Customer Segmentation In Retail

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CUSTOMER SEGMENTATION IN RETAIL

WHAT IS CUSTOMER SEGMENTATION IN RETAIL?

The retail industry can be complex. Customer segmentation in retail is one kind of process that divides customers into groups. These groups are based upon common characteristics and actions taken.

Another word for customer segmentation in business-to-consumer marketing would be demographics or “target market”. Knowing a business’ target demographics is a key point in all strategies for effective market segmentation.

Business-to-consumer marketing is not the only marketing that involves the use of customer segmentation. Business-to-business marketing plans and campaigns might also find themselves using certain types of customer segmentation.

In general, customer segmentation can be quite useful to a business’ marketing team and plan. That is because effective customer segmentation may be able to allow a company to market to each group appropriately and effectively.

Example business to business groups for customer segmentation include industry, number of employees, products, and even location. These characteristics may all be customer segmentation factors that may assist a company in their marketing effectiveness.

As for business to consumer group segmentations, the common demographics would include sorting the groups by age, race, gender, location, marital status, as well as life stage. Life stage includes whether the person is currently an empty nester, divorced, single, retired, etc.

With the use of customer segmentation, any company’s marketing team may be able to find some benefits from it. For example, directed marketing methods such as advertisements may be able to more effectively influence an audience if they are grouped up and identified.

When it comes to customer segmentation, software and other tools may be able to help. Lexer is a provider of customer data platforms for retail businesses. Therefore, retail businesses that wish to leverage customer segmentation to market towards various demographics may find the process made simpler via Lexer.  

A potential, great aspect of customer segmentation in retail is that it may be able to save a company substantial amounts of money. Sometimes, the method may be surprising. For example, if a customer is incredibly loyal to your brand already and will find your pages through organic search, it may be a good idea to “suppress” them from seeing paid ads. That means their segmented group will not be put into the segments that do see paid ads. This way, a company may be able to save noticeable money on advertisement costs.

RETAIL CUSTOMER SEGMENTATION EXAMPLES

Lexer is a marketing solution that may be able to help your company with customer segmentation.

The exact examples of customer segments generally depend on whether the company is a business to business one or a business to consumer one.

Customer segmentation examples include segmenting by age, gender, living location, race, and other key characteristics that may be seen as important for marketers to target and identify.  

Lexer is a customer data platforms provider (CDP). Their CDP offers companies assistance in customer segmentation. In addition to performing the usual work of customer segmentation, Lexer may also be able to help with advanced audience targeting. This can be a great tool for retail businesses that want to make their marketing efforts more efficient.  

Advanced audience targeting is a feature that limits wasteful ad spend and also seeks to drive conversions at the same time. The idea is that in as little as three clicks, the Lexer platform may quickly execute tailored campaigns. These campaigns are to be spread across high-value segments of all channels.

On the other hand, if a particular segment is deemed unaffected by marketing, such as paid ads, the company may be able to save money just through suppressing a certain audience demographic (e.g. excluding them from paid ads, etc.). With the help of effective and accurate segmentation, a company’s marketing team may be able to help increase company revenue through saving on costs.

CUSTOMER SEGMENTATION MODELS

Online retail dataset clustering isn’t easy. How are data used to create these customer segmentation models may be an important question too.

One way to better understand customer segmentation models would be to take a look at a customer segmentation in retail case study. Through the process, one may gain more insight into how a customer segmentation model is created, as well as the benefits that it may bring to a company.

With a marketing solution like Lexer, you may not need any prerequisite knowledge in data science. Their retail business customer data platforms are relatively easy to understand.

Lexer’s easy to use solution has marketer friendly dashboards. These dashboards allow a company’s marketers to self-serve insight in order to inform their marketing strategy.

An example business to business customer segmentation model might be for a business to segment the various businesses it offers services or products to by industry. Oftentimes, a product-offering business may offer their solution, software, or product to multiple industries.

For example, a company might want to market differently to the healthcare industry, the banking industry, and the construction industry. By segmenting the target customers by industry, the marketing effectiveness may significantly increase.

Another popular example is to segment customers by age and gender. For example, marketing schemes that work most effectively on old men are less likely to work as effectively on young women. As with many things involving statistics, some segmentation demographics and numbers may come as a surprise or be less expected.  

With customer segmentation, the goal is typically to understand target demographics and improve marketing efficiency. While significantly improved efficiency nay not be guaranteed, there are many retail businesses that have benefited from using a customer data platform to improve their customer relations and marketing effectiveness.

RETAIL SEGMENTS LIST

If you take a look at a retail segments list, you may be able to identify what are some common retail segments. Customer segments names may even be repetitive or recognizable between industries and fields.

It may be helpful to view retail segments list examples. That is because they may assist a marketing team in better tailoring their marketing efforts towards various audience demographics.

The fashion market segmentation, for example, might use retail segments of a certain kind that a different market would not use.

Creating an accurate retail segments list may be crucial for cutting down on marketing costs. This can be an important goal for any company that has a low marketing budget or simply wishes to lower their current spending on marketing.

With retail customer segmentation, audiences that might not need converting may be more easily removed as the target of paid ads.

In one case example, someone who always buys a company’s product might not need any reminding that the particular company exists. It may even become a nuisance to see the company’s ads, and instead of leading to a conversion, the paid ad may actually end up creating a negative association for that particular audience.

Negative associations with a company’s brand may also occur if someone just recently purchased from the company. Often, seeing recurring ads after already purchasing the service or product can be rather damaging, and hurt the relationship between brand and consumer.

A customer data platform (CDP) like Lexer may be able to effectively and efficiently perform segmentation for your company. The value of avoiding financial and reputational risk to a brand may be difficult to see, but it can be immense.

TYPES OF RETAIL SEGMENTS

Customer segmentation interview questions would likely include the question: what are the common types of retail segments?

There are several ways to create customer segmentation in retail. By creating the types of retail segments, especially the types of retail market segmentation most relevant to a company’s particular market, they may improve their marketing strategy effectiveness greatly.

Retail segmentation examples include sorting by industry and location. These are typically easy to find out, so the segments are fairly easy to create. However, customer segmentation is not just creating circles and groups.

Through online retail dataset analysis, a customer data solution may be able to compare and contrast customer segments by key data points such as products purchased, preferred channels, marketing engagement, external data, and online behaviors. These data points can all help immensely in determining customer segmentation groups.

Through these data points that can help with customer segmentation, a solution like Lexer can help a company learn more about the performance of their current marketing activities and discover opportunities for improvement.

Lexer is a customer data platform (CDP) that may be able to help a company with their audience targeting. It can help brands decide which customer segments they wish to focus their marketing efforts on, and also help them realize if there are any segments that are resistant or immune to certain types of marketing efforts.

Not only can a CDP help you identify which audiences may not be converted or worth the resources, but Lexer can also identify high-value customer segments. These segments created using real data may help save money and drive noticeable results.

Ultimately, selective audience suppression when it comes to marketing may be just as important as targeted ads to certain demographics. Customer segmentation may, in the end, make a difference in a company’s revenue.

Click here to learn the top 15 reasons customers choose Lexer as their preferred CDP partner and vendor.

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