Master targeted advertising with multi-layer segmentation
Segmentation and personalization will smash your targeted marketing and targeted advertising strategy. Here’s what you need to know to get started.
One of the big decisions you need to make as you start out your business is who your ideal customer is. Is your new dog walking service catering to the pains of urban millennials, or suburbian senior citizens? Your first marketing efforts will naturally be geared towards that pillar customer persona you define and build.
But as your business grows and your products evolve and diverge, you will want to communicate your offers to other relevant audiences too. Perhaps those will be more concrete instances of your main persona, i.e. urban senior citizens who have pets, but they may also be completely outside your initial framework, for example singles who own pets and are planning a trip abroad. And because you know that relevancy is a major contributor to the success of your campaigns, you’ll realize that your initial customer persona has become both too general and too restrictive.
The time has come to start segmenting your audiences.
Personalization means segmentation
Segmentation is the practice of dividing and organizing your brand’s audiences in meaningful, manageable ways, allowing you to target customers and prospects with messages you’ve carefully tailored to their preferences, demographics, values, self-perception, outlook, and level of interest in buying.
Getting it right involves careful analysis and organizing of the data you’ve collected on your target market and target audiences, as well as on your existing customers.
The four most common types of customer segmentation are:
- Demographic Segmentation
- Geographic Segmentation
- Behavioral Segmentation
- Psychographic Segmentation
Let’s take a closer look at each.
Segmenting your customers based on demographics takes into consideration the factual, “on-paper” characteristics of your consumers. These characteristics include a customer’s gender, race, age, family status, income, education, and occupation.
Analyzing these characteristics can help you form an idea of who your customers are. For example, you might find that one group of your customers is mainly made up of 32-36 year-old moms making $60-80K a year, while another prominent segment features 54-60 year-old women with an advanced degree and an annual salary of over $120K.
This information will give you a general idea of how your product or service might fit into a specific customer’s life. This in turn will help you create targeted messages for this persona, increasing the chances that they’ll engage with your brand.
Geographic segmentation is a no-brainer. It provides you with information about where your customers live in the world. Although this data is specific (country / state / city) it provides wider context by helping you understand the type of area your customers come from (urban, suburban, rural), the climate they’re used to and the language they speak. If you’re selling windsurfers, you’d want to target audiences living in beach towns with a mellow climate, and not, for example, in rural Alaska.
The “behavior” in the title refers to how your customers operate as consumers. Compared to the demographic and geographic segmentation, behavioral segmentation is more complex and relies on a deeper analysis of your data.
Behavioral segmentation looks at your customers’ buying patterns, whether they are heavy or light users of what you sell, degree of loyalty to your (or another) brand, whether they buy for a particular occasion only (and if so, which occasions), what kinds of things they use your product or service for, and which specific benefits they emphasize, make use of, or value the most.
The main purpose of analyzing your customers’ behavioral data is to understand what causes them to make purchases, to become loyal, or to churn or defect to a competing company. Campaigns based on this data will reach your customers or prospects at their current place along your funnel, with messaging that will emphasize their specific pains and related product benefits, making them more likely to convert.
Psychographic segmentation categorizes customers based on their personality, their lifestyle, and their social class. It pertains to attributes such as personality traits, lifestyle indicators, hobbies, interests, opinions and attitudes.
Psychographic data will give you the most complete picture of who your customers really are, what makes them tick, and how you can add value to their lives. However, psychographic insights are not as straightforward as demographic, geographic or even behavioral data. Indeed, they are the hardest insights to tease out of your data, and demand substantial analysis. But they're worth the effort: basing your messaging on psychographic insights is a powerful way to influence your audience.
The more layers the better
The more multi-layered your segmentation is, the more personal and therefore effective your messaging can be. Take baby products. Google discovered a few years back that only 40% of people who buy things for babies actually have a baby in their house! This means marketers need to establish target audiences well beyond parents and guardians of babies when creating campaigns. It also means that using behavioral data to retarget ads for regular purchases, or which presume the buyer has a baby of their own, may go down like a broken elevator.
Instead, marketers need to carefully cross-reference demographic, geographic, behavioural and psychographic data to figure out less obvious segments — grandparents, godparents, doting aunts and uncles, friends of people with new babies, and so on — and to make sure they’re targeting the right messages at the right people at exactly the right time.
This is fiddly stuff. It takes an eagle eye for detail, an ability to make intelligent connections between pools of data — and, underpinning it all cutting-edge, agile technology that helps you sort through data fast to balance speed and accuracy. Done right, though, it will help you spot potential mistakes, pull a campaign back on track and win over new audiences fast - while your competitors are left holding the baby.