The Ultimate Guide To Customer Segmentation Part 3
By now you should understand the basics of how to segment your customers. The idea is to target each segment individually to ensure they respond better to your marketing efforts. If you have not read part one and two of this series already, please click here:
If you have also completed the homework from the previous article in the series, you will have already attempted to split your readers or customers into at least three different segments, and be in a position to practically implement some of the strategies I mention in this article.
In the previous article I posed a question regarding how Yaro segments his own readers. He does not do it based on value (he should do that also!), but he segments them according to different needs. Yaro realized very early on that his customers (readers) have different ways of digesting his material, so he offers various methods for them to explore.
You can download the text version of Yaro’s blueprint for those who prefer to print things out and read them in peace. You can download podcasts of Yaro’s key articles and manuals, designed for followers that prefer listening to reading, and of course his partnership with Gideon brought forth videos for those of us who prefer to learn through watching.
These are three very distinct sets of users: audio preferrers, text readers and video users. Each of these groups is a distinct customer segment and will react differently to various marketing efforts. For example, audio preferrers are sure to be more excited about a new podcast, then perhaps a new blog post. So naturally I would mail to each of my segments when I have something that will be relevant to them. Podcast lovers would love to know about my new podcasts, and by ensuring I mail them information they like to receive, then they are sure to open my emails for a long time to come.
I have another great example of segmenting blog readers which you should read here. I highly recommend the dating blog case study as it is perhaps the most relevant to this audience, and if I had space I would have included it directly into this article.
I’m sure you can see the power of splitting these various types of customers into different lists. They are more likely to read your newsletter and click your links as they know each newsletter will contain more of their preferred types of information. Such a simple change can bring massive results.
One of the best ways to learn about segmentation is to watch good segmentation in practice. Yaro’s example above should help you understand some basics of segmentation but let’s look at my own story, which may be true to many bloggers.
What I Learnt From My Blog
When I started blogging some four or five years ago, I simply wrote about Internet Marketing in general and hoped people would like it. I did not really have a specific mini-niche, I simply wrote about making money online, which as you know covers virtually the entire market!
Naturally, my articles would be all over the place and I found some of my articles hit the front page of Digg, bringing me tons of new readers, but there was no logic in which types of articles would hit the main page, it seemed random. Here are three examples from my blog, perhaps you can work out what is happening here.
The first article that hit the Digg homepage was a motivational article I did titled “9 Reasons You Will Never Be Successful“. The second to become popular was “How To Impress A Mentor“, an article for those trying to find a mentor, and the last set of articles were all based on creativity within business.
I wrote about many topics as I wanted to express my business knowledge in general, and even though I had over 1000 RSS followers, I could not get people to continuously post comments on my blog. Their interest seemed to waver and the click through rate in my newsletter was low.
The Ah-Ha Moment And Google Analytics
I sat back and took a good hard look at my blog and decided to see what I knew about my customer (readers). I used Google Analytics to find the search terms people were using to find my blog, and surprisingly I finally noticed something that had been staring me in the face the whole time.
By grouping together the keywords people use to find my site, I was able to find three core groups of people that found my site interesting. They were the people who searched for articles and advice regarding mentors, people who searched for motivational articles to help them become successful, and people who like to be inspired by creativity.
This was such an ah-ha moment for me. Just because I like doing all those things, I had assumed that all my readers enjoyed all three topics also. They were not. Google Analytics had suggested there were three types of users on my blog relating to each of the three identified core themes.
I then went through the various types of articles on my blog and found, just as expected, that similar groups of people were commenting on the three main areas of interest.
So, all this time I had been treating all my readers the same, but in fact I should have been splitting them into three different groups. If I sent updates about creative articles only to users mainly interested in creative articles then for sure my click through rate would increase. Why? Well the members on that list would know that each of my newsletters would have something of interest to them, whereas previously it was a one in three chance that the article topic was related to creativity.
How I Segmented My Customers
So here is what I did. I changed my newsletter to three different newsletters and made the sign-up forms on my pages different for each type of article. So creative articles were linked to a free creative report, thus making a list specifically for creative members of my blog. Mentor related articles all had a newsletter sign-up link, which offered a free report on a mentor related topic, and the same success related articles had a ‘becoming a success’ report.
This almost immediately had a positive effect. By segmenting my customers I was able to offer them more of what they wanted, and they showed their thanks with an increased participation on my blog, and a massive increase in click-through rates in my newsletters (which meant more money in my pocket, and allowed me to send out product recommendations to the relevant groups of customers).
The question I am often asked is: How often do I mail my members? Now we have segmented my readers, the answer is easy. I mail my readers every time I write or produce something that I know they are interested in! If I produce a new creative article I mail everyone in my creative mailing list, simple!
