Customer segmentation helps you bring order to the chaos of modern consumerism.
Even now, despite many confined to their homes, consumers are actively engaged in a multitude of conversations, fragmented across time, location and an abundance of digital channels.
With a clear understanding of your audiences and how they spend their time, you can provide the best experience, influence the path to purchase, and identify the best groups to target.
And with marketing under pressure to tighten budgets and rethink their spend, it’s crucial to make sure you’re listening to what the data tells you.
To accompany our guide on segmentation 101, here are some quick tips on what to do.
What is customer segmentation?
Customer segmentation, or audience segmentation, is the process of grouping people based on shared characteristics. For the most part, this is done by businesses to help them improve their targeting.
The most commonly used segmentation types:
Demographic: These describe the outward-facing attributes of a person. For example, their age, gender or marital status.
Behavioral: These tell you the actions they take. This could be their online shopping habits, the social media sites they visit or what devices they use.
Psychographic or attitudinal: These give you clues into their wider perceptions, interests and mindsets. For example, why they like or dislike certain brands, why they enjoy certain movie genres, their lifestyle choices or values.
Geographics: These explain where your target market is located. This can be as expansive or narrow as you like, from continent to zip code.
How do segmentations help?
- It improves your focus.
- It ensures your strategy is customer-first.
- It uncovers opportunities.
- It gives you a competitive advantage.
- It helps you to retain and attract the right customers.
How to make customer segments work
1. Use detailed customer personas to guide your creativity.
Start with your audience’s core set of demographics, such as age, location, ethnicity or family size.
These indicators are a good foundation, but you need to build on this data with insights into behaviors, preferences and affinities.
This is a great way to create more detailed profiles and data-driven personas, reducing the chance of serving irrelevant content.
Combining these personas with an understanding of the channels and platforms best suited to reach a particular group will help you drive more targeted campaigns.
2. Get to know their needs with customer journey maps.
When choosing between different products and services, consumers select the ones that best meet their needs.
Understanding and responding to these needs is key if a campaign is to deliver the desired results.
Most customer segmentation tools focus on behavioral analytics, but going beyond historical data and expanding helps you anticipate the next step your consumer might take.
Armed with this understanding of what drives them, you can map out detailed customer journeys using data and insights to tell you how and where to deliver your message for greatest impact – channels, platforms and format.
By crafting specific content for each point along the journey, you’ll significantly increase your chances of guiding the customer along to the next stage.
3. Combine your data to get more personalized.
The in-depth data now available means customer segmentation can be refined to achieve far greater levels of personalization.
Combining qualitative personas with quantitative data, you can define highly actionable customer. Being this targeted, your content has a far greater chance of resonating with the right people.
And consumer attitudes are changing fast – they expect a much higher standard from brands in terms of messaging, personalization and responsiveness to their needs.
Segmenting customer to deliver tailored messaging and experiences for every customer at every stage is now an essential requirement.
4. Investigate usage and needs for more differentiation.
Usage and needs-based customer segmentation helps you get to the heart of what your customers want and how to differentiate your offer.
Most brands have multiple offerings for different types of consumers and determining the different uses customers may have for your products or services is a great way to carry out this segmentation.
This approach also helps to identify new audiences who share similar needs.
5. Find out what really engages your audience for more reach.
To increase your reach, you need to know what engages your customer segments, but also how their behaviors differ across channels.
When it comes to different audiences, finding out what works for them is key. Our latest statistics show that when targeting mothers, for example, incentives like free delivery and discounts act as the most effective purchase drivers.
Using these insights to deliver more engaging campaigns will bring your reach to new heights.
What’s more, tracking targeted content will allow you to see when and how different audiences are activated – an insight that can be built into further segmentation and incorporated into future campaigns.
Case study: using smart segmentation to win a pitch
First & First is a consultancy with data at its core.
It aims to help brands and agencies bridge the gap between analytics and strategy, ultimately driving new business.
This example from First & First highlights the value brands place on audience segmentation.
First & First have a number of agency clients, one of which was pitching to a beauty brand looking to launch a new product.
The agency tasked First & First with providing recommendations on the beauty brand’s target audience, offering insights into “who they are and what they care about,” says Devon Zdatny, CEO of First & First Consulting.
With little information about the brand beyond the three core pillars it centered itself
“We leveraged GWI to uncover which consumers would care about these pillars. This helped us pinpoint and define our target audience.”
The team gathered insights into the consumers they should be targeting.
Using GWI they could analyze, segment and profile each target group using over 40,000 data points.
Here’s how they went about it:
- They built out an audience which met the criteria associated with the brand’s core pillars of social-first distribution, eco-friendly ingredients and promotion of healthy eating.
- They analyzed the audience demographics in order to shape the target profile.
- They constructed a target audience that balanced scalability with precision.
The agency was successful in their pitch and, as part of the kickoff, hired First & First to conduct a full segmentation study.
“GWI has been core to our continuous efforts to streamline the path to insights,” says Devon.
“The ability to pull such compelling data in ever-tightening timelines has been vital in helping many of our agency clients win pitches.”
Your targeting is only as good as your segmentation
Customer segmentation is at the heart of good marketing. If not carried out with enough detail, companies run the risk of becoming too broad in their targeting and turning potential customers away.
Taking the time to segment your audience with the most up-to-date, in-depth data pays off in the long term. Your profit margins and your customers will thank you for it.