For companies that included segmentation as part of their marketing campaign strategy, 84% indicated that strategic customer segmentation was helpful in targeted promotions, and generated a lift in their campaign results (DMA Postal & E-Mail Marketing Report).
DMA 2005 Customer Prospecting and Retention Report showed that customer segmentation is rated as “very” important by 55% of all respondents.
How can you maximize your customer segmentation efforts? Use the following strategies to help you intelligently segment your customers:
Strategy #1
Decide what data you need in order to properly segment your audience.
You need to identify the right data before you can properly segment your audience.
Overall, most companies developing custom segmentation models have used behavioral (purchase) data, demographic data, and personal judgment as the key inputs (DMA 2005 Customer Prospecting and Retention Report).
If you are initiating a campaign for a home and décor magazine, maybe the following fields would benefit your segmentation exercise: age, income, gender, homeowner/renter, and marital status. By looking at the historical purchases, you may find that one group purchases decorative items on a regular basis and would be more interested in a campaign that highlights the different décor tips in the magazine Another group may buy big ticket items only once a year, and be more interested in a campaign that emphasizes how the magazine articles help them select furniture wisely.
Strategy #2
Closely review the results of similar campaigns conducted previously.
Detect patterns that show how similar groups of people behave the same way, and identify what articles they clicked on, what products they purchased, which services they selected, etc.
Some firms rely on teams of statisticians to analyze the data and identify the patterns, while others rely on technology to find similarities. Whatever method you choose, use historical data to help you learn how you should proceed going forward.
Strategy #3
Ask your customers for profile information.
In a study conducted by ChoiceStream, age groups in the 18-34 range appeared more willing to provide demographic (63%) and preference (71%) data. For the 55+ population, the percentage is slightly less - 49% for the demographic data, and 57% for the preference data.
Even though privacy is an issue that is forefront in many consumers’ minds and they feverishly protect it, the numbers show that people are still willing to provide personal data, as long as they know it will be properly used to help them receive relevant information. Therefore, ask your customers for profile information, and use it to accurately match your offerings to their wants and needs.
Strategy #4
Use collected data and personal judgment to help you perform proper segmentation.
Review the patterns that you were able to gleam from the results you collected. Maybe the results show that you should segment your audience into four different categories, depending on their age and income bracket. However, based on your experience working with a particular age bracket, you know that there is further segmentation that can be done to deliver more relevant content. Even though this did not show up as part of the data, you can still segment your audience into five groups instead of four, and ensure that the most relevant content is displayed for each group.
Segmentation is not an exact science. It is an art. You should allow your personal judgment to come into play, and help you perform the most logical segmentation.
Strategy #5
Use technology to help you with segmentation as much as possible.
When you use technology to help you with segmentation, you are letting it do the heavy lifting. You are leveraging its strengths, to help you be as efficient and effective at your job as possible.
What takes you days to sift through may only require hours from a robust segmentation engine.
Sit down and think through carefully what type of segmentation information you would like to receive from the chosen segmentation software. Thoroughly research the capabilities, and choose the segmentation software that best matches you business needs. Then, reap the rewards.
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