Mastering CRM Contact Segmentation in 4 Simple Steps

Deliver the right offers to the right people for increased conversions

Key Takeaways:

• Understanding demographic, psychographic, behavioral, and transactional data will uncover deep insights into your audience.
• Learn how to define criteria based on business goals and data analysis, such as purchasing behavior, engagement levels, customer lifetime value, and geographical location.
• Learn how to use CRM tools and features for effective segment creation, ensuring your marketing messages are targeted and impactful.
• Implement personalized marketing campaigns, sales follow-ups, and customer support initiatives tailored to each segment.

What would happen if you tried to sell a high-end gaming laptop to an older population that only uses computers for browsing the web and checking emails? Or a luxury spa retreat to those who prefer rugged camping adventures? Your messages would miss the mark by a wide margin.

But what if you could pinpoint exactly who wants cutting-edge gaming hardware? Or identify those who dream of a weekend escape filled with relaxation? That's where the magic of contact segmentation in Customer Relationship Management (CRM) systems comes into play. By dividing your contacts into well-defined segments, you’ll ensure your marketing messages reach and resonate with the right people. 

This article is a step-by-step guide to executing effective contact segmentation in any CRM. Our aim is to make the process easy. From understanding the rich data at your disposal to setting up segments and using them to fine-tune your marketing, sales, and customer service efforts, we've got you covered.

First things first, this guide on skillfully segmenting your CRM contacts is broken down into four steps. Let’s get started with the first one. 

Step 1: Understanding your contacts' data

Data is one of your business’s most valuable assets. The more data you collect, interpret, and utilize, the deeper your understanding of your audience will become, allowing you to market to them more effectively. 

But what kind of data is your CRM actually gathering? It's crucial to break down and comprehend the various data types – demographic, psychographic, behavioral, and transactional. Let's work through these categories and explore how to leverage them to improve your segmentation strategies.

• Demographic data: This is the backbone of your contact information, including age, gender, occupation, and location. Think of it as the “who” in your database. Demographic data helps you craft messages that resonate with specific groups, ensuring that your marketing efforts reach the right audience.
• Psychographic data: Here's where things get interesting. Psychographic data encompasses the “why” – the attitudes, interests, personality types, and values of your contacts. This information is gold for creating deeply personalized content that speaks directly to what motivates and interests your audience.
• Behavioral data: Observing how contacts interact with your website, emails, and social media platforms gives you insights into their preferences and purchasing habits. Behavioral data answers the “how” and “when” – how your contacts engage with your brand and when they're most likely to make a purchase.
• Transactional data: Lastly, the “what” comes from transactional data, detailing what contacts have bought and how much they've spent. This data is crucial for identifying your most valuable customers and understanding purchase patterns.

Analyzing and interpreting your contacts' data

Now, having gathered this data in Step one, the next step is to analyze and interpret it to uncover actionable insights. This involves looking for patterns, trends, and correlations that can inform your segmentation strategy. 

Examples of patterns include:

• Purchase patterns: You might notice that certain demographic groups prefer specific product categories or brands. For instance, millennials might show a higher inclination toward eco-friendly products, indicating a pattern that can inform targeted marketing strategies.
• Engagement patterns: Analysis may reveal that your contacts engage more with certain types of content like how-to videos or blog posts about industry trends on specific days of the week or times of day. This pattern can guide you in scheduling your content distribution for maximum engagement.

Examples of trends include:

• Seasonal trends: You observe an increase in purchases or inquiries about certain products or services during specific seasons or holidays. For example, an uptick in travel-related product sales during the summer months.
• Growing interest trends: A steady increase in interaction with content or products related to a new technology or lifestyle movement, highlighting a growing interest among your audience that you can capitalize on.

Examples of correlations include:

• Product correlations: Discovering that customers who buy product A also tend to purchase product B suggests a correlation that can inform cross-selling strategies.
• Engagement and conversion correlations: Identifying that contacts who engage with a particular type of email content (discount offers) are more likely to make a purchase, pointing toward effective content types for driving sales.

Make sense? The best part is that tools like data analytics platforms integrated with your CRM can automate much of this work, allowing you to focus on strategic decision-making. 

Ensuring Data quality and consistency

Garbage in, garbage out, as they say in the data world. Ensure the quality and consistency of your CRM data is up to standard. Regularly clean up your data to remove duplicates and update outdated information. Implementing standard data entry procedures can also prevent inconsistencies and errors, making your segmentation strategy more effective.

By diving deep into your contacts' data and ensuring its quality and consistency, you set the foundation for meaningful segmentation. That is why this is step number one in the process. 

Now, let’s move on to Step two. 

Step 2: Creating Segmentation Criteria

Now that you've mastered the art of analyzing and interpreting your contacts' data, it's time to use these insights to define your segmentation criteria. These criteria are what guide your marketing strategy, ensuring that your efforts are targeted, relevant, and effective. Here’s how you can craft segmentation criteria that align with your business goals and are adaptable to the changing dynamics of your customer base.

