Companies have access to more customer data than ever before. Whether it is through surveys, customer loyalty cards, in-store data, or web analytics, it can be easily overwhelming to comb through these databases to pull out relevant insights. Although the industry can come up with new tags for a term in an attempt to coin phrases such as profiling, personas, and clusters - it's still just plain segmentation.
What is segmentation analysis?
It is the practice of dividing or coupling your customers into buckets where similar traits are shared. These traits could include demographics (income levels, geographies, genders, etc.) and behaviors (media habits, purchase types, brand usage, etc.) It takes complicated large data sets and simplifies them into common buckets that are easier to interpret.
How can segmentation drive your marketing strategy?
Segmentation can be used to create your top customer tiers. You've heard the phrase, not all customers are created equal so you shouldn't treat all of your marketing budget equally either. By identifying shared demographics and behaviors of your top spending groups (top 80% or 90%) you can cater your marketing messaging appropriately. It will even allow you to be better target your message and audience, particularly with digital marketing and social media.
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