What is Marketing Segmentation?
Simply put, it’s grouping your customers into subsets that you can then reach more precisely and effectively. Depending on your strategy and on the information you have access to, you might use any number of characteristics — including needs, location, behaviors, age, gender, income and interests — to create these groups.
Why Segment Your Customers?
Marketing that is too broadly targeted won’t stand out enough to hook anyone; personalized campaigns yield better results than blanket advertising. Of course, an overly narrow focus isn’t sustainable, either. Appealing to groups is still key. That’s where market segmentation comes in.
Honing in on the majority characteristics and behaviors of your target demographics allows you to personalize your content offerings according to the needs of your average customer, creating a uniquely relevant customer experience. Personalized marketing is overwhelmingly more successful: 80 percent of consumers are more likely to make a purchase when brands offer personalized experiences, according to a 2018 research report by Epsilon.
Breaking your customers down into segments helps you understand them better. You can learn a lot, for example, by monitoring the ways different customer segments engage with your content, and this information can inform your strategy going forward. Segmenting also allows you to use your own internal resources more efficiently. Knowing exactly what you are offering and who you are offering it to cuts down unnecessary time and resources spent on ineffective marketing campaigns.
All of this — better customer understanding, more efficient utilization of resources and improved customer experience — translates to increased profits. A study by Bain & Company found that the profits of organizations that mastered market segmentation were 10 percent higher over five years than those that did not. Segmenting your cohorts well isn’t simple, but you can’t afford to skip it.
How Do You Segment Your Customers?
Start by creating buyer personas. Think of these fictional profiles as composite sketches depicting your average customer, complete with details about their demographics, needs and behaviors. Use data and feedback from your existing customers and from market research to flesh out a picture of what this imaginary person wants and how you can appeal to them.
It’s also important to determine which stage of the buyer’s journey your customers mainly fall into. Don’t skip this step — the way you market yourself will vary greatly depending on whether your customers are in the awareness, consideration, or decision-making stages. A new product or brand, for example, will likely find that most of its target customers are in the awareness stage and are less likely to tolerate blatant self-promotion. Instead, that campaign should focus on bringing attention to the needs that the company or product can solve. Customers in the decision-making stages need to be nurtured, and might benefit from an email reminder when they leave items in an online shopping cart without completing the purchase. Read up on strategies for reaching whichever stage you identify as your target.
Your buyer personas and the target stage of the buyer’s journey will help you decide how to define your customer segments. What information do you have access to (or could you gain access to)? What information will you use to create the groups? How will that help you hone in on customers in your target stage of the buyer’s journey and on your “average customer”? Choose measurable data points and apply filters to both your existing customer base and to prospective customers.
You can then use this information to inform your content offerings and how you distribute it. Every member of your team should be familiar with the segments you’ve identified. Consider the implications of every piece of data you have on your segment. Have you identified some key areas of interest for your group? That’s a great subject for your next series of blog posts. Is your group particularly active in the evenings? You may need to adjust your posting schedule to encourage more engagement. Social media posts and PPC ads can be filtered based on the demographics of your target audience. All of your messaging, across all of your content, should address your target segment as personally as possible.
There is no “one weird trick” that will do your marketing for you, of course. Segmenting your audience is a great tool, but it only works if you take the time to do it well and then put your findings to use.