Segmenting customers and target markets is a hot topic for today’s marketers. Our customer segmentation tool lets you divide your customers by any metric you choose.
In this article, we’ll look at customer segmentation vs. market segmentation – which approach to use and when? Are these two segmentation practices really that different?
They are. We’ll guide you through the differences below. But first, what is customer segmentation?
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Customer segmentation involves dividing customers by various metrics, such as expectations or demographics. Segmenting customers helps businesses organize their resources to effectively communicate with each customer segment, maximizing their marketing efforts for retention and revenue growth.
The three basic forms of customer segmentation are:
A specific segment made into a persona or profile is called an archetype. Using segmented customer data, these archetypes help your sales team devise a specific marketing strategy for each segment, such as a free trial strategy for a specific set of customers. Targeted activities, such as an email series, help you maximize value for your customers – and your business.
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Market segmentation, on the other hand, divides target markets into smaller, more easily defined categories. Market segments are groups of customers sharing similar characteristics, interests, locations, and more.
There are four types:
Every customer is different. Breaking up your customer base into different types of customers ensures you’re giving the right marketing messages to the right customers at the right time in their customer journey.
Customer segmentation helps you:
Market segmentation has its own set of benefits. After market research, you’ll gain insight into how you can do the following for your small business:
Customer segmentation offers a lot more detail when you’re creating your buyer personas. In contrast, an archetype is a much broader definition of an ideal customer.
Using market segmentation to build a buyer persona isn’t recommended because it’s such a general overview of the customer, the market overall, and your place in it.
It’s like looking for needles in nicely rounded haystacks – it’s still a needle, and it’s still a haystack.
While customer segmentation offers a much more detailed view of your ideal customer, market segmentation does have its place.
But no segmentation practice will work without data.
Without data, you can’t determine whether different price points, sales, or better messaging will appeal to different segments of your current customers. You could be missing out on real opportunities to effectively market to more profitable segments.
That’s where Baremetrics has a solution.
With our customer segmentation tool, you can divide and subdivide your customers in whatever ways make the most sense for your business.
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