insights | 26.05.2020

Improved segmentation

Article topics
  1. What is segmentation?
  2. Segmentation types
  3. Demographic
  4. Geographic
  5. Behavioural
  6. Psychographic
  7. Segment objectively, not subjectively
  8. How valuable is your segmented campaign?
  9. Final thought.

What is segmentation?

Segmentation is the method of dividing your customers into different groups, with each group sharing specific characteristics, for the purpose of targeted marketing communications. Segmentation targets customers who are more likely to be interested in a particular marketing message. Market segments are subgroups in your customer database based on traits such as: demographics, needs, priorities, shared interests, and other location, psychographic or behavioural criteria, used to better engage the target audience.

Your database may be made of individual customers, but those individuals will have certain unifying attributes. Your customers, whilst being very different, can be assembled into segmented groups that are more receptive to particular products, services, offers and promotions.

Example:

If a baking supplies retailer sends marketing communications about bread tins to cupcake enthusiasts, it’s likely that the response will be low. If the baking supplies company sends a marketing message about bread tins to bread bakers, a higher percentage of customers within the segment are likely to engage. The same would be true for contacting event cake creators with a special offer about pie dishes—it’s largely irrelevant. The better targeted your marketing campaign is, the more likely it is to succeed.

Recipients are 75% more likely to click on emails from segmented campaigns than non-segmented campaigns.

Segmentation types

Customers can be segmented in myriad ways. There are however some segment types that are commonly used and often effective: demographic, geographic, behavioural and psychographic.

Demographic

Demographic segmentation includes customer traits such as age, gender, income, education, religion, culture. The list goes on. Let’s go a little deeper with ‘age’ and ‘gender’.

Age

Your customers could be any age, from Silent Generation to Gen Z, so you will need to adjust the tone and look of your marketing communications to best appeal to your audience. For example, if your segment age falls into the Baby Boomer category, you would use appropriate language, cultural references and imagery. You wouldn’t use images from contemporary pop culture. Using images showing middle aged people in an aspirational context is more appropriate.

Be sure to remove any customers from your segments who fall outside the age of your target audience (assuming there is one) to help ensure that your message is relevant.

Gender

This segment can be tricky. There are of course products that are aimed by brands at women or men, such as masculine/feminine fragrances, clothes, shoes etc. But it’s important to consider that there are times when men will want to buy perfume or clothing for women, and women will purchase products such as shaving apparel, after shave or underwear, as gifts for men, at Christmas, Birthdays, Valentine’s Day and other special occasions. Be aware, segments can be valuable to different customers at different times.

When segmenting by gender it’s important to avoid stereotypes. It will of course depend on your sector and the products and service that you sell. Not all women like pink, and not all men are alpha males. Segmenting by gender perhaps works best when it is combined with other information, such as purchase history or lifestyle data.

Geographic

Segmenting by geographic location is used when a customer group’s location could influence their interaction with your brand. Geographic location can mean local, national, international or global, with each area providing different opportunities to reach out to your customers.

Localisation

Localisation is the method that enables you to tailor your segmented campaign for local language, culture and customers, so that it’s more appealing and engaging for customers in that location. If customers can better identify with your campaign through language and imagery that they are familiar with, that mirrors their culture and traditions, then they are more likely to engage with your message and your brand.

Climate

With weather-specific products, consideration should be given to local climate and weather. For example, you would be unlikely to push wet weather products in a hotter, drier climate. Although, a regular rainy season in that territory would, at specific times of the year, provide an opportunity to market waterproofs.

Checking the weather forecast can prove useful. Reacting quickly to a forecast of a coming heatwave provides an opportunity for segmenting in that area for products such as sun block, sunglasses, barbeques, parasols etc.

Logistics

Logistics can be geographically dependent too. If you sent an invitation to a customer segment to attend an event in the UK, you probably wouldn’t want to include customers in Australia or China. Likewise, you wouldn’t want to send sales offers to customers who live in countries that you don’t ship to.

Behavioural

Benefits sought

As customers perform pre-purchase research, their behaviour can reveal which benefits, features, values or problems are the most important motivators influencing their purchase decisions. When a customer places higher value on some benefits over others, these primary benefits motivate the purchase decision for that customer.

A simple example is the motivation for customers to buy toothpaste: to help whiten their teeth; alleviate sensitive teeth; flavour; lowest price. With this knowledge the toothpaste seller can create different segments for a single product type.

Purchase history

Knowing what your customers have purchased, when they purchased and what products they purchased together, enables you to create segmented campaigns for specific products and make educated suggestions for related products.

