Customer segmentation, a strategic tool

Customer segmentation, a strategic tool

Beyond price and product or service, what do you have to offer your customers? What makes you unique in their eyes?

The customer experience! A particularly popular concept in times of pandemic, it is at the heart of many organizations’ priorities. The customer experience is what allows your company to stand out, increase customer loyalty and thus, bring business opportunities. How can you improve the customer experience? By developing a relationship with the customer, by personalizing your message to their reality and by making their experience unique. In this era where artificial intelligence allows us to micro-personalize our communications, it is still impossible to develop a customer-oriented business strategy… for each customer! This is where segmentation and personas come into play.

Segmentation vs personas, what is the difference?

Often used interchangeably, these two terms nevertheless represent two complementary approaches. First, a segment is a group of consumers who are similar in their behaviours, needs and consumption habits. Each segment must have similar characteristics and motivations, but they must be different from each other so that strategies can be adapted.

For example, a definition of a pharmacy segment could be: Segment A: Customers in this segment come to the store on average once a week and 75% of them have a child under the age of one.

The persona takes the typical consumer of a segment and personifies it. We add their motivations, challenges, problems, and daily life, to know them well enough to give them a name. We get inside his head and try to describe his thoughts, aspirations, and decision-making processes. It is a question here of putting oneself in the skin of the individual.

Let us take the example of segment A of the pharmacy: Marie-Christine is the new mother of a little girl, and she has a million questions about her new reality. She plans one visit a week to stroll around the store, ask her questions to the specialists and talk with the staff to break the isolation.

So, segmentation is the preliminary step to personas.

A tool for communication and organizational alignment

A good segmentation, well used and integrated, helps to guide corporate strategies and facilitate the identification of priorities. Because no, segmentation is not just a marketing matter! The first use of a segmentation is to allow you to focus on the customers that are most valuable to your business. First seen as a communication tool, it must also be dispersed throughout the organization so that everyone places the customer at the heart of their strategies.

Why make a segmentation?

To have a common vision:

Segmentation helps to identify key segments to focus on. It therefore provides a common referent throughout the organization to align the priorities (of the company and the departments) around one objective: to improve the customer experience. By identifying the needs, expectations, and irritants of key segments, you can ensure that their experience is optimal regardless of the path they take and ensure that they become more attached to your brand.

To maximize the impact of your efforts: 

Because your time and budget are not unlimited! Instead of trying to acquire new customers no matter how good they are or trying to retain customers that are not profitable for your organization, focus your efforts where it is most positive. It is better to invest in the segments with the most loyalty or the best potential and pay less attention to those who are already less inclined to do business with your company and who have low potential. You still need to identify them, and that’s where segmentation comes in handy.

To improve your organization’s reputation and image:

Who does not like to receive special treatment when they consider themselves a good customer? Whether through personalized communications/promotions or products/services adapted to their needs, the use of segmentation makes it possible to offer a more personalized customer experience. An organization that pays special attention to its customers will find it easier to retain them and its image will only improve.

At Numea, creating segmentations is part of our tried and tested expertise. Our approach is rigorous and fact-based. We also accompany you in its deployment to integrate it concretely into your business strategies. Because a segmentation, no matter how attractive it may be, is of NO use if it is not an integral part of your decisions!