Identifying segmentation criteria

Start by aligning your segmentation criteria with your overarching business objectives. Whether you aim to increase customer retention, boost sales in a specific product category, or elevate brand awareness, your segmentation criteria should directly contribute to these goals. Here are some examples of criteria you can use:

• Purchasing behavior: Segmenting your audience based on their purchasing habits (frequent buyers vs. one-time purchasers) can help tailor marketing strategies to encourage repeat business or re-engage quiet customers.
• Engagement level: Understanding which segments of your audience engage most with your content or campaigns allows you to identify your brand advocates and tailor messages to increase engagement in less active groups.
• Customer Lifetime Value: Segments based on CLV enable you to identify your most valuable customers and allocate your marketing resources more effectively, ensuring the highest return on investment.
• Geographic location: Geographic segmentation allows for the localization of marketing efforts, such as regional promotions, events, or even seasonal promotions, making your marketing efforts more relevant and personal.

Developing dynamic segmentation criteria

The key to maintaining effective segmentation over time is to ensure your criteria are dynamic and evolve with your business and customer base. Here are some best practices:

• Regularly review and revise criteria: As your business grows and market conditions change, regularly reviewing your segmentation criteria will ensure they remain relevant and aligned with your goals.
• Incorporate feedback and insights: Use customer feedback and ongoing data analysis to refine and adjust your segments. By doing this iterative process your segments reflect the current needs and preferences of your audience.
• Leverage automation and AI: Utilize CRM tools that offer automation and AI capabilities to dynamically adjust segments based on real-time data. If you can adjust your segments automatically, why wouldn’t you? The tools of the trade are always being upgraded, make sure you are using them to their highest capabilities. 

Markets are dynamic. Things change. That’s why it’s important to change your approach when needed. By taking this strategic approach you maximize your marketing ROI and improve the overall customer experience.

Next, let’s dive into actually setting up segments in a CRM in step three. 

Step 3: Setting up Segments in a CRM

It’s time to finally set up segments in your CRM. To do this, use the CRM’s built-in tools and features to categorize your contacts based on the segmentation criteria you've established. 

Here’s a step-by-step walkthrough to guide you through the technical process of segment creation:

1. Identify your segmentation criteria: Begin with a clear understanding of the criteria you will use to segment your contacts. We set these up in our previous section, but just a quick recap: these could be based on purchasing behavior, engagement levels, CLV, or geographical location.
2. Use CRM filters: Most CRM platforms offer filtering tools that let you sift through your contact database based on specific attributes or behaviors. For instance, you can filter contacts who have made a purchase in the last 30 days or those from a particular geographic region. Play around with these filters to categorize your contacts into your segmentation criteria. 
3. Apply tags for easy identification: Tags are simple, customizable labels you can attach to contact profiles based on their segment. For example, tagging contacts as "High-CLV" or "Engaged-Subscriber" enables you to quickly identify and group contacts belonging to the same segment.
4. Leverage custom fields: If your segmentation criteria involve data points not covered by your CRM's standard fields, use custom fields to capture this information. This could include specific preferences, product interests, or customer feedback.
5. Automate segment creation: Advanced CRM systems allow for the automation of segment creation. By setting up rules or triggers based on your criteria, the CRM automatically assigns contacts to the relevant segments as their information or behavior matches these rules.

CRM segmentation success stories

Sometimes, it’s not enough to just read about a topic to understand its impact. You have to see the evidence. A prime example of this in action is Uber’s use of CRM for targeted customer engagement.

Example 1: Uber CRM case study:

Uber employs LiveRamp for CRM anonymization, enabling it to segment users by lifecycle stages. This segmentation supports personalized campaigns, aimed at improving user experience and satisfaction. This strategic use of segmentation underscores the importance of understanding and addressing customer preferences to maintain a positive reputation and drive growth. If you can speak to your customers exactly where they are in the buyer’s journey, you can increase your CLV and improve your reputation for the long term. To do this, though, you need to segment your CRM data. 

Example 2: Bespoke case study

Bespoke Collection, known for its fine wines and unique customer experiences, leverages its CRM to maintain the high level of personal attention that sets it apart. With an expanding customer base, managing individual customer data became increasingly complex. CRM solutions enabled Bespoke to segment its customers effectively, ensuring the continuation of personalized interactions that have been central to its brand identity.

Bespoke Collection's approach hinges on two main strategies:

First, it ensures personalized communication is a cornerstone of the customer experience. After every purchase, customers receive personalized emails the next morning. This immediate follow-up not only cultivates a feeling of appreciation and connection but also reinforces the brand's commitment to individualized customer care.

