No two customers are the same. To cater to each individual effectively, you must break your customer base up into smaller chunks through customer segmentation. This process is a vital step in maximizing customer satisfaction.

Businesses across industries employ a range of strategies to boost profits and keep customers happy. While many aspects of the customer journey have been optimized, the “middle of the funnel” is often neglected. This stage entails the nurturing techniques businesses implement to get customers and new leads ready to buy or subscribe.

Using artificial intelligence (AI) customer segmentation, you can easily form precise customer segments to target with your marketing. This ensures you’re spending resources efficiently by advertising to customer groups that are the most likely to respond positively. It also improves the customer experience for your clients by serving up personalized content.

Before you dive into the world of AI, you need to understand how it works. Let’s explore the techniques it uses to segment customers.

Understanding the Basics of Customer Segmentation With AI

Defined in the simplest terms, customer segmentation is the process of dividing your customer base into smaller groups—or “customer tribes”—that share similar traits. With these segments, you can zoom in on the needs of specific subsections of your customer base. By addressing these needs, you can craft experiences that lead to greater customer satisfaction and retain more customers.

Customer segmentation is especially useful for marketing and sales, as it allows you to cater your advertising to a specific demographic. This personalized, targeted form of advertising is much more powerful than a vague message trying to appeal to as many customers as possible.

Segmentation is also economical—you can be more precise with your marketing distribution. For example, if an electronics store wishes to advertise a new keyboard for MacBooks, it can limit its marketing to Apple users instead of its entire customer base, saving both money and time.

AI and Customer Segmentation

AI isn’t ready to replace humans just yet, but it can already do plenty that people can’t. Its speed alone makes it a highly effective customer segmentation tool.

In addition, advanced AI using natural language processing (NLP) can analyze customer reviews and feedback. With this information, you can improve your products and customer experience and cater your business’s tone to each customer segment.

These capabilities make AI tempting. But remember, you shouldn’t implement AI mindlessly. It needs high-quality data to perform at its best. Bad data will only produce poor results, leading to marketing mishaps. What’s more, AI isn’t self-sustaining. It must be maintained and updated by skilled experts, so ensure you have the right staff on your team.

Leveraging AI for Personalized Targeting

There are many ways to segment customers. First, pay attention to demographics such as age, gender, location, income, and education. For example, a nationwide clothing store chain may group customers by what city they live in.

There are also psychographic segments to note, including purchase history and product use. A sports equipment store might form groups based on what sports customers play. Finally, needs-based segments are built on customer needs and expectations.

AI can process massive amounts of data faster and more accurately than humans ever could. This allows you to maintain a personalized touch while catering to hundreds or even thousands of customers. AI customer segmentation can also gather information from various points of contact with customers, including social media, purchase history, and website visits.

What’s more, AI customer segmentation may even reveal new customer segments. This can open up additional avenues for marketing and more personalized customer experiences. The result is greater customer engagement and loyalty.

Building Customer Tribes With AI

Traditional methods of customer segmentation work, but they have significant downsides. For instance, they often lead to simplified interpretations of customer behavior. In addition, these methods can’t handle the massive amounts of data modern customers leave on social media and other online platforms.

With AI customer segmentation, you can process more data than ever. This allows you to create more specific segments. Once you’ve identified these segments, you can send personalized, targeted marketing campaigns to each one. Customized outreach shows clients you’re paying attention to them. In turn, they’ll reward your efforts with increased loyalty and sales.

Following each campaign, pay attention to various key performance indicators (KPIs) such as click-through rates. This will show you which aspects of the campaign to change and which are working. AI can help you during this process as well through machine learning.

The Future of Customer Segmentation and AI

AI is constantly evolving and reaching an increasing number of industries. Technology isn’t going anywhere, so it’s in your best interest to learn how to take advantage of it.

As AI continues to advance, you can expect greater automation, making the workplace far more efficient. For instance, marketers can create AI-automated email campaigns that cater to key customer segments. AI can also be used to automate social media tasks, such as scheduling posts, responding to comments, and analyzing metrics.

With AI, the speed at which you can adjust marketing campaigns will also improve. In addition to working faster, AI analyzes data in real-time, giving you the most up-to-date feedback possible. Using this data, you can then make the necessary changes to your marketing campaigns. As AI tech improves, you’ll be served with increasingly instant insight.

Your Business Needs AI Customer Segmentation

As you upgrade your customer segmentation processes, you’ll need tools that allow you to create content for different customer tribes quickly. You’ll also need a way to nurture your customer lists and start moving clients through the sales funnel.

Daily.ai is powerful AI-powered software that delivers completely automated email newsletters. It’s an effective way to keep your customers in the loop regarding your business, the latest deals, and important industry news.

The software uses AI to gather data on customers based on clicks and user behavior. With this information, it curates and refines content to match customer interests and expectations. Book a demo with Daily.ai now to learn how AI can boost customer loyalty and drive revenue.