3 minutes

Where to start to create meaningful consumer classification for geodemographic modelling?

What are you doing with your customer data? Do you have different paths and audiences? With demographic data and geodemographic data, you have the classifications you need to segment. First, you’ll need to decide if its a worthy exercise. If so, you’ll need to plan out how to gather, aggregate and analyse such data. Here are all the basic things you need to know about customer segmentation.

Do you need to segment your customers?

Consider how many products or services your brand has. Do you have different interactions with your customers? Are there different levels of your product? These are initial starters for answering the question of should you segment. Ultimately, if you believe you need to message buyers in a different way or promote different products, segmentation could be a great investment.

Your business can identify different groups and start to cultivate your interactions with them. Many consumer intelligence insights can be obtained by segmenting. The more you understand the many reasons that impact their buying behaviour, the more you can accurately target them.

Get organized

Take all the existing data you have for your customers and organise it. The data sets may be pulled from different systems, but you must get everything to one platform so that you have a total view of the data. During the organisation, rank customers by profit margin. What type of data should you use? Purchase history, amounts, contact information, types of products or services purchased and channel are all great initial data points.

Use tools to understand your data and supplement it

In this step, you’ll want to choose different tools that can help you organise and make sense of what you have. This may also include finding additional data to enrich your audience profiles, like postcode insights. To make the distinctions necessary for customer segmentation, you’ll want to gather as much context as possible to complement what you already have. There are several ways to go about this. Then, group your customers into value and lifestyle groups. These differentiations begin the process of improving your targeting accuracy.

Choose segments that are mutually exclusive

Don’t double segment customers. Start with one segment at a time. Don’t overlap, either. You’ll have less success with marketing if you make either of these mistakes. This only applies for segments differentiated using the same method. Your customers will be in many different segments when different criteria are used. For example, you can’t place a buyer into both rural and urban areas because that’s not possible. But someone can, of course, live in a rural area and also have a college education.

Develop segments that are of value

What segments would matter to your market? That’s a complex answer, but one of the most important ones. You wouldn’t want to waste efforts, resources and money on segmentation that would have little impact on results. When you begin to segment, consider what gives you the greatest opportunity to have high returns. For example, if only a small percentage of your customers are over 65, that isn’t a segment worth investing in.

Segmentation leads to relevance

These questions and considerations will lead you on the path to determining if segmentation is right for your brand. There are many benefits to segmentation. When you are more relevant to your target audience based on their demographics, motivations and purchasing power, you have a better chance of more conversions.

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