Segmenting the Customer Data in Your CRM – The Best Practices to Follow

Carl Taylor | July 18, 2022

Segmenting the Customer Data in Your CRM – The Best Practices to Follow

Businesses that know how to segment their customer data are more likely to reach their goals. Here are the essentials you’ll need to know about segmentation.

Businesses often tend to create mass marketing strategies in an attempt to attract the broadest customer base possible. While this approach can still be effective, the entire strategy can quickly turn out to be costly in terms of time and money.

The reason why catch-all strategies aren’t the best solution today is that the market has changed along with customer expectations.

Modern audiences require a more customised approach. They expect products and services to correspond with their individual needs and behaviours. 

This is precisely what customer segmentation is supposed to provide.

The technique calls for segmenting your customers based on various descriptors. As a result, the segmented data can help you develop strategies to target specific customer types. 

Data segmentation isn’t merely a matter of increased efficiency either. The vast majority of newly-launched products fail because the companies producing them don’t segment properly. In other words, segmentation can make or break a business.

Successful brands include many descriptors when segmenting customer data. They categorise users by demographics, behaviour, lifestyle, attitude, personal preference, brand loyalty, lifetime value, and geographic data.

Segmentation is beneficial in many ways. If done correctly, it can improve your marketing efforts, help your organisation find new opportunities, flesh out effective strategies for branding and distribution, and boost customer retention.

However, the key term here is ‘if done properly.’ To make the most out of the technique, you have to know how to segment and which parameters to use.

Luckily, your CRM is an ideal data repository that can help you in that task.

This article will introduce some of the best industry-leading practices for effective data segmentation within a CRM.

The Best Practices for CRM Segmentation

Data segmentation can become the foundation for powerful strategies. As you’ll see below, the task doesn’t start and end by dividing your customer base into segments. Instead, an understanding of segmentation models is crucial, as is the choice of channels through which you’ll reach the segments.

1. Understand the Various Segmentation Models

Different segmentation models are based on specific descriptors, all of which can play a significant role in particular markets or industry branches.

Demographic segmentation divides customers or prospects by gender, age, education, income, and other demographic indicators. This can help you create specific promotions for different groups, with one targeting, for example, younger female graduates and the other middle-aged male MA’s.

Geographic segmentation is used to sort customers by city, state, country, or continent. Depending on the level at which you’re segmenting, you can use this type to determine the relevant time of day, time zone, or language to use in your promotions.

Technographic segmentation takes into account the technology that your customers engage with. The criteria you can use for segmentation can be broader, dividing users by the generation of technology they use, or narrower, allowing you to promote to people using specific tech tools, software, or operating systems.

Psychographic segmentation requires division based on lifestyle and interests. This includes the customer’s class or social status, religion, hobbies, attitudes, and opinions. Here, the key lies in understanding what your clients hold valuable outside of their business lives. 

Behavioural segmentation is determined by the data you get from customer interaction with your emails, site, social media, or other communication channels. In this case, you’re looking for indicators of their journey as your customer: which pages they visited, whether they downloaded your lead magnet, and did they reply to your messages.

Of course, the list of segmentation models isn’t exhausted here. You can look at other descriptors, although the examples listed will be the most common. Descriptors can be taken in a broader or narrower sense, allowing for finer details to come through.

Finally, you can make your strategy even more specific by combining several factors.

2. Set Clear Goals for Each Segment

Although it might be common knowledge for some, it’s worth mentioning that your segmentation strategy needs to have a clear purpose. 

When segmenting your customer base, you’ll need to have specific outcomes in mind. This will help you segment in the best way for your business and come up with the most effective strategies.

If you find the segmentation process too challenging, that could be an indicator that you need to readjust your goals. This could refer to the aim of the specific campaign or even to the broader goals of your organisation.

Generally speaking, you’ll focus on several key aspects of data segmentation and the strategies that you formulate based on segments.

Of course, determining the correct targets will be primary. When you have a strategy in place, you’ll most likely want to up and cross-sell your products or services. Finally, your targeting can be based not only on the current state but also on your predictions regarding customer behaviour and buying habits.

It’s crucial to keep in mind that the way you segment customers and set goals will be unique. Every business will have a different set of descriptors and goals depending on the industry, business type and size, and the makeup of teams and departments.

In other words, your customer segmentation will be entirely specific to your company.

3. Determine the Best Way to Reach Each Segment

A significant part of the work will start once you’re done segmenting your customers. When you have clearly-defined segments, you’ll need to determine the best way to reach them. 

