Why Customer Segmentation Is Important For Restaurants (A Complete Guide)

Customer segmentation is a powerful tool for restaurant owners to understand their customers and create more effective marketing campaigns.

For example, you could segment your customers by age, location, or dietary preferences. This would allow you to create different marketing campaigns that are tailored to each segment.

Segmenting your customers based on shared characteristics can help you target your marketing messages more effectively, which can lead to increased engagement, improved conversion rates, and increased ROI.

In fact, a study by Mailchimp found that email marketing targeted to segmented groups had 14% higher open rates.

In this blog, we will take a more in-depth look at customer segmentation, including a breakdown of the importance, the different types, and how you can get started.

The importance of customer segmentation (+ expert tips)

Customer segmentation is crucial for restaurants as it enables them to:

1. Understand customers' needs and wants 

By analyzing customers' demographics, psychographics, and behavioral data, restaurants gain insights into what their target audience desires in a dining experience. Armed with this knowledge, they can develop targeted marketing campaigns that resonate with their customers. 

According to Shep Hyken, customer service expert and author of The Amazement Revolution, "The only way to create a truly customer-centric business is to understand your customers inside and out. This means understanding their needs, wants, and pain points."

2. Create personalized experiences 

Through customer segmentation, restaurants can craft tailored experiences that cater to specific customer preferences and interests. This can involve offering diverse menu items, discounts, and promotions to different customer segments. 

As Chris Anderson, business strategy expert and author of The Long Tail, states, "Customer segmentation is the key to delivering personalized experiences that will keep your customers coming back for more." 

3. Improve marketing ROI 

Targeting marketing messages to specific customer segments allows restaurants to enhance their return on investment (ROI). By reaching out to individuals who are genuinely interested in their offerings, restaurants increase the likelihood of their messages being seen and acted upon. 

Jon Morrow, founder of Smart Blogger, emphasizes that "Customer segmentation is the single most important thing you can do to improve your marketing ROI. When you segment your customers, you're able to target your marketing messages to the people who are most likely to be interested in what you have to offer.” Segmentation enables precise targeting, leading to improved click-through rates, conversion rates, and sales.

4. Increase customer loyalty 

Providing personalized and relevant experiences to customers fosters loyalty and encourages repeat visits. When restaurants deliver an exceptional experience tailored to individual preferences, customers are more likely to become loyal patrons. This loyalty drives sales and boosts profits. 

Fred Reichheld, a customer and employee loyalty expert and author of The Loyalty Effect, emphasizes "Loyal customers are the lifeblood of any business. They're the ones who keep coming back, who refer their friends and family, and who ultimately drive your sales and profits."

In short, customer segmentation is an essential tool for any restaurant that wants to improve its marketing and sales efforts. By understanding your customers and their needs, you can create a more personalized and relevant experience that will keep them coming back for more.

Now that you understand the importance of customer segmentation, the question is, how should you approach it? 

4 Types of customer segmentation (with examples)

Market segmentation for restaurants is a straightforward process, with just four main types to consider. All of these types are relevant to the hospitality industry and can be used to create more personalized marketing campaigns that resonate with customers.

The four main types of customer segmentation are: 

1. Behavioral

Behavioral segmentation is a type of customer segmentation that divides customers based on their buying behavior. This can include factors such as what they order, how often they visit, and how much they spend.

For restaurants, behavioral segmentation is probably the most effective way to target marketing messages and promotions. For example, a restaurant could create a loyalty program that rewards customers for their repeat visits. Or, they could send targeted email marketing campaigns to customers who have recently ordered a specific dish.

Here are a few things that behavioral customer segmentation tracks:

• Customer spend: What customers have ordered in the past, how often they order, and how much they spend.
  
  
• Visit trends: How many times do they visit the restaurant, what days of the week do they typically visit, and what times of day do they typically visit
  
  
• Website activity: Which pages customers visit on the restaurant's website, how long they spend on each page, and what they search for.
  
  
• Social media engagement: How customers interact with the restaurant's social media pages, such as liking posts, commenting, and sharing content.
  
  
• App usage: How customers use the restaurant's mobile app, such as making reservations, ordering food, and leaving reviews.
  
  
• Email engagement: How customers interact with the restaurant's email campaigns, such as opening emails, clicking on links, and responding to surveys.

By tracking customer behavior, restaurants can gain a deeper understanding of their customer's needs and preferences. This information can be used to create more personalized and relevant marketing messages that are more likely to drive sales and improve customer loyalty.

Here is an example of how a restaurant could use behavioral segmentation to create a more personalized experience for their customers:

• A customer who orders a salad for lunch every day could be targeted with a promotion for a free side salad with their next purchase.
  
  
• A customer who has never ordered dessert could be sent a personalized email with a recommendation for a new dessert item that they might enjoy.
  
  
• A customer who has visited the restaurant three times in the past month could be invited to join the restaurant's loyalty program.

By using behavioral segmentation, restaurants can create a more personalized experience for their customers and improve their chances of driving repeat business.

>> Want to know more about behavioral customer segmentation for your restaurant? Request a demo today. 

2. Geographic

This segmentation is based on the customer's home location. Identifying which geographical location you are targeting is important as it affects decisions like having a take-out menu or focusing on walk-in customers, or targeting locals vs. tourists.

