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What is Customer Segmentation? Strategies & Tools

Learn about all things customer segmentation, so that you can send the right messages to the right people at the right time.

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June 20, 2024
Kathleen Crampton
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Reading time about 6 min

No matter your industry, marketing matters. You need to get the word out about an event, market a product, send abandoned cart reminders, and so on. But how do you send the right message to the right person? Two words, one process: customer segmentation.

Customer segmentation is the process of dividing your business’s customers and leads into distinct groups based on their needs, characteristics, behaviors, and locations. You’ll analyze data such as purchase history, demographic information, and customer feedback to identify commonalities among your customers and create groups that reflect similar needs and behaviors.

It’s an easy way to tailor your marketing efforts to your customer’s unique preferences.

Even if you're new to SMS marketing or just starting your first campaign, it's crucial to incorporate a customer segmentation strategy to create a personalized experience for your audience. We'll show you how to use this process and fully utilize your text marketing service to reach your customers with customized messages.

 

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Benefits of Customer Segmentation

In marketing, segmentation is a key tool to target different types of customers and meet their various needs. Here are some of the benefits that you can expect.

 

Magnify Audience Reach

By segmenting customers, you ensure that your messages (whether text or email) are relevant to them, increasing the chance of them reading the content and connecting with your brand.

 

Get More Sales

Customers are more likely to pay attention when they receive a message catered to their demographic, behaviors, wants, and needs (or all three). For example, a marketing message to a Gen Z customer versus one to someone from an older generation will likely be very different in tone. Customer segmentation allows you to tweak your messages accordingly to reach various audiences and, in turn, increase their chances of making a purchase.

 

Boost Customer Retention

Customers remember the personal touches. So when you send a group of customers a message that feels “just for them,” you boost retention. With that unique message, you’re elevating their experience with your brand, and the more they feel catered to, the more likely they are to continue giving you their business.

 

Increase Social Engagement

Sending polls and surveys, asking for referrals, and promoting two-way texting are all ways to encourage social interaction with your brand. And that’s made easier with customer segmentation. Each customer group you define can receive the engagement message that fits that segment’s traits, motivations, or challenges.

Learn more about the benefits of SMS marketing for social engagement.

How to Build Your Customer Segmentation Strategy

Building a customer segmentation strategy might seem daunting initially, but stick with us as we share a step-by-step process that you can easily apply to your business’s marketing plan.

Illustration of the steps of customer segmentation: Types > Message > Analyze > Opt-Outs

#1

Decide How to Segment Your Customers

You first need to choose the types of customer segmentation to use for your business needs:

  • Demographic. This includes gender, age, occupation, household income, and marital status (aka the basics).
  • Behavioral. This category of customer segmentation is about understanding your customers’ journeys and what pushes them to order your product or service. How are they navigating your website? How frequently do they have abandoned carts? What stage in the customer life cycle are they in (like a new lead or a long-time customer)? Do they engage with messages for discount codes? Learning about customers’ specific behaviors is a key way to segment.
  • Geographic. You might think this segment only includes location, but it can also get more specific with transportation (like if your customers take the subway or drive for their commute), language, and other factors that might differ from region to region.
  • Value-based. Value is a bit harder to define than the other types of customer segmentation that we mention here. Customer values include things like challenges, motivations, interests, and personality. (Hint: This is where your customer personas or combing through surveys will come in handy.) Value-based segmentation allows you to reach customers in new and surprising ways.

Remember that not all segments are created equal. For example, value-based and geographic data will probably change less frequently than demographic and behavioral data. It’s important to utilize your chosen segments purposefully and even overlap segments to create more targeted messages.

#2

Craft Effective Messaging for Each Segment

Next stop? Use your customer segmentation groups to create messaging campaigns that meet your goals. Set priorities within each segment to help inform how and when you're messaging these customers.

For example, you can promote a new product drop, aiming to increase awareness and sales. Apply that larger goal to each segment to determine the targeted messages you'll send and when you'll send them. If you have a segment of customers that typically purchases only after they receive a discount code, make sure that theirs includes language on affordability. If your product is season-based (like swimsuits), consider sending it to customers on the West Coast a month or two before sending it to customers who live in the country's northern regions.

These are just a few examples of how to tweak your marketing messaging depending on each segment. You must meet customer needs, wants, and behaviors to create effective messaging.

#3

Analyze Results

As with most techniques in marketing, segmentation must include post-campaign analysis — because you need to know what worked and what didn’t.

Did your messages have their intended outcomes? If not, do some customer segmentation analysis, reviewing your data for accuracy and ensuring it’s current. You can do this by sending surveys to current customers, activating live website chats, and so on to refresh your data.

If your customer segments still look accurate, consider tweaking the next set of messages to better fit each group to delight customers and motivate them to take action.

#4

Remove Inactive Users

Though it might seem like a small step, this is important for focusing your efforts on the customers that show promise. That means you should remove any dormant leads from your customer segmentation lists by sending opt-out messages. Doing so will either remind the lead of your business and prompt them to stay in your email or text loop or motivate them to opt out of your company’s messages, thereby letting you move on to nurturing more valuable leads.

How EZ Texting Can Help

Where do you find a customer segmentation solution, you ask? EZ Texting is your one-stop shop for all things SMS marketing. Increase your audience reach, create engaging messaging campaigns, and see big wins for your business — all with our easy-to-use platform.

EZ Texting in-app contacts icon

Start by uploading your contacts and then easily group them into types of customer segmentation depending on your campaign. Then, you’ll see how easy it is to send marketing SMS texts to the right group at the right time, minimizing opt-outs and duplicate messages.

Plus, EZ Texting offers numerous SMS resources, including reporting and analytics, which are crucial to ensuring the success of your marketing campaigns.

Learn about additional EZ Texting solutions, along with customer segmentation tools, that can boost your ROI, increase engagement, and make your business life a whole lot simpler.

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