Right offer, right audience, right time—those have been marketing’s three tent poles since most of us can remember.
But in an age of ever-accumulating data, consumers have come to expect a much more refined and personalized relevance from the advertising they receive, both online and offline. With so much data at our fingertips, marketers would be remiss not to give the people what they want. That’s why data segmentation is more important than ever.
What is data segmenting?
Segmenting in theory is a simple concept: group customers with similar demographic profiles, attitudes, purchasing patterns, buying behaviors or other attributes together to help understand them more thoroughly and market to them more effectively.
There are countless ways to slice and dice your customer database and there is no one right way to do it. It all depends on your organization and the marketing goals you want to achieve. Here’s just a sample of the kind of data you can collect, cross-reference and drill down into to understand your customers better:
Demographic variables: age, gender, race, education, occupation, income, religion, marital status, family size, children, etc.
Geographic variables: zip code, state, country, region, climate and population.
Psychographic variables: lifestyle, values and attitudes.
Behavioral variables: product usage rate, brand loyalty, benefits sought, etc.
Purchasing data: usage, frequency and monetary information.
Frequency: customers who purchased frequently tend to buy again.
Obviously, knowing who your audience is and where they live is essential. Most marketing is based on at least a rudimentary understanding of those aspects. But it pays—in both revenue and savings—to drill down deeper and target campaigns as specifically as possible.
Use segmenting to identify unique motivators
Think about your local pizza shop. Their customers include college students who want a late-night study break, frazzled working parents who swing by to pick up dinner for the family on their way home, and businesses who order in pizzas for working lunches or employee events. They all buy pizza, but what motivates each of them is very different. That’s why developing clearly defined buyer personas is an important part of the segmentation process.
Target offers toward behavior
Not only are your customers not all the same, they are at different points in the buying process with your company. Consider the local pizza shop again: you have those who have downloaded an online coupon or received the pizza shop’s mailer but haven’t yet been enticed to order; the customers who stop in 1-2 times per year; and those who are on a first-name basis with the staff and can simply order by saying “I’ll have the usual.”
The same offer and message will not appeal to each of these customer groups equally. And each of these customer groups likely prefer to be communicated with in different ways (yet another way to segment).
Protect your bottom line
But the most compelling reason to segment is that you most likely don’t have an unlimited marketing budget. If you’re taking a one-size-fits-all approach to your marketing, you’re simply throwing money away. Segment your data, tailor your messages and offers accordingly, and enjoy an increased return on your marketing investment.
Not sure where to start?
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Editor’s note: this blog post was originally published in January 2015 and has been updated to include additional information.