But don’t just look at your customers’ purchase history. Look for patterns too. Find out what pages and products they are viewing on your website and how often. See how they are using your website—can they navigate around the site well or do they need a little help? Are they experiencing difficulty using a product? These behavioural cues can help inform your segmentation strategy.

Satisfaction

Creating surveys and questionnaires for your customers is a good way to gauge which customers are happy and which are not. Analysing browsing behaviour using heat maps and session recordings can also show which customers are having good experiences and which are dissatisfied. But how can this data inform your segmentation?

Those customers with higher satisfaction should be targeted with up-sell and cross-sell opportunities. You could also invite them to leave feedback or write a review to help raise your brand credibility. Customers with lower satisfaction should not be sent cross-sell and up-sell messages. You should reach out with segmented retention campaign and target them with highly individualised content to help resolve their issues.

Psychographic

Understanding your customers is vital. If you don’t already know, you should find out about your customers’ interests, their likes and dislikes, and what they are about, what makes them tick. This kind of psychographic information can tell you why particular products or services might provide value for them, or not.

Common psychographic segments include: lifestyle, values and attitude, activities and interests, social status, the list goes on. But how do you compile this kind of customer data?

Customer surveys and questionnaires are simple, effective ways to gather data. A well-designed questionnaire can reveal lots of valuable insights. Always be sure to offer your customer something in exchange for their precious data: voucher code, a small gift or other reward.

Segment objectively, not subjectively

Your segmented campaign performance should be measured and reviewed using data. To understand how your campaign has performed, drill down into the data using KPIs such as: ROI, profitability, APV, bounce rate, click-through-rate, sales figures etc. to really understand what’s going on and to inform future segmented campaigns.

Even if you’re new to segmenting and have no previous data available for comparison, run test segments. For example, create an email campaign targeting your desired segment and analyse the results. Does it bring more visitors? Are they converting? What other products are they interested in? If the results aren’t as you expect, then that’s fine. Go with what the data says, not preconceived ideas.

If you have a hunch about a segment, or have qualitative data or anecdotal evidence, test it. This will show whether you are right or wrong about a particular segmented group. Learn from the data what the most productive segments are for your brand or business and keep testing them. Remember, your customers’ preferences and behaviours are fluid and difficult to predict. Segmentation that uses the very latest data will have the greatest impact.

How valuable is your segmented campaign?

If your campaign has little or no relevance to your targeted customers, it will have no value. If it’s not valuable it will not be engaged with. And if it’s not engaging it will fail. Two important factors that can have a significant impact on the value of your campaign are keeping your customer details up to date and knowing when to send your campaign.

Don’t use dirty data

Keep your customer database clean. Ensure that customer email addresses are current and that customer profiles remain up to date. This will help reduce bounces and provide more relevant messages to your customers. Keeping your database clean will also give you more accurate data to analyse.

No matter what type of marketing campaign you’re creating, you will have lots of data. But with so much data to manage, it can be difficult to determine what to analyse, which metrics to create, which relationships matter and, more importantly, what generates the highest ROI.

If you’re basing you campaigns on outdated, duplicated or flawed data, your segmented campaign will underperform. There is also the issue of brand credibility. For example, sending a duplicated message to the same customer looks very unprofessional and it can be annoying for recipients.

If your segmented campaign isn’t relevant to the target customer, they will not act on it and they will likely be irritated that you have wasted their time, eroding brand integrity and driving customers to your competitors. Remember, if your marketing message isn’t relevant to your target customers, it’s junk.

When to send

Your customers will respond differently when contacted on different days of the week or times of the day.

You may find that working professionals are more likely to respond to your marketing communications during weeknights, for example, while stay-at-home parents respond during weekday afternoons. Sending emails outside of those times might lead to your message falling on deaf ears. The best time to send marketing communications will vary from business to business and segment to segment. There’s little point scheduling your campaign to be sent at 1pm if it's 11pm in your segment’s time zone, or sending to a retail worker during shop opening hours. Reaching out to your customers at the optimum time means they are more likely to engage with your campaign, more likely to click-through and more likely to convert.

Final thought

Smartly segmented marketing communications will better engage your customers. If you target your customers well, using a data-centred approach, you will be offering them more relevant and more valuable experiences with your business, helping to build brand integrity and encourage customer loyalty and advocacy.

Segmentation should be viewed as a process and not a goal to be achieved. Maintaining your customer database and keeping detailed and current customer information will help ensure that your segmented campaigns are as impactful and successful as possible.

Does your business get the most out of segmentation? Do you need help analysing your customer data? Get in touch today with one of our digital marketing specialists and find out more about how to maximise your segmentation strategy.

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