5 Reasons for Customer Segmentation in Customer Service

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Here’s a shocking stat.

Businesses lose about $75 billion due to poor customer service. 

Customers are becoming increasingly reluctant to buy from those who provide subpar service. Even a single negative experience can make a number of people consider switching to a competitor. 

Many companies fail to realize that modern customers prefer omni channel communication, i.e., they require businesses to serve them through many previously unused communication touchpoints (social media being one of them). Pushing them back to traditional customer support doesn’t make for a great impression.

🚀Read: Customer Experience Guide: How to Put your Customers First? 🚀

For example, in many cases, “traditional experience” means waiting for an agent to respond for 25 minutes. Which is actually not a good way to secure repeat business. Omnichannel customer experience, on the other hand, means meeting them where they are, using the technology they prefer.

Poor customer service can also kill a business with a great product and price. Recently, customer experience has overtaken price and product as the main brand differentiator. Meaning? People are ready to pay more for a great customer experience.

But achieving great customer experience is easier said than done. 

Customer Segmentation: The Road to Excellent Customer Service?

Let me make one thing clear right away: we’re not going to talk about how your business should add more support operators and train them better. This is not a solution here. The key to that much-needed positive experience is studying customers

“Okay, we do it all the time. We wouldn’t be able to sell if we didn’t know what our customers want.”

Fair enough, but it’s not quite the point here. 

The point here is to deliver experiences that are:

  • emotional 
  • positive
  • Personalized

And also, the one that makes customers feel appreciated.

Waiting on the phone for 25 minutes won’t cut it. 

That’s where customer segmentation comes in. It’s an innovative approach to customer support that seeks to drive customer loyalty by using the latest approaches to personalization.

It goes beyond traditional practices like greeting a customer by name. Rather, it means dividing customers into groups and making sure that each of them gets support:

  • at a time and place that suits their needs
  • using the technology they have
  • with relevant information. 

If you do segmentation right, you’ll be able to make customer support your competitive advantage. Sounds good? If so, let’s quickly go over five reasons why segmentation is essential in order to provide the best omnichannel customer support.

5 Reasons for Customer Segmentation in Customer Service

1. Increase Revenue

Gone are the days when price was the most important thing for customers. Today, the situation is quite different. As Adobe wrote,

  • 42 % of customers say they’re ready to pay extra for a more welcoming and friendly experience 
  • 52 % state they’re likely to pay extra for more efficient and speedy customer service 
  • 73 % claim a good experience with a business has a big influence on the decision whether to buy from a business again.

Segmenting your customers and making sure that you’re providing service in a relevant and positive manner increases your chances of making a profit. 

On top of this, knowing details such as income level and purchase history makes you more successful when it comes to upselling and cross-selling.

Increase revenue

Picture 1. Increase revenue

2. More Engaged Customers

Customer segmentation is not a one-way street. 

Businesses can provide opportunities for customers to assign themselves to a certain segment, according to Dianna Ronde, a marketer at BeGraded. “One simple example is offering customers email subscription preferences,” says Dianna. 

Forbes does it well with Newsletters. The company provides a selection of 16 email campaigns for users to choose from.

Forbes email newsletter example

Picture 2. Forbes email newsletter example

This way, Forbes learns more about their users’ needs, and improves the ability to deliver relevant content, ads, and offers. And people love it, too, as they have the option to choose what they receive from brands. 

This self-segmentation helps make the communication between a business and its target audience more relevant. That is always a good idea. As a result, the audience will be more likely to engage with the content/ads/offers sent by a business.

3. Boost Your Marketing

To make your marketing campaigns as effective as possible, you need a lot of data from customers. 

“Getting customer data means conducting surveys, interviews, meetings, and doing other fieldwork,” explains Marcus Bennen, an expert marketing copywriter from Write Scout. “Segmentation helps increase the relevance of marketing messaging and enables you to understand how different customer groups really are.” 

Let’s consider a simple example. You’ve decided to build a customer support chatbot on your website to help more visitors find their way around. After a month, the chatbot has gathered a lot of information from visitors, including:

  • Common support requests
  • Important issues your product can help resolve
  • Ways customers use your product.

This information is pure gold for companies as it helps refocus marketing messaging to address specific pain points. For example, if you discovered your product was pretty good at resolving any issue that your customers have, you might try to mention this in your marketing. 

Read: Popular Customer Pain Points.

As a result, more customers can become interested in your product because they’d perceive it as more relevant to their needs.

Keep in mind that chatbots can be successful if their messages are clear, concise, and easy-to-understand. To make sure your chatbot scripts meet these demands, writing and proofreading tools like Hemingway Editor, Studyker, Subjecto, and Grammarly might be a good idea. 

Chatbots impact marketing in many other ways. They can also be tremendously important when it comes to collecting valuable information in an easy and engaging way. 

4. Retain More Customers

Loyal customers spend 67 % more than new ones and are easier to retain, which makes them invaluable. Segmenting your target audience into groups based on their characteristics, location, buying history, interests, and needs  can actually drive loyalty

Each group should be represented by at least a few customer profiles. Why? To help marketers create a personalized approach that makes people feel like you understand their needs. With modern CRM, this task becomes fairly easy, as they allow collecting tons of information that can be used here. 

Here’s an example of a customer segmentation approach based on retention:

  • Start by creating customer groups based on the information you have
  • Create customer personas for all groups
  • Think about loyalty drivers such as perks, offers, benefits, and deals that each persona can welcome
  • Try introducing the best loyalty drivers and test their performance.

The impact should be quick to emerge. Just remember the time when you received a bonus by being a loyal customer, doesn’t it feel great?

5. Improve Customer Service

This is the overarching theme of customer segmentation. Carefully crafted customer personas can provide valuable information and context for every customer, which means you’ll know how to serve them better. As a result, you avoid that “one-size-fits-it-all” approach and make your customer service more focused. 

There are a bunch of ways in which segmentation benefits both customer support and experience. For example, if you know that a customer prefers to contact you through social media about a certain product, you can give them an opportunity to connect via Messenger chatbot. The Messenger chatbot will collect information and make sure that the customer is  linked to the right service agent. 

Read: Messenger Chatbots: Boosting Your Content Marketing Efforts.

Should You Segment Your Customers?

Absolutely! Successful segmentation isn’t about dividing customers, but understanding their needs and problems better. This has become so important that people are even ready to pay extra for personalized and speedy service. 

With customer profiles in place, you can achieve the benefits described in this article. So definitely start collecting customer information today to bring your business closer to your customers. 

Marques Coleman is a talented copywriter who works for the Essay Assistant. He reads about ten blogs on content marketing and customer research per day to stay in sync with the latest trends in blogging and hopes to start his own writing project soon. In addition to being a prolific reader and writer, Marques also makes a difference by editing texts.

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5 Reasons for Customer Segmentation in Customer Service was last modified: March 1st, 2021 by Milica Vujasin
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