Customer segmentation is all about creating clusters of customers who share common traits. But why would you spend your time researching which of your customers fall into the same demographic or attitudinal segment and which are earning more or less?
Research shows that 71% of companies who have a clear idea of their ideal customer exceed their revenue goals. In addition, knowing your customers also helps to bring clarity as to what their needs are. Unsolicited offers and vague solutions only make customers run off to competitors that actually take their time to find a solution tailored to their problems and budget.
But, what can you do to prevent all of this? In this article, we will discuss a few segmentation strategies that will assist in getting to know your customer base, all while increasing your revenue.
1. Get a 360 view of your customers
This might remind you of the traditional marketing approach, but it comes with a modern twist. With the right software, you can calculate the probability of your customers purchasing from you in the future based on engagement.
For example, you can now find out how often your service is used, how many users are active, and other clues about the health of your customer.
With these things in mind, you can then put together an action plan to improve customer experience, an important part of customer success.
2. Do not apply a universal sales process
Most companies have at least 4 categories of customers: (1) high potential accounts, (2) key accounts, (3) low-value accounts, and (4) accounts at risk. Within these 4 segments they are also usually sliced by another axis that is key to your customer success strategy: high touch, mid touch, and low touch (sometimes referred to as the long tail). This pertains to how you engage with customers, with high touch being the largest by size and revenue impact whereas low touch is a large segment of customers, but not as materially impactful to revenue. However, the low touch does make up a large portion of many companies revenues collectively.
Rather than building a process that can be replicated on all of your customers, it is important to use segmentation so that you are able to determine how your revenue is split by the categories mentioned above. . As a company, you must identify what makes your most successful customers successful, what their common traits are, and what common processes have you applied to the engagement. Using these common traits, you can then leverage and apply them to all of your customers.
3. Build a process for each segment
We talked above about how we can not replicate the same process for all segments, but we can replicate a successful pattern for the segment on which it was tested.
This strategy works extremely well in the customer retention phase. Also, keep in mind that it is 7 times more expensive to attract new clients than to get business from your current ones.
Luckily, there are solutions for companies who are looking for renewal blueprints to increase their retention rates. With the popularity of data science, companies can more easily analyze data and better determine the success pattern of their most successful customers with the goal of becoming as predictive as possible.
4. What are the benefits of customer segmentation, and why should you care?
Knowing your customer is vital to the success of your business because it allows you to tailor your product to their needs while increasing your revenue.
Technology has made it possible for you to be more accurate when it comes to customer segmentation, receiving early warnings when things go wrong, and building renewal blueprints to retain more customers.
If you want to find out more about how you can get a better grasp of who your customers are and who is ready to buy more, feel free to take a look at how we use augmented intelligence to make this happen.