As the old saying goes, you can’t be all things to all people. The same concept holds true for brands. Each type of audience requires a different approach and often, different content. Developing, presenting and monitoring these unique messages… are at the very heart of customer segmentation strategies.
Think of it like this. Imagine that you just earned a performance bonus at work. Obviously, that’s great news. News that you’d like to share, with important people in your life. So, you’ll deliver that news with various types of content phrasing… depending on who and when you’re sharing it. With your spouse for example, they’ll receive every detail. If you have children, you may share the results merely by exclaiming, “We’re going to Disney World!” And to non-family, you will be likely just a bit more circumspect.
Think of the delivery of this type of reporting to each of these audience members as “customer segmentation.” Everyone is receiving the same news. But it’s being presented… in a different way.
And so it goes for Building Product Brands. Sales and marketing content will perform even better — when the right messages are sent — to the right audiences.
The Value of Customer Segmentation
In a nutshell, customer segmentation is the process of dividing audiences into groups that share similar characteristics… such as demographics, interests, needs or location.
The value of a customer segmentation business model can be broken down as follows:
For a customer or prospect, segmentation:
- Provides fine-tuned guidance to direct an audience to the right product or service
- Enables promises to be better tailored to meet specific needs
- Reduces the chance of overwhelming audiences with too many options
- Provides better targeted — and more relevant — messages, to help keep audiences even more engaged
For a brand, segmentation:
- Facilitates planning… since reactions to marketing activities can be better observed and more accurately measured
- Helps to identify prospects who demonstrate greater interest… and as such, are more likely to convert
- Allows marketers to get to know their communities and individual audience members even better
- Enables budgets to be allocated more efficiently across audience segments
- Makes it possible to align marketing and sales activities… leading to more sales, lower cost and higher profitability
Creating messaging campaigns — and content specific to what a customer or prospect needs — increases the chance of connecting in a meaningful way. The more specific the segment, the more likely marketers will reach — and engage — their audiences, resulting in increased brand affinity and loyalty.
The Four Types of Customer Segmentation
While there are countless ways to use segmentation, following are some popular methods designed to divide a macro audience… into more focused groups, with common affinities.
Demographic segmentation. One of the most traditional forms of market segmentation. This refers to statistical data about a group of people — for example, characteristics such as company size, corporate structure, industry type and job function.
Geographic segmentation. Categorizing audience members, based upon their geographic location. Characteristics such as ZIP codes, cities or even climates can be useful determinations.
Psychographic segmentation. Audiences can be grouped based on common personalities and psychological characteristics. Certainly, these are more difficult to identify — over say, demographics — simply because the characteristics tend to be subjective. Available data may be difficult to narrow focus and as such, may require specialized research to better analyze.
Behavioral segmentation. While demographic and psychographic segmentation focuses on “who” a customer or prospect is… behavioral segmentation helps to predict how a customer or prospect likely will “act”. This creates an opportunity to divide an audience… based upon their purchasing habits, brand interactions and social media engagement. Of course, to be most effective, behavioral segmentation requires us to know a customer’s or prospect’s current actions. As well as how they have engaged with a brand, in the past.
Benefits of Customer Segmentation
Segmentation makes it easier to target marketing efforts — and in turn, better allocate valuable resources — for reaching all important audiences. While at the same time, allowing a brand the opportunity to nurture individual customers and prospects… in more intimate ways. By breaking an audience into divisions, each segment’s particular needs can be better identified. And direction can be established for determining how to best meet those needs.
Consider these seven benefits that building product brands can achieve through customer segmentation.
Create stronger marketing messages. When you know specifically who you’re talking to, it’s easier to develop stronger marketing messages and content. As such, “actionable” insights can be leveraged to help create and execute more impactful marketing messaging. So it’s important to avoid vague, generic language that speaks towards a broader audience… rather, consider more direct messaging that addresses the unique wants and needs of individual targeted community members.
Design hyper-targeted campaigns. Digital ad targeting — applied to social media platforms — allow audiences to be grouped according to their age, location, purchasing habits and interests. This content strategy enables more relevant, and effective, campaigns to be created.
Identify the most effective marketing tactics. Not every marketing tactic will attract every ideal customer or prospect. Consider instead, applying different approaches for different audience segments — and then testing the results — to help determine the most effective marketing strategies.
Easily adjust campaigns on an ongoing basis. Creating separate campaigns for different customers — rather than a single campaign aimed at attracting all potential buyers — makes it easier to shift focus as needed, based upon the responses of specific segments.
Attract and convert quality leads. Reach and engage prospects who are likely to convert into buyers. When marketing messages are clear, direct and well-targeted… they will be much more suited to attract and resonate, with the right people.
Create brand differentiation. By communicating specific value propositions, a building product brand can stand out from the competition… instead of blending in with them.
Identify niche market opportunities. As target markets become further segmented, underserved and niche markets become even more clear… creating opportunities for developing robust pipelines of new products and services, ideally positioned just for them.
Putting Customer Segmentation to Work
Deploy these six strategies for valuing audience members.
Analyze your existing customers. Experiment with customer segmentation models by exploring in greater detail, existing audiences. The resulting analysis provides valuable lessons to learn even further about — and identify more trends that exist within — current customer databases. How are these customers and prospect similar? And perhaps just as important, how do they differ?
Study your business data. Progressive sales and marketing teams collect significant data that can help align audience aspirations. And leveraging these customer relationships via tools like Salesforce and point-of-sale management systems can help to determine trends in behaviors. Study the data that demonstrates how much customers typically spend. How often they place orders. And the types of products and services that they specify.
Use your website’s analytics. Website analytics generate valuable metrics that can help define “buyer intent”. Dig deep into this data… to learn about visitor behavior by determining which webpages users often visit. How long they stay on a particular content section. How have they accessed the site (desktop or mobile). What sites led them in, and so on.
Research your competition. Study competition to see what messages they are using. Pay attention to how to differentiate user-experiences from theirs. And determine those differentiated segmentation opportunities… that they’re missing.
Run tests. Create unique campaigns to test messages on various segments. Pay-per-click ads can be particularly helpful for this analysis. Track results and ramp up those campaigns… that resonate best.
Use Customer Segmentation to Build Better Marketing Campaigns
Segmentation helps building product brands better understand audiences and informs how to align sales and marketing goals. The strategies identify unique customers and prospects who can be best reached… and better served. What’s more, it helps uncover which new markets to consider exploring.
Looking to better target and align your sales & marketing campaigns? Whether you’re ready to launch a new program or enhance current momentum, K&A is here to help. Send an email to Steve Kleber at email@example.com to learn more.