Personalization is a rallying cry for marketers.
It is almost impossible to drown it out. We’re witnessing the death of mass blast content.
Without marketing segmentation, consistent one-to-one interactions and an understanding of the complexity of designing experiences, it’s impossible to create a customer experience that is exceptional.
Let’s find out why.
What is marketing segmentation?
Do you remember when you were in grade school learning about the animal kingdom? Based on common characteristics, you would see animals divided into different groups, such as orders, genus and families.
These classifications were created by scientists to help understand the commonalities and evolution of animals.
Marketing segmentation is akin to the organization logic of the animal kingdom. Marketing segmentation uses four key methods to divide brands’ target markets into smaller, more defined segments.
- Demographic Segmentation This is the most basic and broadest type of segmentation. It divides people based on their age (gender, income), location, or occupation.
A cream to prevent stretch marks may be more appropriate for women between 20 and 35 than it is for men. Marketers may create segments that include women in that age group, and then build messaging and journeys to that segment.
- The psychographic segmentation goes deeper than demographic segmentation. It divides people based on their values, attitudes, and lifestyles. Marketers can gain more insight into their customers through psychographic segmentation. This can allow them to create content and experiences that reflect the unique psychographic segments of their users.
Imagine that you have customers who are very concerned about the privacy settings on their smartphones. They may be more inclined to buy this phone because of its privacy-friendly features.
Another example: Users who are attracted to new shiny gadgets are early adopters. These consumers can give you insight into how your ads perform.
With a clear understanding of your customers’ interests and lives, you can experiment with different design styles and copy. You can make more emotional connections by keeping track of early adopters’ interests outside of tech.
- Customer segmentation based on their behavior. Segments are created according to how customers interact with companies and the steps they take towards a purchase decision. The patterns that are analyzed include brand interactions, website activity and loyalty.
Let’s suppose you have a customer who is a huge winter sports fan. Your app has been downloaded by this consumer who purchases a new snowboard each year for between $600-800.
You can segment your customers for messaging prior to their annual purchase. Then, try to upsell them by offering boards beyond that range or cross-selling to them with add ons such as bindings, cold-weather gear and lift tickets.
- Geographic segmentation places people in groups according to where they live. Marketers use climate, country, zip codes, urban, suburban or rural categorizations to determine which segments they place consumers in.
Imagine that you have a short, sleeveless sundress that you wish to sell in spring. This would be for summer shoppers. A geofence could be used to target women living in warmer areas within a few hundred miles of a beach. You might also consider avoiding beaches near women’s bodies.
It all comes down to understanding your customers and making good judgment calls to avoid negative perceptions of your brand at a particular location.
Imagine that you are a sports brand and can detect when users enter or leave a stadium during a game. It is possible to predict the preferences of users and recommend products and experiences to them on game day.
Imagine you are a financial service firm that wants to promote its cloud-based accounting solution to business travelers. To send highly targeted messages, you can segment users who enter different airport zones.
How to design a marketing segmentation strategy
Let’s now dive deeper into the benefits of each type of segmentation and how you can create your own marketing segmentation strategy.
Get Started with Marketing Segmentation
- Analyze customers – The first step in creating segments is understanding customers’ behavior. How do you do this?
- Get feedback: Send surveys to your customers asking for their opinions. To keep customers engaged, take this strategy one step further and reach out to them whenever you make changes to your product or service.
- Talk to sales Your salespeople get to know your prospects and customers on a personal level by interacting daily with them. Invite your sales team to the conversation to create segments that are based on who your customers really are.
- Get into the analytics to see how customers spend their time on your site. To gain a better understanding of what is working and what needs to be improved, you can see where drop-offs are occurring, which pages are performing well, and where customers are providing their personal information for access to gated assets.
- Do you notice a product category getting a lot of attention? You might want to use your psychographic information to create a segment to that category.
- Does your product positioning work? Evaluate your messaging and see if it resonates with your target audience.
- Are you helping the right people? One key to creating a profitable marketing segment is finding the right people with the same problem as your product. Your message will be more relevant if you match your solution to their problem.
- Ready. Set. Launch. A/B testing is essential. Pay attention to how segments react, and adjust if results don’t match industry benchmarks or predicted expectations.
Marketing Segmentation and One to One Experiences
Segmentation in marketing can teach you valuable lessons about your customers. It also gives you insight into the best places to grow your marketing efforts and where to direct them for maximum results.
Imagine that you are a beloved ice-cream brand with a loyal following. It’s finally here. You are expanding your sales to a virtual storefront. Your martech stack is in place. You are GDPR-compliant.
It’s now time to send announcements, discounts, and messages to potential customers, loyalists, as well as everyone else.
You can be more relevant the more you know.
How would triple-chocolate-loving customers react if they were given a discount on plain vanilla?
Some may be eager to try new things. They might think of someone vanilla-loving in their circle.
If the consumer has never bought chocolate products, your brand is likely to get the “hey they don’t really understand me” reaction. A well-meaning message combined with a loyalty-building discount code could have the opposite effect and alienate customers, leaving them with a bad taste in his mouth.
Segmentation in marketing uses an individual experience-first approach. Customers’ demographic, behavioral, geographic, and psychographic data are analyzed. These insights would be used to create relevant brand interactions, personalized messaging and relevant recommendations that would ultimately lead to a positive brand experience.
Let’s now take the case of the vanilla lover who is a chocolate-loving person and receives a discount. Instead, the marketer took into consideration all of the customer marketing segmentation data.
Marketing segmentation used to create delectable journeys
The email will include a link to their favorite triple chocolate ice-cream, and they can also visit your website to see a dynamic banner that matches the content of the email.
AI then matches them up with related chocolate products that match their affinities. If they have bought peanut butter products, you can release a limited-edition peanut butter ice cream. It sounds irresistible, doesn’t it?
Let’s suppose they bite. Now you have a better idea of the consumer. Now you might want to segment them into a peanut butter and chocolate affinity segment. You may discover that the consumer likes non-chocolate products with a nut base as you increase time and interact with your mobile app, emails and ads.
They may also buy two gallons of milk at one time, or stock up on a particular flavor every year for their loved ones’ and family’s birthdays.
These patterns and timings will allow you to create consistent, valuable journeys that are full of brand interactions that generate brand loyalty and strong memories. This is marketing segmentation.