In today’s highly competitive business landscape, simply broadcasting generic messaging to your entire customer base is no longer an effective marketing and sales strategy. To stand out and nurture strong customer relationships you need to segment your contacts and tailor communications to their specific needs and preferences. This is where CRM segmentation comes in.
In this comprehensive guide, we’ll explain what CRM segmentation is, the benefits it provides, and how to leverage it to boost results for your business
What is CRM Segmentation?
CRM segmentation is the process of dividing your customer relationship management (CRM) database into groups based on various attributes This allows you to categorize contacts based on common behaviors, needs, and characteristics.
For example, you may segment your CRM by:
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Demographic factors like age, location, job title
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Psychographic factors like personality, values, interests
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Behavioral factors like past purchases, online activity, engagement
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Firmographic factors like company size, industry, technologies used
Once you’ve segmented your customers into distinct groups, you can then tailor marketing campaigns, sales techniques, products, pricing, and customer service to the preferences of each segment.
Why is CRM Segmentation Important for Businesses?
There are many benefits to segmenting your CRM contacts rather than taking a blanket, one-size-fits-all approach:
More Relevant, Effective Marketing
With CRM segmentation, you can send emails, social media posts, and ads that directly speak to what each customer group cares about most. This drives higher open and click-through rates.
Increased Sales Opportunities
Sales teams can adjust their pitches based on customer segments. For example, selling to IT managers requires a different approach than selling to marketing managers.
Improved Conversion Rates
On your website, you can provide segmented landing pages, offers, and messaging to convert different types of visitors more effectively.
Higher Customer Satisfaction
You can improve customer service by understanding the unique needs of customer groups and tailoring support accordingly.
New Product Development Opportunities
Analyzing different customer segments can reveal areas of unmet needs to inform future product development.
Better Ability to Upsell/Cross-sell
You can create targeted upsell and cross-sell offers matched to each segment’s behaviors and needs.
As you can see, CRM segmentation provides immense value to organizations across departments. It enables more strategic, insightful selling and marketing.
How to Get Started with CRM Segmentation
Follow these steps to implement an effective CRM segmentation strategy:
Step 1: Determine Your Segmentation Criteria
First, decide how you will group your customers. Assess their attributes and behaviors to determine the most relevant criteria, such as:
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Firms by industry, company size, technologies used
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Individuals by demographics, geography, interests
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All contacts by past purchases, email engagement, web activity
Step 2: Use Your CRM Platform’s Tools
Leading CRM systems like Salesforce, HubSpot, and Zoho all offer segmentation capabilities. Use their dashboards and features to divide contacts based on your chosen criteria.
Step 3: Continuously Refine Segments
As you gather more data, look for patterns and additional ways to subgroup customers. Regularly update segments to keep them actionable.
Step 4: Create Tailored Campaigns & Offers
With clearly defined segments in place, you can now create highly targeted content, promotions, pricing, and messaging tailored to each one.
Step 5: Test & Optimize
Pay attention to how well segmented campaigns perform and make adjustments. You may uncover new insights that allow further segmentation.
Examples of Effective CRM Segmentation
Here are a few examples of how companies can benefit from CRM segmentation:
Technology Company
Segments: Power Users, Regular Users, Potential Defectors
Approach: Create a customer loyalty program with exclusive perks for Power Users. Develop more educational marketing content to nurture Regular Users. Send Potential Defectors promotions and survey them on needs.
Fashion Retailer
Segments: VIP Shoppers, Deal Seekers, Window Shoppers
Approach: Offer exclusive early access to sales for VIP Shoppers. Send Deal Seekers coupon codes and flash sales. Retarget Window Shoppers with ads for items they browsed.
B2B Marketing Agency
Segments: Current Customers, Cold Leads, Warm Leads
Approach: Upsell and cross-sell Current Customers. Use lead nurturing emails to Warm Leads. Send Cold Leads content offers to collect more data on their needs.
Tips for Successful CRM Segmentation
Here are some best practices to ensure your segmentation strategy is highly effective:
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Keep segments relatively broad at first, then get more granular over time.
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Name and organize segments clearly so they are easy to analyze.
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Regularly review data and activity trends to identify any emerging segments.
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Don’t rely solely on basic demographic factors. Behavioral and psychographic segmentation often provides more actionable insights.
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Use segmentation across sales, marketing, customer service, and product teams for alignment.
CRM Segmentation Drives Results
In today’s consumer-centric landscape, businesses can no longer rely on mass marketing techniques. CRM segmentation enables a strategic, nuanced approach to reach, engage, convert, satisfy, and retain each unique type of customer.
While it takes some effort to implement, segmentation provides immense long-term value. With the right strategy, your CRM contacts go from being data points to actionable customer insights that ultimately drive growth.
How does segmentation work?
Most people’s inboxes are filled with spam, junk mail, and promotions that they immediately delete because they aren’t relevant to them. If your content provides a more personalized experience for the person who receives it, the chances of them opening your message and grabbing their attention become much higher.
Customer segmentation helps personalize the customer experience, which leads to greater satisfaction. This helps reap big benefits for you and your company.
The importance of customer segmentation analysis
Customer segmentation analysis consists of in-depth evaluations intended to arrive at a clearer understanding of target customer demographics. This kind of analysis helps companies optimize and enhance everything from marketing campaigns to sales, support, and product placement, along with other business activities.
There are several types or categories of customer segmentation analysis:
- Behavioral
- Demographic
- Economic
- Industry/Vertical
The importance of customer segmentation analysis comes down to two things: determining the future value of a given customer profile which helps businesses discern their ideal customer profile, and continuously optimizing strategies and services to retain existing customers and maximize lifetime value.
What is CRM and How Does it Work? | Salesforce
Do you need a CRM for customer segmentation?
Yes, but to varying degrees and levels of sophistication. The key to a successful customer segmentation strategy is the CRM that you use. Your CRM should be able to easily sort out all your customers into different categories for you. It should also seamlessly connect data from other systems to provide a complete customer profile.
Why is customer segmentation important?
The result of the guided campaigns and actions will be a boost to customer loyalty and conversations. Customer segmentation will help you learn about customers more deeply, so you can know how to market and sell your products, which customers to invest in and how to improve your marketing techniques.
How can a modern CRM make the most of segmentation?
While these strategies form the backbone of segmentation, the real magic happens when they’re paired with the capabilities of a modern CRM. Handling customer data isn’t just about the basics. To truly make the most of segmentation, it’s essential to explore advanced methods.
What is segmenting in CRM & how does it work?
This could mean segmenting based on a mix of purchase dates, spending habits, and product preferences, considering multiple criteria simultaneously to create highly specific segments. How to Apply: Use CRM tools that offer multi-faceted filtering options, combining various data points to create unique segments.
