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Customer Segmentation for Small Business: Tips and Tricks

Brand Development

Your small business serves a wide range of customers with different interests and needs. So it’s impossible to create a single message that appeals to everyone. It’s also impossible to personalize marketing campaigns for each of your customers.  

The best thing you can do is to segment your audience and identify who your most valuable customers are. Through customer segmentation, you can focus your marketing efforts on a specific subset of customers who are similar to your current best customers and engage them.  

When you personalize your marketing approach and communications in a way that’s meaningful to them, you can capture their attention, create campaigns that generate results, and boost your sales.  

As your go-to SEO company in Fort Lauderdale that specializes in helping small businesses gain traction online, we know that this will make it easier for you to take your business to the next level and achieve your objectives effectively and efficiently.  

In this article, we will discuss everything you need to know about customer segmentation and share with you how to properly segment your customers.  

What is Customer Segmentation?

Fort Lauderdale SEO company  holding magnifier to find target audience among other people.

Customer segmentation is the process of grouping customers in your target audience based on similar characteristics. This will allow you to create a more tailored marketing message that speaks directly to their needs and interests.  

Here is some data you can use to inform your customer segmentation:

  • Needs  
  • Buying characteristics
  • Demographics
  • Interests
  • Behaviors
  • Psychographics

The three main approaches to market segmentation are:

Priori Segmentation – A segmentation technique that sorts people according to conventional marketing variables, such as demographics, lifestyle, and psychographics, and classifies customers according to these assumptions rather than on market research.

Needs-Based Segmentation – Based on needs or wants that customers express for a specific product or service that you offer. Their needs are determined and verified first through market research, then you group your audience according to those needs.  

Value-Based Segmentation – This type of segmentation evaluates customers based on the revenue they generate and the costs of establishing a relationship with them as well as maintaining it. It also allows you to determine which segments are the most profitable so that you can adjust your marketing accordingly.  

Why is Customer Segmentation Crucial to Your Small Business?

Small businesses tend to have limited resources. As the leading SEO company in Fort Lauderdale, we recommend that you focus your time, energy, and money on your most profitable customers.

To do that, you need to who your best customers are and how to serve them.

Every customer has distinct needs, traits, preferences, aversions, demographics, and values. And, these factors greatly impact their motivation to buy.  

Through segmentation, you can create various marketing messages to communicate to each group across various platforms. As a result, you can drive more potential customers to convert.  

Aside from more targeted messaging and better conversion rates, here are a few reasons why customer segmentation is crucial to any business that wants to thrive:

1. Improve your product: Having a clear idea of who needs and wants your products and services and what they need it for will help you position your company as the best solution for their specific needs.  

As a result, you will stand out from your competitors, better satisfy your customers, and deliver better products. Insights towards your best customers will also allow your company to offer better customer support, post-purchase content, and other offerings that will take their product experience to the next level.  

2. Maximize sales and profit: By spending less time on less lucrative customers and more on your most profitable segments, you can increase your conversion rate and ultimately increase your revenue.  

3. Generate higher quality revenues: People can buy your products for the wrong reason and selling into the wrong segment can be more expensive to maintain. You’ll also experience a higher churn rate and a lower upsell potential post-purchase. By focusing on the right segment, you can increase your margins and successfully grow your customer base.  

4 Types of Customer Segmentation

Geographic

Image from ManyChat

Geographic segmentation is grouping your customer according to their location. If you have a global market, this can be especially useful.  

For example, if you sell ski gear and winter equipment, you can target people in regions experiencing snow for a specific time.  This prevents you from wasting any resources on people who won’t ever buy from you.  

On a smaller scale, neighborhood cafés, for example, can also use geographic location to show their ads only to people inside the town they live in.  

Demographic

Campaign by Loft uses demographic segmentation to target teachers.

Image from Dropbox

This segmentation groups together people according to specific attributes like:

  • Religion
  • Sex
  • Age
  • Salary
  • Occupation

If you sell luxury goods, you can target people with higher incomes. If you sell women's perfumes that are on the higher end, you can target females, 25-50 years of age, and with higher income.  

Demographic segmentation works best when you have multiple attributes at the same time for a more targeted segmentation.  

Psychographic

Hilton hotels uses psychographic segmentation to target mothers in campaign.

Image from Business2Community

Psychographics divides your audience based on less "substantial" factors such as the way of life, values, identity, and socioeconomic class.  

This type of segmentation is more difficult to execute because it requires you to become more acquainted with your present and past clients.  

An example of this is identifying your customers who are thrifty and capturing them by using marketing messages like "Best Deals" and "Lowest Prices".

Behavioral

Toyota uses behavioral segmentation to appeal to environmentally conscious buyers.

Image from Sumo

Behavioral segmentation is when you group customers according to the following attributes:

  • Loyalties
  • Events
  • Learning
  • Purchase intents
  • Utilization
  • Mindfulness

Behavioral segmentation allows you to generate information you can use to create more meaningful marketing messages that resonate well with your intended audience.

A great example of this is Netflix. Every time you watch, skip or rate a movie or show, it gives its algorithm system more information about your behavior, which allows them to present more personalized recommendations for you.  

How to Segment Your Customers

As your go-to SEO company in Fort Lauderdale, we suggest that you segment your audience into groups with a strategy in mind. The difference in your segment’s traits should be relevant to your marketing objectives.  

To achieve this, you want to approach segmentation through the following:

1. Define Your Best Current Customer Segment

Who are your best customers? Is it those who spend the most time on your site, and who open your app most frequently? Or those who spend the most money on your products?

Depending on your marketing campaign, find out who your best customers are for this project and determine the common characteristics that define good customers.  

To effectively define what a good customer is, create a quality score you can use to objectively rank your customer base.  

2. Determine Where You Acquired Your Best Customers

Identify which channels you’re acquiring your high-value customers. Is it on social media? Search engine? Ads?

It’s important to know which channel they’re coming from so you can double down advertising through that platform and strengthen your presence.  

3. Analyze Customer Data to Determine Consistent Patterns

Go through your main type of customer segmentation and determine common characteristics they have. For example, you might find that high-value customers are women aged 25 to 37, and they live in the Fort Lauderdale area.  

4. Asses How These Customers Are Interacting with Your Products or Services

How are your customers interacting with your brand or content? Is there a specific time of day or week that they are most actively liking your posts or messaging you on social? What products do they inquire about the most? What are the types of content they engage the most?

5. Make a Conclusion from Your Collected Data

Based on the data you collected above, conclude your best customers' interests, behaviors, needs, and pain points.  

6. Asses Which Segments Are Worth Tailoring a Campaign To

Based on the characteristics of who your best customers are, which channel you've acquired them from, their similarities, and how they're interacting with your product, you've now pulled together enough patterns to create several segments.  

However, not all segments are worth tailoring a campaign to. Find out your most profitable segments and create hyper-personalized campaigns to establish deeper connections, especially for those segments of small size but extremely high value.  

Looking for a Fort Lauderdale SEO Company?

Take your campaigns and marketing efforts to the next level with SEO and proper targeting!

By knowing who you want to reach out to, you can create more effective campaigns that generate conversions. You can also maximize your marketing budget by making sure that your ads only appear in front of those who will likely turn into your customers and focus on your most high-value customers.  

Digital Resource is an SEO company in Fort Lauderdale that specializes in helping small businesses gain traction online. If you’re having a hard time identifying who your best customers are and creating campaigns that appeal to and win them over, we can help.  

Contact us today to know how we can help you build a successful and lucrative business online through SEO and effective digital marketing.  

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