The era of personalization has arrived and no one sees the same collection of ads on TV, everyone enjoys banners of relevant products that they might actually want to buy.
At this point, customers themselves prefer personalization. 71% of them are frustrated when purchases feel impersonal and 91% are more likely to buy from companies that offer relevant product recommendations. If you don’t have personalization, you’re far behind, both in the eyes of competitors and customers.
Audience segmentation is a great way to personalize your customers’ experience. Read on to learn more about the benefits and best practices of customer segmentation.
What is audience segmentation?
Audience segmentation is a marketing strategy where you divide your large audience into small groups and offer them different recommendations and types of content. Segmentation can be done based on location, gender, age, etc. So, for example, you can send promotional emails offering umbrellas to audience segments that usually have rain in their towns or cities.
It is important to always keep an eye on your numbers and the performance of your team. We recommend our guide where we explain What to do if your sales are going down.
Once you divide large groups into smaller ones, you can send them different product recommendations, tailor images or voice tones to your liking, and send more personalized emails and relevant content.
Why is segmentation important in marketing?
Audience segmentation takes some effort on your part: you’ll have to collect a lot of customer data, try to create groups in the most efficient way, and then figure out what that group likes best. So does it really matter that much? Worth the effort? Or is it just another marketing buzzword? Why do companies use segmentation?
Let the benefits of customer segmentation answer those questions for you:
Better customer retention
They say that communication is the key to customer retention, but we often forget that this communication must be relevant. It really is a hit or miss situation. If you send personalized messages to certain groups of more or less interested customers, they may like your brand even more. But if you bombard consumers with completely irrelevant information, you can lose even your most dedicated fans.
80% of customers who consider themselves frequent buyers say they only buy from companies that provide personalized shopping experiences. Therefore, audience segmentation is a successful move here.
More new clients with fewer resources
51% of retail shoppers expect brands to anticipate their needs and provide relevant product suggestions, even before making contact with that brand. Therefore, segmentation is of great help in targeting a target audience. In fact, it is one of its main components.
So, let’s say you didn’t do your targeting homework and let 1,000 people see an ad for an anti-aging cream for women. You hope that 50% of the people who saw your ad are women and that at least 25% of them are over 35 years old. However, people aged 65 and 35 may want the cream for different reasons and prefer different tones of voice and aesthetics. Therefore, the percentage is reduced to 10% of people who might be interested. At least half of them will already have cream, so you’ll be left with only 5% and wasting 95% of your resources.
Don’t lose your customers with an empty experience, check out our Guide with the best strategies to offer value to your customers.
Now, if you segment your customers, you won’t have to target men, women under 35, and those who don’t appreciate your communication channels and tone of voice. Then you would spend the same money, but attract many more customers, which is a marketing dream, right?
Higher earnings
According to the McKinsey report, retail companies can expect to earn between 3 to 5% more sales by running personalized marketing campaigns for different segments of their audience.
Plus, by retaining customers and increasing your conversions through segmentation, you can significantly increase your revenue. There will be more customers and they will spend more money over their lifetime, so it’s a win for you no matter how you look at it.
Four types of market segmentation
You can divide customer groups based on different characteristics and your message will differ in various ways based on that. So, let’s look at four types of market segmentation.
Demographic
It is one of the most popular types of segmentation in marketing. Your main focus is who, which means your targeting variables are gender, age, income, religion, and profession. For example, it is not the best idea to show ads for luxury brands to people with a lower income level or promote Barbie dolls to older adults.
Geographical
Geographic type consists of categorizing customers according to their location. It is not the most popular type of segmentation because it is too broad, but it is widely used as a complement to other types of market segmentation. Depending on location, you may want to reconsider your language and currencies, as well as message and imagery, because different cultures value different things and may find things offensive that are completely normal in your culture. You can also send messages based on local weather, important news, events, holidays, etc.
