How do you use segmentation to create customer loyalty?

1 Identify your segments

The first step to use segmentation to create customer loyalty is to identify the different types of customers that you have or want to have. You can use various criteria to segment your market, such as demographics, psychographics, geographics, behavioral, or attitudinal. The key is to choose the criteria that are most relevant to your product, brand, and goals. For example, if you sell clothing, you might segment your customers based on their style, occasion, budget, or frequency of purchase.

2 Analyze their value

The next step is to analyze the value of each segment to your business. You can use metrics such as customer lifetime value, profitability, loyalty, retention, or referral rate to evaluate how much each segment contributes to your bottom line and growth potential. You can also assess the size, growth, and competition of each segment to determine how attractive and feasible they are. For example, if you sell clothing, you might find that your loyal customers have a high lifetime value, but they are a small and saturated segment, while your occasional customers have a low lifetime value, but they are a large and untapped segment.

3 Select your strategies

The third step is to select the strategies that you will use to create customer loyalty for each segment. You can use different types of loyalty programs, such as points, rewards, discounts, memberships, or gamification, to incentivize repeat purchases and referrals. You can also use personalized communication, content, and recommendations to build trust and engagement. You can also use experiential marketing, such as events, communities, or social media, to create emotional connections and advocacy. For example, if you sell clothing, you might offer your loyal customers exclusive access to new collections, personalized styling advice, and invitations to fashion shows, while you might offer your occasional customers free shipping, coupons, and curated suggestions based on their preferences.

4 Measure your results

The final step is to measure the results of your segmentation and loyalty strategies. You can use metrics such as customer satisfaction, retention, loyalty, advocacy, or revenue to evaluate how well you are meeting your customers' needs and expectations, and how much you are increasing their value to your business. You can also use feedback, surveys, or reviews to collect insights and testimonials from your customers. You can use this data to refine and improve your segmentation and loyalty strategies over time. For example, if you sell clothing, you might track how often your customers buy from you, how much they spend, how likely they are to recommend you, and what they like or dislike about your products and services.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?