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July 27, 2023

Decoding Customer Segmentation: Examples from Successful Brands

Segments. They’re not just for oranges. In fact, they’re a marketing essential.

No matter your industry, the importance of segmentation for marketing can’t be overstated. Customer segmentation increases the relevance of your marketing and increases your sales.

Why? It’s simple. Segmentation leads to personalisation. And that leads to happy, engaged, and loyal customers. So much so, some studies suggest that around half of consumers become repeat buyers if the brand in question gets personalisation right.

We pulled together several customer segmentation examples to highlight just how powerful this strategy can be for eCommerce businesses.

What is customer segmentation?

Let’s go back to that orange. You aren’t going to put the entire thing in your mouth at once. No siree. You’re going to break it up into pieces (segments), so you can actually taste and enjoy each juicy chunk.

You can do the same with your customers.

Rather than have one big mass of people, you can split them into smaller groups, each with shared characteristics so they’re easier to manage and market to.

Working with smaller groups means that you can fine tune your strategy, and tailor your content, product recommendations and offers more precisely to your target market. This approach can make more of a difference to your marketing results than you might think. Data confirms that using this strategy for email marketing alone can increase your revenue by as much as 760%.

Sorting your customer demographics into logical groups can be advantageous on a number of levels:

Get a competitor advantage: We mentioned above that personalised experiences can turn buyers into loyal repeat customers. The inverse is also true. With 76% of customers finding one-size-fits-all experiences frustrating, businesses failing to offer a personalised experience often see their prospects head elsewhere. Making sure you’re able to deliver on personalisation can therefore be a competitive advantage.

Reduce the cost of your marketing campaigns: If you’re a PPC advertiser, any fine tuning you can make to your ad targeting directly translates into money saved. That’s because more relevant adverts generate better click throughs, which leads to better ad quality ratings, more conversions and improved ROI.

Generate better results: When your marketing, product recommendations and overall messages resonate more clearly with your audience, the outcome – regardless of the nature of your campaign – will be better, with a ripple effect across your business. A more engaged social media audience could translate to a more active community for example. A memorable website experience could lead to more positive online reviews and even word-of-mouth recommendations. More precise email marketing could increase customer lifetime value.

Types of customer segmentation

When it comes to good customer segmentation examples, there’s a wide pool to choose from. And plenty of examples of customer segmentation strategies being used by successful brands such as Mcdonald's, Ben & Jerry's, and Nike.

Demographic customer segmentation examples

Demographic customer segmentation groups customers according to demographic markers. Those include things like age, gender, marital status, and income. This type of segmentation is often used by eCommerce companies, especially those in niches such as fashion, to deliver more personalised marketing and advertising to shoppers.

Fashion retailers New Look and Zadig and Voltaire both sell clothing for men and women. In these two examples, the content is clearly created to specifically target female shoppers. Both pieces of content - a Shoppable Reel and social media advert use female models and a selection of items from their women’s range.

Geographic customer segmentation examples

Geographic customer segmentation examples are easy to come by – that’s because this method of targeting groups customers according to attributes such as which town, city, or country they live in. This kind of segmentation is especially useful for eCommerce businesses that serve a broad user base. Geographic segmentation means you can display prices in the local currency for example and share content in that country’s native language.

Consider this example from KFC. This post was shared on the KFC Mexico Facebook page. It’s written in Spanish, references local ingredients and uses local idioms – so it was clearly created with the local audience’s taste, language, and culture in mind.

Another great example of personalising marketing messaging using geographic segmentation comes in the form of this alternative KFC product announcement shared in the USA.

The content is clearly localised for a U.S. audience, with mention of a classic American style of chicken, along with the iconic American diner chicken and waffles combo, and quintessential maple syrup. The use of traditional American ingredients and menu items is intentional – it creates familiarity and a sense of comfort in order to tempt the American consumer to indulge in a traditional family favourite.

Psychographic customer segmentation examples

Psychographic segmentation is another way to group your audience so you can better personalise your marketing activity and appear more relevant to your customers. This type of segmentation categorises consumers based on personality and character traits – such as their beliefs, values, and interests.

The coffee company Grind has created highly effective adverts designed to speak to ethically minded, eco-conscious consumers. Their Google ad uses emotive language to speak to shared values and common beliefs– words like compostable, organic, ethically sourced, sustainable and traded fairly are heavily geared towards socially responsible shoppers.

Behavioural segmentation examples

Behavioural segmentation can be a highly effective strategy for eCommerce companies. As a brand, this type of segmentation will see you creating clusters of customers based on how they behave and interact with you. Typical examples include creating segments based on purchase history, frequency of purchase and buyer habits.

If you sell contact lenses for example, you may create a segment for buyers who purchase daily disposable lenses, and another for those who buy monthly contacts. That can help you to feel confident that you’re sharing the right kinds of content, adverts, and product recommendations to wearers. While a daily disposable wearer wouldn’t care about a great deal on disinfection solutions, a monthly contact wearer would.

For a skincare company like L’Oréal, behavioural segmentation could mean creating segments of customers grouped by skin concern – someone looking for anti-aging products would require a different skincare regime and totally different products to another consumer who regularly buys treatments for acne or dry skin.  Knowing what the shopper’s skin concern is means that they can be served with relevant product suggestions to meet those needs.

The concept of classification

If we want to go a step beyond segmentation and have an even clearer idea of what a customer may engage with and the action they will take, we need to consider classification. While our customer segmentation examples above focus on what we know about each customer, classification is more predictive. It considers whether a person will buy or exit without making a purchase. Will they prefer this product, or that one? Customer classification is more focused on future events than buyer behaviour right now. While segmentation looks at data we already have, classification is more of a probability rating which forecasts whether an event will or won’t occur. Think of it as your eCommerce crystal ball.

If you’d like to know more about customer segmentation, or explore how you can make your existing segmentation more successful by building in classification, schedule a demo with our team today.

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