Customer Segmentation Examples
#1 Based on a user experience survey – insights on customer loyalty
Gary Stevens, Hosting Canada
When it comes to segmenting customers, too often companies rely on vague parameters like age, sex, or income that rarely capture consumers’ true motivations.
When we looked into creating a segmentation of our audience, we knew we didn’t want to make the same mistake. With some outside help from a market research firm, we crafted a user experience survey to see what each of our customers expected out of our company and how well they thought we were meeting those expectations at an individual level.
Not only did we discover our users’ attitudes towards us. We also explored how they felt about our competitors and what they thought the market was lacking as a whole” he continues.
What we found were 3 distinct segments of users:
1) Group that loved us and was loyal to the point that losing them didn’t even seem possible.
2) Group that thought our offerings and company are no better or worse than the competition but continued to visit us because they enjoyed having options.
3) Group that wasn’t even sure why they continued their patronage with us.
This last group disliked everything about our company and – quite frankly – it didn’t seem like there was anything we could do to change that. So we stopped trying.
We focused the majority of our marketing efforts on the 2nd group in hopes of winning them over from our competitors and making them as loyal as group #1. The results we saw validated our decision and we haven’t looked back.
#2 Based on the job position and business type
Joris Brabants, Head of Marketing at Apicbase
In my current role, we’re seeing a lot of positive outcomes in segmenting our audience. Because of the fact that we serve various industries and get in touch with different buyer personas, customer segmentation is super important for us.
What do we segment?
- Buyer persona: chef, restaurant owner, f&b manager;
- Type of business: restaurant, hotel, restaurant chain, food production.
Why do we segment?
The most important reason to segment our audience is to tailor our message to the right person and type of business so that it resonates better with them.
A success story:
Our guide to food cost control is downloaded by a variety of personas. We see restaurant owners, chefs, f&b managers downloading the guide. In the follow-up email sequence they get, we send different emails based on which type of persona they are. A restaurant owner cares more about profitability, while the chef cares about the time it takes to calculate and control the food cost.
Before customer segmentation, the conversion rate from lead to MQL was only 2%.
When we implemented the email sequences per persona, we now see lead to MQL of 6%, which is x3.
#3 Based on customer longevity
William Taylor, Career Development Manager at VelvetJobs.
I believe you can’t take a set-it-and-forget-it approach to customer segmentation. Your users will evolve over time so you must revisit your segmentation strategy periodically and look for shifts in size, behavior, and engagement.
We usually have three customer segments:
- Those who have just heard about our services or inquired about us;
- Those who are just starting out with us;
- Those who are our regular customers.
Segmenting your customers can help you in personalizing your marketing strategies.
#4 Based on income, level of education, and work/life schedule
We use three different criteria to segment our customers effectively. These are:
- Income (this helps us when it comes to pricing the packages we offer);
- Level of education (more specifically, financial education);
- Work/life schedule.
By segmenting our customers in this manner, we are able to craft different marketing techniques that are most effective for each group. This resulted in better product differentiation and more valuable products that serve each customer’s individual learning needs, as well as effective marketing that results in higher conversions.
#5 Based on affluence and perceived wealth
We split our customers up into age and location to segment them in terms of affluence and perceived wealth. This allowed us to target our higher-earning customers with higher rates of investment options as well as property-based schemes.
We used different low-level incentives for lower-income customers as not to offer them things that they cannot afford or would be a financial stretch for them.
Our average engagement and response rate was around 7% before customer segmentation.
Afterward, they rose significantly in each sector. Higher earning segmentation rose to 13%, almost doubling, whereas the lower-earning customers rose to 10%. Effectively, raising our turnover by 11% YOY.
#6 Based on the number of places a person visited, distance, and vacation budget
Jeremy Scott Foster, CEO of TravelFreak
We segment our customers based on the number of places and the average distance they have traveled, as well as how much they typically spend on vacation.
By categorizing our customers in this way we have been able to laser target them with promotions that are applicable to them: those relevant to their budget and preferred destinations.
By only sending applicable vacations and deals we have increased the open rates on our sales emails massively even if the click-through rate and conversion have stayed constant. This means we get a piece of a bigger revenue pie, with our revenue up from tours and vacations by 25% so far this season.
#7 Based on brands, product category, and spending patterns
John Frigo, Digital Marketing Lead at MySupplementStore.com
We segment our customers in a number of ways both for online and brick and mortar.
We segment our customers by:
- Which brands they buy;
- Which products they buy;
- Which categories of products they buy;
- How much they spend or how frequently they buy.
