Customer segmentation is the act of identifying the different types of customers that might buy our product and creating value for each segment based on their unique needs. Knowing the types of customers who will buy our product will help us tailor our product and marketing for each segment.
Let’s pretend we own a coffee shop. What type of customers might we serve? Can you break down these customers into segments? Some segments could be:
- The busy businesswoman who wants to get her coffee and get to work quickly.
- The college student who is looking for a good cup of coffee and a quiet place to study.
- The old friends who want to catch up over a cup of coffee.
All of the above customers are buying our coffee, but they have different needs. How can we meet those needs? By providing value for each customer segment. We could install an express line for the businesswoman, free Wi-Fi and high-backed booths for the college students, and circular tables for the old friends who want to catch up.
What’s important to the busy businesswoman is not important to the college student, etc.. As a Marketeer, it is your job to communicate to the busy businesswoman one message about the value of our product, the college student a different value, and to the old friends a third value. Each customer segment would have their own marketing campaign.
Here are some simple rules for Customer Segmentation:
- Divide buyers into segments.
- Create Buyer Personas
- Identify each segment’s needs.
- Create value for that customer segment by meeting their needs.
- Communicate the correct value to the correct customer segment in a marketing campaign.