Knowing me, knowing you

A straight forward guide to customer segmentation

One of the greatest challenges for any small business is time. Maybe if there was 40 hours in a day instead of the working week then small business operators may get through their to-do list, perhaps... But without the ability to bend time what can small business operators do to make better use of the working week?

We've all heard the cliché - work smarter not faster, but on this occasion it does hold some grain of truth. Imagine if you know which customers will buy, what and when and how much they will spend. No I'm not talking about a crystal ball, but I am talking about the use of customer segmentation so you can better focus your marketing efforts to the right people at the right time - to gain a much stronger return on your investment.

So what is customer segmentation? Customer segmentation is where you divide your customers into how they interact with your business or who they are. Be that by industry, by what product they use, how big they are, the choice is almost limitless. The point is that you can use these more targeted groups, or segments, to create tailored marketing strategies. It is more effective to target the specific needs of each segment separately, rather than attempting a mass campaign that is too general to have any real impact. 

So given that every small business operator is tight on time how do they find the time to run through this exercise? Well depending on how much detail the business operator wants or needs to go into, the customer segmentation process can be as simple as dividing by gender, or geography and looking for common trends and opportunities to cross sell or cross promote.

For example, customer details could give you segments based on gender (title, name), location (country, state, suburb) and age (birth date). Information on previous sales could give you segments based on the types of product purchased or the general spend.

Alternatively businesses can turn to a company like Dun & Bradstreet to cross reference your data against our 150 million records against which you can clean your customer & supplier files, standardise your data formats, remove duplicates and supplement your data with further information.

Generally most business have the basic information of their customers and prospects, the key is to not only capture this information but capture it in a way that you can use at a later date to better seize future opportunities. Build a template in an excel spreadsheet that captures all key information so the next time you conduct this exercise you can increase the sophistication levels of your analysis.

The benefit of strong customer segmentation is that you can simply focus on the activities that provide you the best results across your customer base. Without the invention of a time machine, a little time spent on customer segmentation may be just the thing to give you some time back in your day.

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