How to make your customer segmentation relevant

How to make your customer segmentation relevant

In order for communication to contribute to sales, a number of basic questions related to customer segmentation need to be answered. What behaviours and needs help us understand how existing and potential customers make decisions? Which communications create value and which contribute to the opposite? Are we talking to the right audience, at the right time and in the right channels?  

These are examples of questions that have been relevant and the same throughout history, but the answers have shifted as consumer behaviour and needs have changed. Variations are also influenced by other factors such as changes in technology, societal challenges and, for example, fluctuations in the economy. 

Right now, during the ongoing corona pandemic, many companies are grappling with the challenge of making relevant customer segmentations. It is simply possible that some segments may have changed while others have disappeared or suddenly proved irrelevant. At the same time, companies express that the pandemic has enabled them to identify new segments that are meaningful and important for them to reach.  

To know that we are talking to the right customer, at the right time, with the right message and in the right channel, it is important to continuously review the customer segmentation that underpins the communication. In concrete terms, this involves dividing existing and potential customers into groups with certain characteristics in common. 

Below is an example of a segmentation:

Fanny 15 years old and vegan is segmented in the same segment as Lotta 52 years old. They are grouped in the same segment because they share values. While they share values, they differ because they have different economic circumstances and are in different life cycles. The question that then becomes important to seek answers to is whether the segment is still relevant despite their differences. Simply put, do the shared values outweigh, for example, the fact that they are in different life cycles?  

Segmentation can be done in many different ways, for example based on variables such as: 

  • Income 
  • Behaviour 
  • Age 
  • Lifecycle 
  • Loyalty
  • Geography
  • Values
  • Location

This guide is about critically reviewing your existing customer segments. You may find that a lot has changed and that you risk missing the mark with your communications. In that case, you will need to rethink your communication so that it can better contribute to the impact you want.  

Reflection questions: customer segmentation 

  • Some examples of variables that may be relevant in customer segmentation were given above. Which of these are relevant to you in your segmentation?  
  • Are there others that are important? Which ones and why? 
  • Based on the segmentation you have just done, who is the most valuable customer and why? 
  • Are there customers you can prioritise away from and focus on even more relevant customers? Which ones and why? 
  • How can you develop the communication targeted at these priority customer segments? 
  • How do you meet your priority customers in a physical environment today? Give examples.  
  • How do you meet your priority customers in a digital environment? Give examples. 
  • Are you satisfied with the answers you gave or are there important and necessary changes to be made?  

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