Secondly, Bespoke Collection prioritizes relationship-based sales over transactional interactions. This focus on nurturing deeper relationships with customers, which has led to notable improvements in customer retention, overall satisfaction, and the generation of referrals. Additionally, this strategy has positively impacted the average order value, indicating that customers are willing to invest more in a brand that takes the time to understand and engage with them on a personal level.

None of this would be possible, however, without proper CRM segmentation. It’s that powerful. Let’s get into step four, utilizing segments for targeted actions. 

Step 4: Utilizing segments for targeted actions

Alright, your CRM is set up. Are you done? Well, not quite. The last step is to activate these segments through targeted actions. By leveraging the detailed understanding you've built about your different customer groups, you can create highly personalized and effective campaigns, follow-ups, and support initiatives. 

Here's how to make the most of your CRM segments:

1. Personalized marketing campaigns

• Interest-based offers: For segments identified by specific interests (eco-friendly products, technology enthusiasts), create marketing messages highlighting new arrivals, innovations, or sustainability practices that align with these interests.
• Lifecycle milestones: Send personalized communications acknowledging important milestones in the customer journey, such as the anniversary of their first purchase or a birthday, with special offers or rewards.

2. Sales follow-ups

• Behavior-triggered follow-ups: Implement follow-ups triggered by specific behaviors, such as visiting a particular product page multiple times without making a purchase. Tailor the message to offer additional product details, customer testimonials, or a limited-time discount to encourage action.
• Post-purchase check-ins: For segments that have recently made a purchase, follow up with tips on how to get the most out of their new product, offer complementary product suggestions, or simply check in to ensure their satisfaction.

3. Customer support customization

• Proactive support for high-value segments: For segments with high customer lifetime value, offer proactive support services, such as personal account managers or priority customer service lines, to ensure they receive immediate and personalized assistance.\
• FAQs and support for new users: For segments new to your product or service, create targeted FAQs or instructional content that addresses common questions or challenges they might face, helping them to achieve success and satisfaction with their purchase.

Like everything in sales, it’s all about communication. If you can speak directly to your segments the way they want to be talked to, you have a higher likelihood of increasing their lifetime value and creating fans instead of just customers. 

Monitoring and measuring impact

You’ve segmented your audience, personalized your marketing, fine-tuned your sales approach, and customized your customer service. But the big question remains: How effective have these efforts been? That's where the vital step of monitoring and measuring impact comes into the picture. It’s the reality check every strategy needs. Without measuring their impact, you’re essentially flying blind, unaware of what’s working and what isn’t. 

Here’s a quick way to measure whether your efforts are working or if you need to adjust:

• Set clear KPIs: These are important! Identify key performance indicators relevant to each targeted action. This could include metrics like email open rates, conversion rates, customer satisfaction scores, or repeat purchase rates.

• Analyze segment performance: Regularly analyze the performance of each segment against your KPIs to understand what's working and what isn't. This analysis should inform your ongoing strategy and help you fine-tune your segmentation and targeted actions.

• Emphasize continuous improvement: Use the insights gained from your performance analysis to continuously improve your segmentation strategy and targeted actions. Experiment with different approaches to see what resonates best with each segment, and remain flexible in your strategy to adapt to changing customer needs and market conditions.

Make sense? It’s not enough to just set your CRM up and let it go. You need to measure what works and what doesn’t. Otherwise, you might be wasting your time and energy. Both of which you only have so much of. 

Segmentation success = business success

Navigating through the maze of CRM segmentation might seem daunting at first, but it really all comes down to this one sentence: CRM segmentation is about making smarter, more direct connections with your audience. That doesn’t sound so difficult, right? We didn’t think so. 

Here’s a quick recap of the key steps to ensure you’re on the right track:

1. Deep dive into your contacts' data: This is the foundation of effective segmentation. Understand the data at your disposal – demographic, psychographic, behavioral, and transactional.
2. Craft your segmentation criteria: Armed with insights, define your criteria. Segment by purchasing behavior, engagement levels, customer lifetime value, or geographic location, aligning with your business objectives.
3. Implement segments in your CRM: The technical magic happens here. Use your CRM's capabilities to filter, tag, and use customized fields to place your contacts into their segments.
4. Leverage segments for targeted actions: Now, make your segments work for you. Tailor your marketing, sales approaches, and customer support to meet the unique needs of each group.
5. And just remember, segmentation isn’t a “set it and forget it” deal. You need to evolve with your audience and continually refine your approach based on feedback and performance data.

Do this and you’ll transform your CRM from a boring database into a real engine of growth.

One last quick note: Don’t let this just be another read. Take a moment to reflect on your current segmentation strategies. Are they as effective as they could be? If not, ContentBacon is here to help! 

You have enough on your plate. We have a full team of CRM strategists ready to help set up your CRM so it works as hard as you do. With our expertise, we'll ensure your segmentation strategies are finely tuned to meet the unique demands of your business and your customers. Ready to get started? 

Set up your CRM segmentation today!