Customer Segmentation Analysis: A Guide

Customer Lifecycle Marketing|6 Minute Read

Customer Segmentation Analysis: A Guide

Customer segmentation analysis remains a highly critical task for marketers today.

And now, there’s a simpler, far more efficient means to conduct this data analysis.

When done carefully and thoroughly — and with the optimal marketing technology (a critical component we’ll circle back on shortly) — this data examination can transform your customer lifecycle orchestration for the better, both immediately and in the long run.

With a concerted customer segmentation strategy and the aforementioned martech, you can not only group your myriad buyers based on various criteria, but also routinely and extensively investigate each “bucket” of your customer base and ascertain intricate insights about their respective purchasing behaviors and patterns (i.e., their customer journeys).

Simply put, scrutinizing your target segments and evaluating the (hopefully) rich customer data that lives in their (hopefully) unified profiles (e.g., products and services bought, online engagement levels) is now the premier way to better understand and serve your audience.

So, how can you enhance your customer segmentation analysis — and, in turn, get on your way to perfecting your personalization approach and improving your marketing ROI?

The answer lies in a particular — and increasingly popular — data-driven marketing solution used by many mid-sized and enterprise brands today: the customer data platform (CDP).

customer segmentation

Customer segmentation analysis: Your key to better understanding your audience

We won’t highlight the (many) benefits of audience-based segmentation or the (many) types of specific market segmentation businesses can implement today.

You already know segmenting buyers and subscribers is a fundamental component of your marketing. It can also give you the ability to learn about customers’ behaviors.

Let’s cover why customer segmentation analysis is just as critical as grouping those individuals into distinct clusters within your main marketing database.

Any worthwhile market segmentation strategy requires constant, in-depth data analysis of each particular collection of customers so you can discern how to calibrate your promotional efforts accordingly to retain, upsell, and cross-sell those folks.

The rewards of regularly reviewing one’s customer base are many for marketers:

  • Customer segmentation and related persona analysis is deemed the second-most-effective tactic for organizations to grow lifetime value. — 2019 Econsultancy research
  • “The ability to dynamically segment audiences” was the top tactic for marketers when it comes to improving consumer experience. — 2018 Econsultancy report
  • Advanced analytics for robust segmentation and data consolidation to better understand customers are CMOs’ top marketing investments. — 2020 Merkle study

Whether you’re focused mostly on psychographic segmentation to determine buyers’ interests and motivations or geographic segmentation to distinguish shoppers by location, closely analyzing these clusters is what will help you evolve your customer engagement strategy and optimize your niche marketing efforts to those segments.

How to compare and contrast your segments with a customer data platform

What can enhance your marketing even more, however, is to compare your segments.

This is how leading companies figure out which groups of customers are worth allocating time, resources, and money to (e.g., high-CLV customers with high-cost subscriptions) and which to focus on later (or not at all) with your messaging, like inactive shoppers with low recency, frequency, and monetary value (RFM) scores.

customer segmentation

 

BlueConic customers use our Segment Comparison insight to explore the differences between segments. They can compare the sum or average of up to 10 number-, decimal-, and currency-oriented profile properties that pertain to their groups of customers in their BlueConic tenants.

By evaluating the average or sum associated with each segment, our customers can get an at-a-glance, eye-opening view as to how their segments stack up against one another – and discover if one segment of customers spends more, has a higher lifetime value, or purchases more frequently.

For instance, if you’re a direct-to-consumer brand and want to see how customers across segments perform in terms of average order value (AOV), you could compare them based on:

  • Buying frequency: Do those who buy 1-2 times or 3-5 times have higher AOV? 
  • CLV scores: Is there a group of customers with mid-range CLV scores with higher AOV? 
  • Consent status: Do those who consent to personalized messaging have higher AOV? 
  • Subscription level: How does your basic and premium subscribers AOV compare? 
  • Engagement: How does the AOV compare for buyers with varying engagement scores? 

Marketing professionals with our CDP in place can also use the Profile Distribution Graph insight to visualize a profile property’s distribution across a given customer segment and the relationship of said profile property to another for the same segment.

At the end of the day, the sheer number of segmentation options possible — and, therefore, number of niche marketing segments brands can build — is seemingly incalculable.

Suffice to say, with a feature like Segment Comparison, you have the opportunity to glean highly valuable customer insights that can educate you about buyers and enlighten you as to how you can better your segmentation marketing efforts (and considerably).

customer segmentation

Segmentation analysis simpler (and far more streamlined) with a leading CDP

Once you know which are the most critical segments that require your attention ASAP, you can adjust your messaging to them to boost one or more of your primary marketing metrics.

For example, BlueConic customers who identify a segment via this comparison feature with both the highest momentum score (based on website activity in the last seven days) and propensity to buy (based on recent purchases) know right away that’s a prized audience.

Marketers who use BlueConic can then use this new info about this niche portion of their customer base to see what past personalized messaging helps increase their engagement and buying behaviors and perhaps apply the same approach to other segments.

Conversely, BlueConic customers who pinpoint buyer buckets with the highest propensity to churn can use that info to see what’s causing customer attrition rates to spike.

This sizable churn rate could be due to a lack of or too much messaging, use of the wrong marketing channels, poor customer service experiences, or something else entirely. You and your team won’t know for sure, though, until you’ve unified all first-party data for every buyer and subscriber into a centralized database like a customer data platform.

Having just some customer data stored in disparate databases won’t give you the necessary insights into your target audiences or ability to liberate that data in cross-channel activities.

Nor will it give other teams at your brand the opportunity to leverage said data for their work (e.g., informing product development or go-to-market strategies for new offerings).

It’s only when you consolidate every pertinent data point for your audience into a single source of truth like a CDP that you’ll be in a position to segment customers, compare them accordingly, and create an action plan that improves your lifecycle marketing strategy.

Watch our on-demand webinar today to learn about several specific CDP use cases — including multi-dimensional customer segmentation and segment analysis.

customer data platform use cases

See what BlueConic can do for you.

Whether you’re looking for operational efficiencies or improved marketing effectiveness through data activation, our customer data platform can help.