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The Perks of Using Customer Segmentation Analysis in Retail

The retail industry is undergoing a rapid phase of change as brands are increasingly focusing on developing highly personalized customer experiences. Furthermore, the rising market competition has resulted in increasing customer expectations. Customers expect brands to understand their individual needs and provide an exceptional customer experience. To achieve this, retail companies must move on from the one-size-fits-all approach to a more personalized approach in order to cater to different customer needs. This is where the role of customer segmentation analysis comes into play. Customer segmentation analysis in the retail industry involves arranging a broad customer base into smaller subgroups. These subgroups represent a common customer need or goal. Retailers can then formulate strategies to satisfy the needs of each of these customer segments.

It is increasingly important for marketers to send relevant messages that are tailored to the appropriate stage of the purchase funnel. Infiniti’s customer intelligence solutions combine the best data gathering approaches to identify the most profitable customer segments, measure the effectiveness of a marketing campaign, assess changes in customer expectations, and devise value maximization strategies to enhance their shares. Request a free proposal to know more about our customer intelligence solutions.

Benefits of customer segmentation analysis in retail

Customer segmentation analysisRetail marketers are constantly on the lookout for ways to attract more customers by improving the effectiveness of their campaigns. Customer segmentation analysis can help them better plan their marketing strategy. Additionally, having a customer segmentation model also helps retailers understand what offers or product customizations will work with each group of customers.

Individualize customers

Marketing, customer services, and even product development can be made more effective with the help of customer segmentation analysis by giving retailers comprehensive insights about their specific customer groups. Not every shopper has the same expectations from a brand. Without a customer segmentation model that reflect the needs of customers more accurately, retailers often struggle to meet customer expectations.

While most retailers know they need a sophisticated approach to customer segmentation analysis, many still struggle to understand their customer with a 360-degree view. Get in touch with us to know how we help our clients identify target customers, realize factors that drive customers to competitors, gain a clear understanding of budgets and timelines, compare product or service pricing, and also understand customers’ decision-making process.

Collecting smarter data

Customer segmentation analysis not only helps retailers gain a better understanding of their customers, but it also helps them evaluate their own performance. Different metrics relating to marketing campaigns, sales, and other incentive programs can be broken down into different segments based on the customers’ transactional data. Additionally, most cloud-based POS solutions record and update customer data automatically whenever they make a purchase. This information is then synced across all retail locations and connected devices. When grouped into different segments, customers’ spending history can be used to pinpoint the strengths and weaknesses of the marketing campaign and business model as a whole.  Moreover, customer segmentation analysis also provides retailers with a better idea of who buys what, which can be used when expanding products or adding new merchandise.

Enhancing marketing campaigns

One of the biggest advantages of customer segmentation analysis is that it helps in enhancing the marketing campaigns of retail companies. By tracking different customer groups, retailers can analyze different variables that will help them determine ways to attract new customers, build brand loyalty, and create awareness around specific products.

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A Leading Fashion Retail Brand Curtailed Losses and Increased Revenues by 20% – A Customer Segmentation Case Study

Business challenge

Over the last decade, the retail industry has undergone incredible disruption, largely impacting how customers shop and what they expect and demand from retailers. Fashion retail is one of the most dynamic segments in retail, wherein companies have to keep a constant watch on the changing trends. A failure to do so would result in a considerable decline in their market share. Although fashion retail is a highly united industry, the owners of fashion brands may find it difficult to thrive in the fiercely competitive industry due to its ambiguous nature. As the pace of change in the fashion retail industry accelerates, the need to have an innovative and sustainable customer segmentation models have become imperative.

Recently, a fashion retailer based out of Central Europe faced a decline in their overall sales rate. They also noted a substantial reduction in the number of frequent and repeat buyers. The company, therefore, approached Infiniti Research to undertake a detailed analysis to better understand the European fashion retail industry. The client wanted to leverage our customer segmentation solution to examine customer behavior, identify segments with a high potential for losses, and devise a mechanism to better understand the changing customer needs.

