4 Сustomer Segmentation Models for Content Personalization in 2024

Why does a business need segmentation models

Customer segmentation is an opportunity to obtain valuable data about customers and tailor campaigns based on this data rather than just dividing people into groups. Why invest in audience segmentation:

1. Effective customer interaction

Segmentation models improve understanding of customer interests. By applying them in marketing, you can find effective ways to attract users. When you send relevant messages to your audience, you improve their customer experience, thereby increasing sales. Through segmentation and prioritizing communication, you can tailor each message to maximize its effectiveness.

Example of a personalized letter from Sephora

2. Increased advertising ROI

If there is only one marketing channel where customer segmentation brings impressive results, it is paid advertising. It is in the company's interest to address ads specifically to potential customers for whom it is relevant.

The main advantage of customer segmentation for advertising campaigns is the ability to focus more attention on groups that are more profitable, while reducing interaction with less profitable audiences.

For example, if an online store plans to promote a new collection of sunglasses, it should focus on user segments living in sunny regions or conduct the campaign during the summer season.

3. High email open rates and click-through rates

Understanding what users need and their preferences is the first step to effective segmentation.

Example of audience segmentation in Altcraft Platform

4. Increased customer loyalty

4 customer segmentation model

So, you're ready to start segmentation. But where to begin? The approach depends on the industry, goals, and customer journey.

1. Sociodemographic segmentation

The demographic segmentation model is one of the most popular among marketers. Therefore, it is among the first stages of customer segmentation strategy in any company. Such division groups people based on specific demographic characteristics:

• age
• gender
• education
• occupation
• income
• marital status

Demographic segmentation is highly effective for brands with a broad audience across various sectors, from e-commerce to media and fitness applications.

Let's consider a successful example from the Adidas Training app, where gender was taken as a segmentation criterion. After the user specifies their gender in the settings, the brand recommends an enhanced version of the service. To attract attention, female athletes are showcased during workouts to make the offer more relevant to the specific group, resulting in higher engagement.

For instance, suppose you need to promote a B2B application and its new feature. Then, you need to understand what a user from another company represents and tailor messages to their professional inquiries.

2. Segmentation by geolocation

Geolocation segmentation is considered one of the fundamental elements of content personalization, as it divides customers based on their location: country, city. This is ideal when your business operates globally or in two or more regions.

If users' geolocation is not automatically determined through the website or application, use the city or country that the person specified during registration, and based on this geodata, send individualized offers. Additionally, such information can be obtained through email surveys and quizzes on social networks.

Knowing where customers are located allows for tailored interactions and better service. How to do this? Everything comes into play: local slang, local news, and respect for local traditions.

Such messages demonstrate that you have thought out the marketing campaign and have special conditions specifically for a particular location. Also, segmentation by location allows for sending relevant emails or SMS messages taking into account customers' time zones. This makes it easier to attract them to offline stores, if available.

Example of audience segmentation by geolocation in Altcraft Platform

3. Behavioral segmentation

Demographic and geolocation information are good starting points for customer segmentation, but in most cases, understanding people's behavior – their interactions with your company – proves key to capturing users' attention. This can include browsing or purchase history on the website or engagement with email newsletters.

Through behavioral segmentation, the customer team identifies common issues and expands the knowledge base. For example, discovering a pattern among visitors who left the website because the ordering process was too complex. You can address many issues through a detailed database or by streamlining the ordering process.

4. RFM analysis

RFM segmentation (Recency, Frequency, Monetary) is a model for dividing the audience into groups based on three criteria: the recency of activity, the frequency of interaction, and the monetary value. This model is popular because it uses concise and objective data. Additionally, the information obtained from RFM analytics is easier to interpret. Such indicators of customer behavior are directly related to their value and engagement.

How to personalize content to reach customers

Regardless of how you segment your audience, you also need to understand how to personalize content for them and adhere to established rules.

1. Base decisions on data obtained directly from the user

Send users personalized content based on the data that the user wants you to know about them. This way, you will not mislead customers with knowledge of information they did not provide to you.

You should determine which segment is more important in terms of potential profit. Create a loyalty program for exclusive discounts only for those who reach a certain purchase threshold. This does not mean that you should neglect customers who make few purchases. Send them personalized product recommendations, special rewards. Or reduce costs for the segment by making customer service entirely automated.

2. Develop the onboarding process

Streaming services, such as Netflix, start the onboarding process immediately after a person registers on the platform. Customers indicate three favorite series so that the service can provide personalized recommendations for further viewing.

If you want even more personalized onboarding, add personalized video to the welcome email. It's not as difficult as it seems, as you can use the same script and make some changes based on the preferences and demographic data provided by the user during registration. But for small businesses, this is not an ideal option due to limited time frames and funding.

3. Develop personalized blog content

What is the main goal of creating a carefully crafted blog? To answer the audience's key questions. There is a lot of blog content on search engines, so you need to personalize your posts to truly address individual customer problems.

When you customize personalized article recommendations, you show readers the importance of addressing their pressing issues. As a result, the chances increase that visitors will start trusting the blog and returning for valuable content, and website traffic will grow.

Personalize the material according to specific segmentation criteria: demographic or reading history of the blog. For example, if a beauty brand wants to attract male customers, specific posts can be recommended: guides on grooming procedures for men, compilations of products to achieve specific skincare goals.

Personalized block in help center on Altcraft website

4. Embed dynamic content into emails and SMS

Dynamic content blocks are parts of emails or messages that adapt to the recipient's data. Using dynamic content saves marketers time in creating personalized email campaigns for each segment. This way, you create one email template, add dynamic content, and customize it for each segment. As a result, recipients feel that the brand is closer to them and cares about solving their personal problems.

5. Track and analyze your action

All experienced marketers will tell you that there's no point in segmenting your audience and setting up campaigns if you're not evaluating the performance of your personalized communications. Otherwise, it's difficult to determine if your efforts are yielding the desired results. Track the performance of your personalized content—this way, you'll be able to make decisions on how to optimize the customer experience based on objective data.

There are several key performance indicators you should be monitoring: customer engagement and churn rate, conversion rates, and others. Determine which ones significantly impact your business goals and which ones do not.

Conclusion

Customer segmentation and content personalization are two reliable allies for businesses when it comes to creating and tailoring the customer journey. By selecting the most suitable segmentation model, you get closer to finely tuning marketing interactions with customers

By grouping users based on various criteria, you provide them with the personalized experience they expect. As a result, subscribers will respond to your campaigns and may return for new purchases.