Customer segmentation is the practice of dividing your potential and existing customers into groups that are similar in specific ways relevant to marketing efforts. People are routinely segmented using factors such as age, gender, interests or spending habits.
Why segment? Companies that segment understand that every customer is different. So segmentation allows companies to effectively target specific, smaller groups with relevant messages in order to streamline marketing activities. As it’s impossible to speak to every single different customer in a different way.
When it comes to segmentation, one of the first questions I ask my clients is:
"What are your customer types?”
The answer I get back most often is: Prospect, Customer, and then some segmentation by the customer type with regards to service or product purchased.
Now this answer isn't wrong, it's just misinformed and maybe slightly simplified.
Your goal with your marketing, and marketing automation, is to build relationships with your audience. To be effective at that you need to make sure you are talking to them appropriately and give them a personalised experience or they will feel like one of the many.
The personalised experience you give them should always be catered to their needs in the moment, and by far the easiest way to do that is to segment your audience by their type.
Oh yes - we're talking full on divide and conquer here…
If that statement has caught you off guard, let's look at a real life application of this.
Let's say you're going down to the pub for a drink.
At the bar, you bump into an old friend. You get talking, and the conversation is easy and flows well. A little later, your friend calls someone over, someone you have never met before. You get introduced - how do you talk to the new person vs your old friend?
You can't take the same stance as you did with your old friend, because you don't have the existing relationship to build on. So instead, you put effort into getting to know this new person, and you get on quite well.
An hour or so later, the new friend calls another person over, you've also not met this person before. Now you can't talk to this very new person the same way you spoke to your old friend, and you can't talk to them in the exact same way as you are currently talking to your new friend because you have zero relationship with them. You need to start from scratch again.
You're juggling 3 relationships here, more than likely with ease, and you're automatically catering your conversation to the type of relationship you have with the person you're speaking to.
Why would you treat your audience any differently?
Your brand spanking new prospects can't be spoken to in the same way as your loyal customers because the relationship that you have with them is at different places.
You need to be catering to their needs in their specific moment.
Even if you're a pro at segmentation, chances are you aren't segmenting deeply enough.
Don't get hung up on creating loads of different types of communication for EACH type of customer. Rather the idea is to identify which categories need to be treated wholly differently.
Wait, that’s a new terms. What's a Customer Category??
Don't panic! A customer category is simply a grouping of segments. For instance, there are 3 types of prospect, each of those types of prospect is considered a segment, but the overall theme is "New person on the list" - this is a customer category.
As in the image below:
I have grouped them by the same categories in the descriptions to make it easier 🙂
We have identified that there are 13 different types of customers that you can segment your audience into. See, prospect and customer aren’t necessarily wrong. It just isn’t going far enough.
So, how far should you go with customer segmentation?
My suggestion for you is to segment for as many of the 13 types as you can. Then to identify which categories (or groupings) you will talk to differently.
From there, use the segments themselves in specific launches, and to identify points in your marketing process that may need a bit extra, or different handling to help those segments convert.
The first category is prospects. There are three segments within this: prospect, suspect and lead
How to define a Prospect:
How to segment Prospects out:
How to define a Suspect:
How to segment Suspects out:
How to define a Lead:
Prospects who have performed a specific sales related Micro conversion, such as signing up to the leadmagnet of a sales funnel, and giving you some personal information in the process. They are much more qualified than prospects, and require quicker actioning than suspects.
How to segment Leads out:
Micro Conversions are the small steps a prospect may take towards the primary conversion goal: It’s all the little things that they do in order to get to the point where they are ready to become a customer.
Macro Conversions are your end goal: Most often the purchase. It’s the final commitment your prospect makes in order to become a customer (or a repeat customer, loyal customer etc).
Macro Conversions are commitment, Micro Conversions are engagement. You can’t have a Macro conversion without a multitude of little Micro conversions.
Micro conversions are considered actions such as:
All of the above are considered engagement activities.
There are two broad groups of Micro Conversion:
Process Milestones are the Micro conversions that can be equated to a linear movement towards the conversion/end goal.
Secondary Actions aren’t related to the primary goal but are desirable actions because they build trust and relationships.
When understood correctly, Micro conversions will help you predict a Macro conversion.
If you utilise Micro conversions properly your prospects will be much more comfortable with a Macro conversion.
The other category is customers. These can be separated into, the good, the bad and the awesome. Once into these, they can then be segmented further again.
How to define a New Customer:
How to segment New Customers out:
How to define Active Customers:
How to segment Active Customers out:
How to define Novice Customers:
How to segment Novice Customers out:
How to define Repeat Customers:
How to segment Repeat Customers out:
How to define At Risk Customers:
How to segment At Risk Customers out:
How to define Lapsed Customers:
How to segment Lapsed Customers out:
How to define Unhappy Customers:
How to segment Unhappy Customers out:
How to define Loyal Customers:
How to segment Loyal Customers out:
How to define Referring Customers:
How to segment Referring Customers out:
How to define Company Advocates:
How to segment Company Advocates out:
And there we have it! That is the 13 types of Customer - in 4 Categories: Prospects and Customers: The Good, The Bad and the Awesome.
Each customer type should be treated appropriately for maximum customer satisfaction.
In order to ensure you are speaking to each customer in the right way, segmentation is essential. This will allow you to talk to each of those groups in the appropriate way.
A good comprehensive marketing strategy will move each of your prospects and customers through each of the ideal stages, as well as encompassing strategies and scenarios for the instances when customers are not in an ideal stage, and will detail how you plan to move them to the appropriate stage.
So here's my question to you - how well is your marketing strategy planned out? Do you have plans, automation and scenarios in place for each of these?
And if so - why not? Leave a comment at the bottom of this post and let me know where you're at!
Kenda Macdonald is an Automation Ninja. With a background in Forensic Psychology and an affinity for statistics and behaviourally intelligent automation – she’s not your average expert. She’s been living and breathing Infusionsoft since 2011 and has spent over 14 500 hours learning new ways to automate what people think is impossible. She’s a true nerd, and spends her waking hours helping businesses understand behaviour for super effective marketing, and relishes in simplifying over complicated processes for truly intelligent automated marketing. She’s the founder of Automation Ninjas - Experts in behavioural automation. Expect enthusiasm and a wealth of knowledge – not normalcy.