Most small businesses don’t have the time or the budget to treat every one of their customers individually however there has to be some recognition that not every customer has identical needs to each other. Segmentation is really the process of separating customers into groups by interests or demographics which really allows businesses to target their clients more uniquely rather than adopting a policy of one rule fits all. By grouping or tagging their customers in this way, companies can maximise their marketing work and deliver a greater conversion rate than if all customers were treated exactly the same. Ideally, businesses would do this for every single customer however this is impossible and segmentation offers a practical alternative.

How we segregate our customers depends very much on the business involved. Groups might be identified in terms of the way the customer came through the sales funnel or perhaps by their interest in a particular product. Customers may want your product or service for different reasons and they might want different quantities. Some customers may shop exclusively online and be open to digital marketing while others might only shop in a specific supermarket and respond only to traditional print advertising. Some segmentation groups are based on lifestyle habits such as drinker and non-drinker while others may be focused on income levels and distinguish between student and professional. When it comes to international marketing, a frequently used segmentation approach is to group by country and the generalised characteristics of the nation and its people including tastes and trends.

Successful marketing relies on the ability to specifically target the people who are really interested in what you have to offer, not those who have no interest. It also requires a variety of different communication mediums to ensure key messages reach the target audience.

Businesses use a range of grouping techniques. Psychographic segmentation seeks to distinguish personality traits among customers while behaviouristic segmentation groups by consumer behaviour patterns including frequent/infrequent purchase, brand loyalty. It can be a useful tool to differentiate customers who will always buy your product regardless of trends and those who frequently switch between brands depending on special offers and pricing.

One of the most common types of segmentation is distinguishing your business customers from your consumer markets. Banks and transport providers such as airlines and train companies need to do this very well as they are two very distinct markets. While business markets contain a much smaller pool of new customers when compared with consumer markets, these customers can be much more valuable in terms of the average annual spend on travel or the amount they have available to invest.

Every business can benefit from segmenting its customers, particularly smaller firms which don’t have the resources to waste on unnecessary marketing. Segmentation can help businesses identify their most and least profitable customers so that the little funds they do have available to invest deliver the desired outcome. Don’t leave segmentation on the backburner until your business grows, chances are your competitors are already successfully grouping their customers.

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