Customer segmentation is the ability to group customers together based on certain shared characteristics, interests or behaviours. These characteristics can range from location, sex, age, purchase history and size. Segmenting customers in your database can help focus your marketing efforts on a particular group to increase profits and overall customer satisfaction. It can help you increase profits by targeting customers with personalized promotions and special offers. More advanced customer segmentation strategies can help retailers make the best use of their marketing resources, identify promising new markets, and increase overall customer satisfaction and brand loyalty.
To do this successfully, a retailer must start collecting and analysing customer data and then start the process of building customer profiles. There is much more to customer segmentation than just grouping customers demographically. Magento’s latest eBook, Identifying Your Most Profitable Customers: An Introduction to Customer Segmentation outlines the steps and strategies to:
- Understand your customer-related business costs
- Identify your best (and worst) customers
- Collect data from external sources
- Create effective customer profiles
- Choose the right segmentation strategies for your business