??The Power of Good Segmentation

Normally, when we work in Marketing, one of the key topics we talk about is Segmentation.

I remember when I was studying Marketing, my teacher explained all types of segmentation that we can use, such as geographical, behavioral, generational, age, educational, and firmographic. However, in my last two years of working in CRM Marketing, I have learned that there is a world of data that helps us to go deeper into segmentation.

Every day, we hear that we need to think outside the box. But the more people get older, the more they feel comfortable arguing things like, "This is how the work has been done and how it works" and "We know how things are supposed to be done." But is this way of working the best? How can we offer better solutions to our customers? One thing I’ve learned is that segmentation can be key to understanding customers. Let's look at different ways of customer segmentation that go beyond what we learned in the past.

1. RFM Segmentation

RFM stands for Recency, Frequency, and Monetary value. It’s a method used to segment customers based on their purchasing behavior.

• Recency (R): How recently a customer made a purchase.
• Frequency (F): How often a customer makes a purchase.
• Monetary Value (M): How much money a customer spends on purchases.

Steps to perform RFM segmentation:

1. Collect Data: Gather data on purchase history.
2. Calculate RFM Scores: Assign scores for Recency, Frequency, and Monetary value.
3. Segment Customers: Group customers into segments based on their RFM scores.

The first time I saw this segmentation style, I thought it was a wonderful science, and I believed it must have been developed by a mathematician. But the truth is, this way of thinking helped me start thinking outside the box. Since one of my teammates started applying it, I realized that old school methods should no longer be used, at least in my field.

2. Behavioral Segmentation

Segment customers based on their behavior, such as:

• Purchase Behavior: Types of products bought, purchase frequency.
• Browsing Behavior: Pages visited, time spent on site.
• Engagement Level: Interaction with emails, social media, etc.

This type of segmentation is more focused on e-commerce businesses where users navigate different pages and select various products during their visit. However, this could help us ask interesting questions, such as: Is a customer who interacts more with our blog the same as the one who always tries to take advantage of the lower prices of our products? I don't think so, because they are interested in different aspects of our business, which means we shouldn't impact them in the same way. They are not interested in the same things.

3. Customer Lifetime Value (CLV) Segmentation

Segment customers based on their predicted lifetime value to the company. This involves:

• Calculating CLV: Using historical purchase data to predict future value.
• Segmenting Based on CLV: Creating segments like high-value customers, medium-value customers, and low-value customers.

Using this type of segmentation, we can create initiatives to impact customers who are more likely to churn, and we can develop more interesting retention campaigns.

4. Technographic Segmentation

Segment customers based on their technology preferences and usage:

• Device Used: Desktop, mobile, tablet.
• Technology Adoption: Early adopters, laggards.

Based on this type of segmentation, we can create different initiatives to tailor the customer experience based on the device they prefer and the way they interact with new features.

These are just a few ways to segment customers, but there could be hundreds of new ways to think about it. Remember, Email Marketing is not just about creating emails and sending content to customers randomly; it is the art of creating ways to better impact the customer based on how they interact with our product.

If you like this content and you find it useful, comment with me which other type of segmentation do you apply in your daily basis. Thank you for your time, and I hope to share something else next week.

Best,

AFL