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Marketing Tactics: Segmentation

Wednesday, June 21, 2017

  What’s so important about segmentation?

The simple answer: If everyone was the same we could sell anything to anyone the same way. But this is not the case. Surely your product or service offering is not a one size fits all model. When we segment messaging, or offers, to key groups of people, the results are better.

There are five key practices to consider when segmenting your data. They are:

1. Audience segmentation

Know who is buying your product and/or services. But don’t stop there. It’s equally important to determine who is making the decision. For example, data shows on the consumer side that women in the household make the financial decisions. But, at the same time, it may be the man who is doing the research and deciding which products to consider. On the business side, a human resources executive may be looking for a solution, but the CFO is making that final purchasing decision. And this is where segmentation becomes so important. In other words, the end user who may not be the decision maker is most concerned with features, but the final decision maker may be more concerned with cost and value.   

Fact: Segmented email campaigns produce nearly a 29% higher open rate and a nearly 50% click through rate than undifferentiated messages

2. Demographic segmentation

Once you’ve identified your audience you need to go another level down and segment based on demographic. For example, if you’re a car manufacturer you can’t always market your highest-level model. You’ll need to understand the audience better and consider factors like geography, household income (HHI), gender and more. This way, you can market the high-end to the higher HHI groups, the base models to the lower HHI groups, and perhaps all-wheel-drive models to geographical locations that have winter driving conditions. The fact remains that you can segment your list in an infinite number of ways. So you’ll need to be methodical and test everything you do.

3. Behavioral segmentation

Behavioral segmentation is a key to testing your efforts. Once you have segmented your audience, you can begin to segment future communication based on their actions. For example: for the group that has not responded, you’ll need to create a new message in hopes of getting their attention. Then there’s the group that may have responded, but not converted into a sale. You’ll need to send them a new message that gives them more reason to take the next step. There are a variety of tools to help you understand the data, so be sure you set up your campaign in a way that allows you to track actions made by your audience.  

Fact: “Segmenting the data for one client produced a smaller mailing resulting in a cost savings of 37% with a 32% increase in response.” – Nonprofit client

4. Segmented landing pages 

Once your direct communication has done its job and brought your audience to your website, you begin to have more control over continued messaging. How you manage this becomes a key factor in converting visitors to sales. Using the latest technology, your website can be set up to recognize customers individually when they visit. By doing this you are able to control what they see, using dynamic content to deliver a highly personalized experience. From simple messages like “Welcome John”, to displaying specific products or services, you want your first hit to be as impactful as possible. There is no doubt you have seen this on some of your favorite retail sites – but when it’s done well you might not even realize it.

5. Predictive modeling

Sometimes what we’ve learned in the past can be leveraged to help us succeed faster in the future. By leveraging predictive modeling, the ability to save significant costs by targeting marketing campaigns to a smaller universe of prospects that generate a higher ROI versus marketing to a larger universe of prospects becomes possible. A predictive database model looks at existing and past customer behavior and predicts future buying behaviors. 

By using a client’s existing sales data we can identify:

     The customers that are most likely to buy and at what price

     The most likely first time customers among prospect records

     The current customers that are likely to become lapsed customers

In today’s hyper-competitive environment, marketers must significantly improve the impact of every marketing dollar spent. And communicating the right offers to the right people at the right time - through the right channels – is key to optimized results.

Joe Contrino is CEO of The Contrino Group, a direct marketing agency located in Lafayette, CO.

Joe is an award winning direct marketer with over 32 of years of experience.   Prior to founding The Contrino Group, Joe was a Senior Partner at Suite 700 Direct, Integrated Marketing Solutions Manager at Henry Wurst, Inc., and CEO and owner of Contrino Direct Marketing, Boulder, CO.

Joe is a Direct Marketing Association Certified Direct Marketer Professional, Industry Co-Chair of the Denver Postal Customer Council Board of Directors, and speaks regionally and nationally on direct marketing topics and trends.

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