Segmenting customers can be an essential tool for companies striving for growth. In a previous blog, we referred to the sales strategies of cross-selling and upselling. Both rest on the tactic of making recommendations to customers in order to get them to buy more. But how do you make the right recommendation to the right customer at the right time?
The pitfalls of recommendations
Recommendations to your customer must be relevant. When cross-selling and upselling, the recommendations you make should closely match your customer's needs and interests. In fact, inappropriate recommendations can damage the customer experience. A lack of customer insight can also be damaging - the more you know, the more you understand their needs and behaviour, the better you can recommend the right services and products. And this is precisely where customer segmentation comes in.
An introduction to customer segmentation
Customer segmentation is the process of dividing your customer base into different groups based on shared characteristics, behaviours or preferences. By understanding the different needs and preferences of customer groups, you can segment customers. The aim is to put customers with similar characteristics into a segment, so you can communicate and make recommendations in a more targeted and relevant way.
How customer segmentation helps with recommendations
- Personalisation: are your customers segmented, then you can make personalised recommendations. You recommend products or services of specific interest to them.
- Behavioural: if you know which customers are more likely to be price-conscious, and who likes high quality, you can recommend the right behaviour. Price-conscious customers will respond more to discounts and promotions than those who are after a very high-quality product, where price matters less.
- Higher efficiency: your marketing and sales efforts will be more efficient if you target segments. Instead of sending generic messages, you can run targeted campaigns that better meet the needs of each group.
Clearly, customer segmentation is an essential tool for companies striving for effective recommendations. You understand your customer better, you can make more personal and relevant recommendations, increasing your conversion rate and ROI.
