B2B and B2C customer segmentation analysis: your guide to consumer loyalty

While the internet has undoubtedly been a boon to many businesses, connecting them with customers across the globe, there’s been a definite downside for many. Thanks to the internet we’re now living in the Age of the Customer, where customers not only have more options than ever when it comes to where to spend their money, they also have the soapbox of social media on which to complain about subpar customer service.

For organizations that use the right strategies and tools, however, the internet can swing back to being nothing but a bigtime business benefit. Customer segmentation is one such strategy that can help a business capitalize in the Age of the Customer.

Segmentation basics and benefits

Customer segmentation is conveniently what it sounds like: dividing a business’s customer base into groups of people with shared traits that are relevant from a marketing perspective. Customers could be divided based on any number of attributes including age, gender, income, spending habits, geographical location, how often they interact with the brand, how they prefer to interact with the brand, preferred devices, the list could go on.

What customer segmentation does is enable a brand to craft individualized marketing messages suited to each segment, both in terms of content and how the messages are delivered. This approach works to maximize how receptive customers are to the marketing messages, increasing their likelihood of success. It also allows an organization’s sales people to focus more of their time and efforts on the customers that make more frequent purchases or spend more money.

Furthermore, using customer segmentation a brand can demonstrate each individual customer’s importance to the brand by providing them with the most effortless and enjoyable customer experience possible, one that’s been tailored to their specific tastes. Demonstrating a customer’s importance goes a long way towards deepening the personal connection between customer and brand, which goes an equally long way to increasing customer loyalty. The two biggest benefits of customer loyalty? Increased customer lifetime value, and word of mouth marketing.

Tools of the trade

The segmentation schemes listed below are simply starting points for B2B and B2C organizations. By taking advantage of the tools available for customer segmentation analysis, organizations can divide customers based on as many factors and attributes as they like, creating exceptionally precise customer groups. However, to do this organizations require leading customer segmentation analysis tools.

Customer Relationship Management (CRM) software is an effective tool for collecting customer data, storing it and analyzing it to create segments basic customer segments. Leading customer segmentation analysis tools such as Voice of the Customer analytics are what make it possible to complete segmentation based on those less quantifiable but highly valuable segmentation schemes – behavioral and psychographic. As digital customer service solutions provider nanorep says in their guide to customer segmentation analysis, seeing beyond what customers say to how they actually think based on how they interact with a brand is a major key to effective segmentation, and a tool like Voice of the Customer analytics is one of the only ways to capture this information.

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B2B segmentation

It might go without saying, but an organization is free to segment its customer base in any manner that aligns with its goals and objectives. However, there are three main approaches to B2B segmentation. They are:

  • Priori or firmographics segmentation. This is segmentation based on information related to customers that is publicly available, such as company size and industry. This is a simplistic approach to segmentation and it is where a B2B organization might start if it was just getting into customer segmentation and wasn’t yet taking advantage of the tools and analytics available for customer segmentation.
  • Value based segmentation. This divides customers based on the economic value they present to the organization, both in terms of completed sales and potential sales. This approach makes it easy for sales people to identify and spend more time on high value customers.
  • Needs-based segmentation. This approach to segmentation groups customers based on validated needs for products or services. While the value-based approach is perhaps the most efficient for sales people, a needs-based approach provides the most accurate method of targeting customers.
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B2C segmentation

For B2C segmentation, there are four basic segmentation approaches.

  • Demographic segmentation. This is the B2C version of firmographics. Demographic segmentation divides customers based on aspects such as age, gender, education, religion, occupation, income and marital status.
  • Geographic segmentation. This approach groups customers based on geographic location. It allows companies to focus the products and services offered to different segments based on where they are located. It also helps smaller companies save marketing spend on impressions that aren’t likely to become leads.
  • Behavioral segmentation. A somewhat looser or less quantifiable approach to customer segmentation, behavioral segmentation divides customers based on attributes such as brand loyalty, awareness, knowledge, social media interaction and purchasing patterns. Though difficult to implement, especially without advanced customer segmentation analysis tools, behavioral segmentation allows for precisely targeted marketing messages.
  • Psychographic segmentation. Also a less quantifiable approach to segmentation, this approach groups customers based on personality, lifestyle, values and social class. Similar to behavioral segmentation, psychographic segmentation can be difficult to implement, but the payoff in precise marketing is significant.

The Age of the Company

Implementing customer segmentation isn’t going to magically swing all the power back in the favor of businesses. Frankly though, the type of organizations that use customer segmentation aren’t interested in power so much as they are interested in maximizing customer lifetime value by providing the best possible customer experience, and customer segmentation certainly helps with that.