Resources Hub » Knowledge base » How is Marketing Segmentation Used in Customer Retention?

It’s not enough to gain customers. Seasoned marketers know the importance (and the challenge) of retaining them.

Properly serving customers is the goal of any successful business. Serving them so well that they continue to return is the key to good retention rates. While it is impossible to keep all your customers around forever, there is a reason retention is such an important metric.

How is marketing segmentation used in customer retention?

Keeping customers happy isn’t always easy, especially as your customer base grows. Segmentation is a great way to simplify your marketing efforts. However, how impactful is it toward retention?

How to measure customer retention (with and without segments)

Customer retention could be thought of as the number of customers that stick around in a given period. To calculate this, see how many remain at the end minus the number of new ones acquired, and divide that by the number at the start. Multiple the total by 100 for a solid figure you can rely on.

how is marketing segmentation used in customer retention?

Image from CallMiner

As we see here, segmentation is already coming into play just during the calculation phase. To see how many customers you are retaining, it requires some work. You have to segment your customer base by the time in which they first found you.

Some people use slightly different ways to calculate retention, but segmentation can always make it easier. With the right email platform, you can find out how many customers are sticking around either in segments you create or without them.

Customer retention is often about learning what customers want and being able to handle any problems customers have had. The use of segments makes it easy to group people together, whether they have been longtime customers, or whether they’re newcomers.

It also provides a way to manage retention campaigns more easily. For example, any customer who has logged a complaint could be put in one segment, and this segment could be used for retention campaigns to try and resolve the issues of unhappy customers.

With segmentation, it is much easier to handle customer needs and make sure no one feels forgotten or overlooked.

Does segmentation for customer retention really matter?

The matter of customer retention is a priority for any successful organization. A customer who leaves a brand may leave negative reviews or spread the wrong information.

Even if they don’t, a customer lost is an opportunity lost. A customer who leaves a brand can cost future sales and sales opportunities, as well as things like traffic, subscription numbers, and testimonials.

Companies lose over $136 billion yearly from consumer switching.

Customer retention matters. But how much does segmentation matter in improving customer retention? As a general rule, the bigger your customer base is, the more you need segmentation. It is impossible to keep all customers happy at all times. The best way to right multiple wrongs at once is to group unhappy customers in segments.

You can even create multiple segments: One could be used for customers who were frequent buyers but fell off, and another could be used for anyone who has logged a complaint. Another could be used for those who have been dormant for most of their time with a company.

Segmentation is a smarter, faster way of keeping customers happy and ensuring your retention rates stay high.

What now?

Now that you know how vital segmentation is to retain customers, the next question is: how can you use segmentation to keep your retention rates high?

  • Retention can be calculated more easily using segmentation
  • Customers in segments are easier to keep happy
  • Prioritizing retention helps companies minimize loss

There are many metrics to manage in the marketing sphere, but retention is arguably the most important of all.

If you’re a marketer who is looking to improve your retention rates, learn how segmentation and targeted email campaigns can help drive your metrics up.

This blog provides general information and discussion about email marketing and related subjects. The content provided in this blog ("Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.

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