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Market Insight: Dynamics of Micro-Segmentation of Customers for CX Targeting

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Quadrant Knowledge Solutions Market Insights research provides detailed insights to users about the dynamics of micro-segmentation of customers for CX targeting.

Customers simply wants experiences very personal to them as well as aligned with their needs, preferences, social circumstances and more. With such growing customer expectations, it is exciting to see how marketers tackle the need to deliver tailored content to customers. However, in such case, applying macro segmentation, which basically means clustering customers based on a broader scope / emphasizing on high level customer data seems to be a flawed marketing strategy. Prior to devising any specific marketing strategy, organizations need to take a critical step of comprehensively understanding their customers to drive business success. There is a need to uniquely segregate and engage customers based on various factors such as first-time visitors, brand advocates, high-value consumers, frequent browsers, infrequent buys, and more. The ideal way to provide differentiated experiences is by granularly segmenting audiences through micro-segmentation approach – resulting into highly tailored experiences.

Micro-segmentation is the practice of categorizing the organization’s customers into precise groups as per their behavioral characteristics and information. Customers are categorized into segments based on their demographic, geographic, psychographic, and behavioural data. Data from different business silos is integrated to refine segments into micro-segments for delivering tailored experiences. In a way, micro-segmentation is a smaller tenet of personalization as it actively supports the process of subdividing the larger market into smaller groups of customers sharing similar buying behaviour for delivering targeting relevant message.

The process of micro-segmenting audiences basically begins with clustering audiences into macro segments (based on demographics, geography, interests, etc.) first and then segregating the customers into more niche categories with the help of AI/ML-driven algorithms. The granular level of data related to customer interests, behaviours, lifestyle, location is leveraged to create the micro-segments. Micro-segmentation is done by identifying the customer activity triggers across their journey such as cart abandonment, saved items in wish list, availed/unavailed offers. For instance, people performing different activities across their purchase lifecycle would need a tailored message based on their stage they are in. Whereas people newly introduced to the brand as well as people with incomplete purchases may accordingly need tailored messages/offers.

According to Priyanka Panhale, Analyst at Quadrant Knowledge Solutions, “Micro segmentation approach empowers brands in developing a viable strategy for improved communication with their target audience. Before adopting a micro-segmentation strategy organizations should focus on understanding key attributes of their best customers, effectively directing marketing strategies to new micro-segments and selecting a right customer experience (CX) technology.”

Table of Contents

A Glance at Dynamic CX Landscape

How Does Traditional/Macro-Segmentation Differ from Micro-Segmentation ?

Working of Micro-segmentation

Micro-segmentation Becoming Critical for the Business Success

Challenges and Ways to Achieve Micro-segmentation for CX Targeting

Final Words

This Market Insights is a part of Quadrant’s Customer Experience & Commerce practice.


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