The first and crucial step will be to come up with a way to target a specific segment. The methods you use here will be more or less specific, depending on how narrow the segment is and which descriptors you’ve used.

You’ll want to stay consistent when communicating with different segments, maintaining your branding throughout the interaction. Automation Agency can help you achieve perfect consistency in your email marketing for different customer groups. Our Automation Heroes can create email templates that will allow you to address your customers with a unique voice and style.

In terms of how your departments will participate in the outreach, you can design particular tasks for team members from the sales, marketing, service, and other teams.

The marketing team can customise your message according to segments, maximising your reach and elevating brand awareness. Then, sales personnel can find the shared traits within every segment and determine the best methods of communication. Your service department can utilise the segmentation data to come up with the most enticing resources and materials.

When you use all of the departments in your organisation in coordination and direct them according to data segmentation, you’ll have a highly-efficient campaign.

4. Understand the Difference Between Transactional and Behavioural Data

Transactional and behavioural data can sometimes get mixed up, leading to less-than-ideal outcomes. 

The issue is that people often confuse data concerning purchases with data about customer behaviour. Knowing the difference between the two can help you pinpoint your campaigns.

Transactional data refers exclusively to what a customer has purchased from you and how they went about it. The key factors in transactional data are the number of purchases, the date of the last order, and the source of registration.

In terms of purchases, you should segment customers by whether they made one, two, four, or more purchases. The date of the last order can help you determine where customers are in their journey with your business and can influence the timing of your messaging.

Finally, knowing the source of your customers will be valuable for determining which sources to prioritise. You can’t treat a source that brings in a thousand customers with the one that brought ten times more.

Behavioural data, as the name says, comes down to segmenting by behaviour. Here, you should look at how many sessions it takes a customer to make a purchase, which users open your emails or website pages, and when customers tend to interact with your channels the most.

You can analyse the session number to create profiles targeting customers who purchase after a single site visit as well as those who come to the site multiple times before buying something.

Email opens and page clicks are also valuable indicators of customer behaviour. Here, the particular focus should be on page clicks since customers who interact with your website are more promising.

Finally, determining customer timing will help you understand when people are most engaged. Then, you can match your communication with the periods when they’re most active.

5. Keep Your Data Clean

Data cleaning is an essential factor for functional CRMs. 

Your CRM can, in time, accumulate a considerable amount of invalid data, including duplicates, irrelevant information, and data errors.

If that happens, your targeting and outreach could miss the mark by a large margin. Duplicated data might cause you to repeat the same message to the same people, filling their inboxes with spammy emails. On the other hand, incorrect or outdated data will simply cause inaccurate targeting. 

The data in your CRM should be cleaned and maintained regularly. This is crucial since the information stored in there can become obsolete within a year – sometimes in a few months.

6. Focus on the Customer Journey

Where your customers are within your funnel or the stage of their journey will be a vital consideration in your segmentation strategy.

In fact, a customer’s position on their journey will be a crucial descriptor in the process. 

You’ll certainly use other descriptors to determine age, geography, and other groups. However, you should also maintain a strong focus on the characteristics of the customer’s relationship with your brand.

Regular customers should be warmed up continually with incentives for retention. Rewards should be ready for your greatest fans. Finally, you should have a dedicated strategy to engage lapsed customers again and turn them into recurring clients.

7. Don’t Segment Too Much

Like most things, segmentation is best when it isn’t overdone.

Too many segments will likely create unnecessary confusion in your campaign and make it less effective. Luckily, there’s a simple rule to help you avoid such complications.

If you suspect your segments have become too complex, check how many adjectives you need to use to describe each segment. If the number’s larger than three, the segment is overly complex.

This is a matter of fine balance. You should only be specific enough in your segmentation, making sure it doesn’t go overboard.

Segment for Better Results

When done with care and attention to your specific goals, segmentation can be a powerful tool in your strategy. 

By segmenting carefully, you can turn your CRM into the ultimate customer acquisition and retention machine. Combined with the segmentation technique, the system will allow you to target prospects and customers with utmost accuracy and achieve the expected results.

If you’re interested in learning more about CRM segmentation and implementation, Automation Agency is ready to help. We can set up your CRM and assist you in segmenting your customer base in the most effective way possible. Feel free to contact our Concierge Service, and let’s get started.


About the author 

Carl Taylor

Carl Taylor is the Founder & CEO of Automation Agency. For the past 10 years Carl has been building businesses and marketing them online through the use of Sales Funnels, Email Marketing Automation, Landing Pages, and Wordpress Websites. Carl is also a #1 author and highly sought after speaker and consultant whose work has impacted thousands of businesses across various industries worldwide.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}