Psychographic
The psychographic type of segmentation focuses on personalities. You divide customers according to their interests, lifestyles, values and beliefs. This is one of the most powerful types, but also the most challenging, because you will need to do a lot of research to implement it, especially in surveys. Google Analytics does not provide clean and simple charts compared to the previous two types.
Behavioral
Behavioral targeting is based on your customers’ previous interactions with the company, including their spending, purchasing, and browsing habits, their brand loyalty , and their recent product reviews. For example, you wouldn’t give returning customers a coupon for their first purchase and you wouldn’t offer loyalty program sales to newcomers.
Customer Segmentation Best Practices
So how exactly do you collect all your data? Where do you incorporate your findings? Are there customer segmentation techniques to get the most out of segmentation? Let’s find the answers below.
Create customer profiles
So you decided to try customer segmentation, what’s next? At first, you need to decide the type of targeting you want and collect data from available sources. If you choose demographic, the simplest type, you can find all the information about your audience in Google Analytics, the e-commerce platform or customer relations software you are already using. The same goes for geographic and behavioral types.
For psychographics, you’ll need more information than that: the most accurate way to get information about your customers’ interests and lifestyle is through surveys and interviews, you can also use third-party researchers and data providers, as well as segmentation software. of marketing.
You can create typical customer profiles once you have all the data in place. For example, Cristina, woman, 35 years old, lives in Guayaquil, uses Facebook more frequently than other communication channels, is married and has two children, has a medium income, likes yoga and dogs, her typical day is, etc. . create as many of them as you have audience groups.
Write down the needs of the group
It is not enough to know how different your customer groups are, it is necessary to know their needs and preferences: what type of products they may be most interested in, what problems they have that this product can solve, what are their preferred communication channels, what types of colors and fonts seem more attractive to them, etc.
Here is an example of how you can structure all the information about different user segments:
Prioritize your segments
Some customer segments are larger and more valuable than others. For example, you may see women as potential buyers of men’s cologne because they may want it as a gift for their husbands, fathers, brothers, or boyfriends. However, they will generate less profit than real men and you may want to focus on them on specific days, such as Christmas, Valentine’s Day, etc. instead of all year round. It will not be the smartest decision to put all your efforts and research on women while your main consumers are men. So learn to prioritize and work hard for your most important segments.
And yet, it’s vital to consider seasonal marketing. We recommend our articles on seasonal marketing, we have a Guide for a spring campaign, a summer campaign and an autumn one.
Tailor your emails to consumer segments
If you’re wondering where to use customer segmentation, emails are usually the first option. Millennials, for example, hate seeing irrelevant emails, 70% of them will be directly annoyed if brand communication is generic.
Then, send emails with different product recommendations, news, and visuals to different segments to keep retention rates high and unsubscribe levels low. Below, you can find an email with highly personalized content that is perfectly tailored to the needs of a chosen consumer segment.
Provide only relevant content
Audience segmentation is not just about relevant product recommendations, but also content suggestions. For example, if we are talking about sports websites, you will have to rely on psychographic segmentation11 and give them content based on their interests, whether they are articles about gymnastics, losing weight or fishing.
Consider segmenting your chatbot audience
You can also teach chatbots to take different customer segments into account. For example, there is an option to do a personality match based on the user’s questions: if you use an official tone and react negatively to funny GIFs, the chatbot will also use a more official tone, but if you enjoy funnier conversations, it will go along the designed paths.
Chatbots can also give recommendations based on small surveys. Make sure you have created the survey based on your customer segments and their needs to find the perfect product.
In summary
Audience segmentation is a powerful marketing strategy that allows businesses to stay ahead of the competition in the era of personalization, increase revenue, and build better customer relationships.
You can segment customers based on demographic, geographic, personality, or behavioral data and create segments based on data from Google Analytics, CRM, CMS, customer surveys and interviews, third-party data companies, and marketing segmentation tools.
Once you have all your buyer personas, you can start implementing your new insights into product recommendations and content on your website, in your emails, and in chatbots.