Building a customer segmentation strategy is no easy task, but within the retail sector, it is quickly becoming a necessity. Request a FREE brochure to know how our solutions can help you build an ideal customer segmentation strategy.

Solutions offered and value delivered

Infiniti’s customer segmentation analysis included a study based on a combination of factors such as customer needs, purchase patterns, attitudes, and behaviors. The customer segmentation solution offered to the client helped them uncover lucrative, under-served customer segments. Furthermore, gleaning insights into the potential customer segments helped the fashion retailer to determine the profit potential of each segment by analyzing its revenue and cost impact. The unique customer segmentation strategy also empowered the client to differentiate their brand from the global competition. This, in turn, helped them break through the cluttered market space with a unique and convincing proposition.

Targeted and focused strategies are the key to survival in today’s competitive world. Learn how we can help you devise an ideal go-to-market strategy. Request a free proposal.

In a span of eight weeks, the client was able to transform their operating model into a more segmented, customer-relationship based structure. This helped them to improve their wallet share and increased their overall revenue by 20%.  Moreover, with the help of Infiniti’s customer segmentation solution and recommendations, the client was able to increase their customer retention rate by 2X.

Importance of customer segmentation

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3 Types of Customer Segmentation Models that You Should Consider

Appealing to a large number of people with the same generic messages is an arduous task for most marketing teams and it comes as no surprise that most businesses’ strategies fail when it comes to boosting customer reach. This is where the role of customer segmentation models comes into play. Effectively designed customer segmentation models help gain a deeper understanding of the customers by identifying their unique interests, behaviors, and preferences. It is, therefore, critical for businesses who are looking to enhance personalization across all channels and gain a better understanding of their customers.

To help such businesses, we at Infiniti Research, have highlighted the three common types of customer segmentation strategies that should be incorporated into every marketing campaign.

Types of Customer Segmentation Strategies 

Demographic segmentation

Segmenting the customers on the basis of demographic data is a very obvious way of personalizing marketing messages. There are a lot of factors that can be considered, such as age, gender, location, ethnicity, marital status, household income, occupation, and education level. But there is a certain trick to demographic segmentation and that is to find the most effective way to group the customers so that it’s easier to make an authentic, ongoing dialogue kind of conversation with them.

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Geographic segmentation

Geographic segmentation is one of the commonly used types of customer segmentation strategies that leverage factors like states, nations, cities, regions, postal/zip codes to segment the customer base into various groups. This, in turn, helps marketers to run customer-specific promotional campaigns and offer unique products.

Behavioral segmentation

Behavioral segmentation is one of the types of customer segmentation strategies that divides a population based on their behavior and their response towards any product. In this segmentation strategy, the people are grouped into a single segment to make the marketing campaign more specific. Sich types of market segmentation strategies help companies to promote their products and services in a streamlined manner. This form of segmentation is basically done for products that are a niche in nature and are targeted towards the demands of the customer

Customer Segmentation Models

Segmentation based on the pattern of purchasing

Analyzing the purchase patterns of customers sheds light on what, how, and when the targeted customers make the purchase. This further helps in identifying the frequent shoppers as well as the shoppers of the highest value. This is one of the shortest ways to retain customers and is one of the customer segmentation models that helps in retaining customers effectively.

Our customer segmentation solutions have helped our clients identify their most profitable customer segments and strategize to effectively serve them. Learn more about how we can help your business.

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Segmentation based on goals of customer

The process of customer segmentation requires and utilizes lots of data. Data such as their demography, geography, and interests help in defining the goals of the customers. Such customer segmentation models give a detailed and in-depth analysis of the targeted customers.

Segmentation based on interaction frequency

This is one of the common customer segmentation models that help analyze how many customers are engaging with your website and content online. It also helps to examine what is the frequency of customers who are messaging you for support on social platforms, or email, and offline interactions. Such interactions act as crystal balls in determining the growth of the business.


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