This segmentation type includes: 

• Country
• State
• County
• City
• Postal code

For instance, a restaurant that is located in a tourist destination might segment its market based on the time of year. They could offer different menus or promotions during peak tourist season.

3. Demographics

This segmentation focuses on who your customers are, and is likely the most popular type of market segmentation. 

Demographic customer segmentation includes factors such as:

•  Age
• Gender
• Income
• Education
• Occupation
• Religion
• Ethnicity, etc.

For example, a restaurant that caters to families with children might segment its market based on the age of the children. They could offer a kids' menu with lower prices, or have a separate play area for children.

4. Psychographics

This method of segmentation focuses on the whys of your customers' behaviors, determined by their hobbies and personalities. Psychographic segmentation allows you to establish your consumer groups based on their:

• Interests
• Hobbies
• Personality
• Beliefs
• Values
• Lifestyle

For example, a restaurant that focuses on healthy eating might segment its market based on the health-conscious consumer. They could offer vegetarian and vegan options, or have a focus on fresh, local ingredients.

Together, these factors provide restaurant owners with a holistic view of their target customers. 

To help spark inspiration, let’s take a look at a few examples of how you can use these different customer segmentations for restaurant marketing campaigns.

Examples of marketing ideas based on customer segmentation:

• Menu customization: Analyzing customer preferences allows restaurants to tailor their menus to different segments. They can offer specific dishes or dietary options that cater to various tastes, such as vegetarian or gluten-free choices.
  
  
• Targeted promotions: By segmenting customers, restaurants can design promotions and discounts that appeal to specific groups. For instance, they might offer happy hour specials to attract after-work crowds or provide exclusive deals to frequent diners.
  
  
• Loyalty programs: Segmenting customers based on their loyalty and spending habits enables restaurants to create targeted loyalty programs. They can offer rewards, discounts, or exclusive benefits to incentivize repeat visits and foster customer loyalty.
  
  
• Social media targeting: Customer segmentation aids in crafting targeted social media campaigns. Restaurants can create content tailored to specific customer segments and deliver it through appropriate platforms to maximize engagement and reach.
  
  
• Email marketing campaigns: Segmenting customer email lists allows restaurants to send personalized offers, updates, and event invitations based on individual preferences and past behaviors.

How to implement customer segmentation for restaurants

Now that you know all about customer segmentation and its importance for restaurants, how do you actually do it for your establishment?

Here are a few tips on how to implement customer segmentation for your restaurant:

• Gather your data. The first step is to gather as much data as you can about your customers. This includes information such as their demographics, purchase history, website activity, and social media engagement. You can collect this data through a CRM system, like Eat App, website analytics, and social media platforms.
  
  
• Choose your segmentation criteria. Once you have gathered your data, you need to choose your segmentation criteria. This could include factors such as age, gender, location, dietary preferences, or purchase history. The criteria you choose will depend on your specific business and goals.
  
  
• Create customer segments. Once you have chosen your segmentation criteria, you can create customer segments. This involves grouping your customers together based on the shared characteristics you have identified. You can use a variety of tools to create customer segments, such as CRM software, marketing automation platforms, and data analysis tools.
  
  
• Target your marketing messages. Once you have created customer segments, you can start targeting your marketing messages. This means sending different marketing messages to different segments of your customer base. For example, you could send a different email campaign to young professionals and families with children.
  
  
• Measure your results. It is important to measure the results of your customer segmentation efforts. This will help you determine whether your segmentation strategy is effective and make necessary adjustments. You can measure your results by tracking metrics such as website traffic, email open rates, and conversion rates.

By following these tips, you can implement customer segmentation for your restaurant and start reaping the benefits of this powerful tool.

Suggested customer segmentation software 

1. Eat App 

Eat App also allows restaurants to create customer segments based on these factors within the CRM system, making the whole process quick and streamlined. You can easily filter guests based on different factors to identify and create multiple customer segments in a matter of minutes.

Our system also makes it easier for restaurants to target their customer segments with personalized messaging by sending tailored emails directly through the CRM system. 

For instance, you can filter guests on the basis of the number of visits, create a segment for guests who have visited your restaurant 10+ times, and send them a special discount code to award their loyalty, all through Eat App’s CRM system.

Interested in trying Eat App’s CRM system for your restaurant? Start your free 14-day trial now.

2. HubSpot CRM

HubSpot CRM can be used to segment customers based on their demographics, such as age, gender, and location. It can also be used to segment customers based on their psychographics, such as their interests and hobbies. HubSpot CRM also offers features for tracking customer behavior, such as their website activity and purchase history. This information can be used to create more personalized marketing campaigns that are tailored to the specific needs and interests of each customer segment.

3. Salesforce

Salesforce can be used to segment customers based on a variety of factors, including their demographics, psychographics, and behavioral data. Salesforce also offers features for creating custom reports and dashboards, which can help restaurants track the effectiveness of their customer segmentation campaigns.

4. Pipedrive

Pipedrive is a good option for restaurants that are looking for a CRM platform that is specifically designed for sales teams. Pipedrive offers features for lead scoring and pipeline management, which can help restaurants track the progress of their sales leads and identify the most promising customers.

5. Zoho CRM

Zoho CRM is a cost-effective CRM platform that offers a variety of features for customer segmentation. Zoho CRM is a good option for restaurants that are looking for a CRM platform that is easy to use and affordable.