Segmentation: Making Your Marketing Efforts More Relevant

You’ve done a thousand things to make your marketing stand out from the crowd, but something’s just not working. You’re not getting the hits on your website you were expecting, and the direct mail pieces you sent are just not getting the expected response. What’s the catch?

Maybe you’re not segmenting your database as effectively as needed. Segmentation, after all, is the key to talking to the right people at the right time. Without it, you’re just sending messages into space and hoping someone, somewhere will catch onto your messages. And, with the cost of all forms of media rising that is not a cost-effective endeavor.

With this in mind, let’s take a deep dive into the properties of segmentation and what it can mean for your marketing efforts.

Marketing 101: What is Segmentation?

By definition, marketing segmentation means grouping people who are similar together so marketers can create messages that speak directly to their consumers’ wants and needs. Segmentation can include any of the following elements:

  • Where people fall within the sales funnel
  • What consumers’ known buyer behaviors are
  • Where customers are located geographically
  • Age, educational background, annual household income and other demographics
  • Whether or not prospective customers have bought from your brand before, how recently and how much have they spent

While you may not have all of this information at your fingertips, the more you utilize the information you do have, the better you’ll be able to perform proper segmentation. In turn, the advertisements and messages you’ll send to your leads and customers will be more productive. In the end, segmentation allows marketers to target and personalize their messages in ways that make sense to their audiences.

Why Does Segmentation Matter?

You never want your marketing messages to fall on deaf ears. Unfortunately, that happens all too often when segmentation isn’t put into place. Even worse, you could wind up sending long-term customers away if your lack of segmentation offends them and you don’t recognize the established relationship.

Let’s take a look at an example. Say you operate an HVAC company, and many of your long-term customers have been with you for years. However, because you don’t segment your customer database, you don’t know the difference between recent customers and consumers who once simply inquired about your services. You send a winter tune-up reminder to customers who just bought their HVAC systems from you two months ago. Suddenly, those people who have spent hundreds or thousands of dollars with your company feel invisible and unrecognized.

Let’s look at the other side of the coin. You’ve properly segmented your database based upon past purchases, and you know which customers are most likely in need of an HVAC tune-up before winter hits. You send those customers a friendly reminder, including the last date in which your team serviced their furnace, and your service calendar fills up.

Why? Because people want to feel like they matter, and they appreciate being treated like an important building block in businesses’ strategies for success.

Segmentation also allows you to prioritize your target audiences, so you use your energies and budget on consumers who are most likely to convert into paying customers.

How Marketing Segmentation Allows You to Speak to Your Audiences

Once you’ve defined and segmented your audience, you can allocate your resources in a more effective manner. The end goal is to speak to each segment in a language that suits their unique buyer journeys. Here’s a look at how a well-created segmentation framework can benefit your business:

1. Serving customers’ wants and needs

75% of email recipients are more likely to click on emails from segmented campaigns versus non-segmented campaigns. That’s because the messages—from the subject line to the call-to-action—are tailored to individual buyers’ needs and wants.

2. Up-selling and cross-selling across the customer journey

Segmentation enables you to understand your customers and what they may be looking for so you can find ways to offer more products and services that will enhance their lives (i.e., upselling and cross-selling). The goal is to increase the value per customer.

Need proof? Here are some examples:

  • Amazon attributes as much as 35% of its growth to cross-selling through its “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” features.
  • A 2015 study by Bain & Company revealed that telco customers were spreading their mobile, internet, landline, and TV purchases across three or four providers. Getting just 10% of those customers to switch was worth $480 to $630 million annually.

3. Creating sustainable customer relationships in all phases of the buyer journey

Customers often change their behaviors or preferences. If you have different segments across your organization, you can hand-hold customers from one stage of buying to the next by analyzing and understanding their motivations. In this way, you can offer customized solutions that are applicable for various stages of the buyer journey.

For example, a car dealership may have a customer who’s just getting her license and needs a good first car. Through segmentation, the dealership can reach out in a few years to offer an upgrade that’s fun for a young professional. Over time, that customer might begin seeing advertisements for family-friendly cars. This is how segmentation facilitates the lifecycle of long-term customers’ buying patterns.

How Can You Optimize Your Segmentation Efforts?

It may feel overwhelming in the beginning, but just remember the benefits. You’ll be able to create better relationships with your customers, boost engagement with prospective buyers, be more cost-effective and ultimately cross-sell your existing customer additional products or services. Your marketing team will have the tools they need to talk to people in a more personalized manner with messages that resonate with specific audiences. Look online for tools that can help you learn more about segmentation, or skip that step and head straight for marketing pros who can guide you through process and apply their experience and knowledge.

If you are interested in professional guidance for effectively segmenting your customer database, The Weinstein Organization can help. Reach out to us for a no-obligation consultation!