Loyal customers or repeat customers tend to get premium deals that we don’t offer to everyone. When we run specials or sales we market them to people who have bought that specific product, that brand, and a product in that category and target the messages based on that.
The open rates, as well as the revenue driven by an email to a targeted customer group versus just our main list, are much more powerful.
We’re looking at an open rate from 20% to 40% as opposed to 6% to 8%. We’re looking at an email that will bring in $3,000 in sales versus $400 in sales.
Even though that targeted list is substantially smaller, it will bring in much more revenue.
#8 Based on the customers’ gender
Jeff Moriarty, Founder at Moriarty’s Gem Art
Like many companies, we divide our emails into a variety of segments. One of the best performing customer segmentation is based on the gender of the buyer. While we don’t ask this of our customers, our 3rd party email provider has an AI for this.
Being in the jewelry industry, sometimes women buy for themselves, other times it is the significant other.
What we implemented was the segmentation of gender for all our follow up emails. If someone purchases a ring, they get a follow up of a necklace, If they purchase a necklace, they get a follow up with a pair of earrings.
Where the segmentation comes into place is with the content of the email. If our system thinks it is a male, the email is more focused around giving a gift. If it thinks they are female, it is all about purchasing a matching item for yourself.
This has increased our open rate by about 50% and has had a nice positive impact on repeat buyers. Because of that, it’s something we will continue to use.
#9 Based on the sales cycle and product type
Kuri Khailo, Digital Marketing & SEO Supervisor at Best Price Nutrition
We use two different tactics to make segments!
One segment we have is anyone that has bought a product from us in 120 days and is active in the site in the last 30 days., This usually gives us a great open rate because it’s the most recent people we are sending to instead of someone that bought from us 6 years ago and never opened an email.
Another segment we have is certain products. So if we have a fat burner segment, it would look something like anyone who has bought a fat burner in the last 120 days and is not suppressed.
We do this a lot with certain products and or collections so we can focus more on those customers with certain deals.
#10 Based on the industry
Benjamin K. Walker, Founder & CEO at Transcription Outsourcing
We segment our customers based on the industry they are in. Because we provide transcription services for the legal, law enforcement, medical, academic, financial, and general business industries it is important that our marketing materials and sales people know the differences in each.
The medical industry is very different from the legal industry and they use very different lingo so knowing the difference is how we are able to serve all those different niche markets. We also have separate teams that work with the different niches as well, and that’s what’s also allowed us to be successful in a handful of totally different markets.
We work with Fortune 500 companies, law enforcement agencies, hospitals, law firms, and some of the most prestigious universities in the world.
#11 Based on the platforms/technology that customers use
Kazimierz Rajnerowicz, Content Specialist at Tidio
Our product – a customer engagement solution boosted with chatbots – is platform-based, so we segment our users by platforms and technologies they use or don’t use.
Shopify users and WordPress users are our two most prominent customer segments. Everything we do – from marketing to retention and referral stages – reflects this division.
For instance, we create blog content that attracts users of the two separate platforms. “Live Chat & Chatbots for Shopify” and “10 Best WordPress Chat Plugins” are two articles with the best conversion rate in the history of Tidio Blog – 49.4%(!) and 33.8%, respectively. It means that every second Shopify user and every third WordPress user looking for a live chat solution who stumbles across the post creates an account. After that, they receive separate onboarding emails and different tours.
We base our remarketing on the platforms that are most popular among our customers as well. Segmenting the users of our app helped us to attract them more effectively, deliver better support, and to lower our churn rate.
#12 Based on the product features that customers use
Carsten Schaefer, Founder, and CEO at Crowdy
This may be a bit unusual, but we segment our customers based on which feature they use the most in our app. We have several different offers when it comes to social proof tools and usually, customers don’t end up using all of them.
For example, some rely heavily on reviews, while others use conversion notifications.
We send email newsletters to our customers all the time, but it’s no use sending an email about a feature that the customer doesn’t use. So, we send different emails based on the feature that the customer uses predominantly. If they use reviews extensively, we send them emails on how to collect better reviews, where to display them, how to maximize their conversion rates through reviews, etc.
Using this strategy, we’ve been able to decrease our churn by half and increase our click-through rates from emails by about 40%. Overall, our marketing metrics have picked up significantly.
Now, these are some solid customer segmentation examples, wouldn’t you agree?
There’s so much you can learn about your customers and prospects if you know where to look and which questions to ask!
So, what do you say? Ready to get better at customer segmentation?
Maybe you need something that will set you off to a good start?
Good luck & Have fun!