information to determine the best and worst credit risks, as well as predicting what financial services people in certain segmentations will need.

In the end, customer segmentation comes down to simply knowing your customers better. With the tools and techniques now available through digital marketing services, it’s never been easier to accomplish.