Please click here if you want to read more real life case studies about customer segmentation.
In the previous article in this series we talked about segmenting your customer in terms of value, or how valuable they are for you.
In today’s article I used two examples to show you how to segment your users by activity. So now we have two different ways to segment your users.
Who Are Your Most Valuable Readers?
However, even if you segment users by activity, you should still segment them by value again, so that you know who your most valuable readers are.
For example, I split my readers into those who like creative articles, those who like success related articles and those who like mentor or coaching related articles. However, not all the readers within each of these groups will be the same, so I should split them again in terms of value, so I know who my best readers are within each group. (See part two in this series to understand why we do this.)
If I do this for my blog then I will end up with four mini-segments for each of my main three types of customers, so in total I have 12 different groups of readers. So for those who like creative articles, I will have four sub-segments (shown in red in the figure above). I would then repeat the process for my other two main groups of readers, and thus end up with 12 different groups. (I discussed in the previous article ways to achieve this, so head back there if you need a refresher.)
The good news is that you do not need to work on all 12 segments so do not worry! This is about working on the 10% that count, and not aimlessly creating extra work.
We want to develop the customers, who are less active, into customers who are way more active, and thus participating more and earning you more money. We also must remember not to neglect our best selection of customer, as it is these 10% of customers who give us 90% of our profits.
The value of our groups in the figure above goes from one to four in that order. Group four are our trouble makers and therefore our role is to eliminate them from our blogs if possible. Groups one to three are what we should concentrate on, perhaps using some of these suggestions:
Group 1: Our Most Valued Readers
The whole objective with this group is to keep them close. They are your ideal customers and click on almost every link you send them. I discussed some tactics in the previous article as to how to keep them close, but here is a recap:
- Only use special articles for this group. No one else gets access to these articles and no one else even knows they are available (this creates mystery, and these good readers will continue to be active as they do not want to risk missing out on things!).
- When you produce a report or series of blog posts, send them in a complete format to this group so they do not have to wait for the next parts to be published. Tell them they get special treatment as your best readers, and they will love you for it.
- Hold special teleconferences with this group. It makes them feel special and gives you a chance to obtain great feedback.
Remember, treat this group like they are special and they will remain loyal forever. Almost 99.9% of marketers never do this and thus lose hardcore followers. You can send many messages to this group, including third party offers, they will read everything yet stay loyal.
Group 2: Readers Who Commented At Least Once
This group holds the most potential for your income. They just need an extra boost or kick to join your readers in Group 1 – you just need to help them find that missing element. Here are some ideas:
- Like the first group, invite them to teleconferences so you can find out more about them, and they can learn to trust you more.
- Once in a while, send them some of the stuff you made specifically for Group 1 members, but tell them it is only a sneak peak and only special members get those kind of freebies on a regular basis. Some of them are bound to be motivated to rise up the ranks.
This is likely to be a large group and if you can mange to train them to be like Group 1 then you are in the money. Like Group 1 they are loyal and you can send them third party promotional emails without the risk of losing them, provided of course you are still satisfying their needs on your blog also. Mail them as frequently as Group 1.
Group 3: Readers Who Do Not Comment
This group is the trickiest. (Note: When I say readers who do not comment I also include readers who have not purchased anything yet.) They may read your stuff, but perhaps do not return the value in the form of activity.
Most larger companies simply employ mass marketing tactics on these groups, and do not pay it a lot of direct attention as the return on the time you invest will be very low compared to Groups 1 and 2. Groups 1 and 2 represent where 20% of your successful effort should go. You should not neglect Group 3, but spending too much time on them will not bring enough results to justify your efforts. Simply stick to normal mass marketing efforts.
Avoid emailing this group too much. They are not convinced about you or your blog yet, so they will feel hounded by emails. I suggest to mail to this segment once a week and maximum twice a week.
Third party product recommendations may not bring great results and may cause you to lose loyalty to another product creator (they have not bought anything from you, but they buy from someone you recommend, thus they see the product creator as more valuable), so only advertise other products if you clearly do not care about developing this segment.
That was a very brief introduction to Customer Segmentation and Customer Relationship Management. Of course the topic is much deeper then this and thus I am hired as a consultant by many freelancers, but this should give you enough groundwork to make customer segmentation work for you. It is not difficult if you do not over complicate it.
As mentioned before, if the only thing you take from this series is that you should start treating your best readers differently, like they are special, then this whole series has been worth it. This tip alone will bring you great results for many years to come.
This whole series is one of 30 lessons in my Online Marketing MBA course, be sure to check it out if you found this useful.