Segmentation - The Basics

In just about every blog we write, somewhere we will have mentioned the importance of segmenting your list of customers.

While your company may well have only one product or service, you certainly don't have just one customer type. Maybe you’re a plumbing supply company. Simple right, you sell plumbing parts and items. But your customer types? Plumbers, commercial plumbing contractors, one-man bands, DIY enthusiasts. All different types of customer with different types of spending power and certainly different buying motivations.

In this blog we are going to explore the very basics of Segmentation.

Segmentation forms the basis for an overall strategic approach to your marketing using the Segmentation, Targeting and Positioning model.

Even if you don't do the further steps of Targeting and Positioning, I promise you that your email marketing results will improve just by the application and practice of Segmentation.

Segmentation

So, thinking about that database of contacts you have. Names, emails, addresses, perhaps even purchase records. You’re sitting on your own personal gold mine of information. Now to start making that data that you created and own work for you.

Without any segmentation, your database is basically a big list. A list of many people with different interests, purchase motivations, etc. Sending your entire database the same marketing emails or newsletters is the quickest way to be ignored, unsubscribed or worse, marked as spam.

• Can you identify who are Customers (those actually buying from you) or Prospects (made enquiries, on your email list, etc. but have not purchased)?
• Sorting out Customers from Prospects would be Segmentation 101.
• Then further refine both the prospect and customer lists for the product/service that interests them (By purchase history, the enquiries made or web pages visited).
• Could your further segment be based on their interest for Premium, Value for Money or Basic products/services?
• Are they regular/repeat customers or 1-off purchasers?

These are just some very basic but effective examples of segmentation that you can easily make and that will make a big difference on your marketing results.

So, how can we achieve these segmentation's in practice?

If you have a marketing automation system then:

• Create a contact query or filter for each identified segment
• Save it as a search query or segment to use over-and-over again.
• Consider the use of tags or permanent custom fields in your database to move contacts from Prospect to Customer.
• Then repeat for each of the additional segmentation.

It's possible to layer these queries so you can refine contacts into very precise groups .

In less sophisticated systems, you could create individual mailing lists for each segment. Export a list (CSV or Spreadsheet) of all contacts and then mark each contact with the appropriate tags/segmentation's and re-import your contacts.

It will take a lot of effort to do this manually and that's just one of the reasons people use Marketing Automation. With a marketing automation platform you can do this on the fly!

Lets look at a more practical example of segmentation……. at a car dealership.

In figure 1, with no segmentation we have just a big list. If this car dealer sent everyone the same newsletter on say new 4x4 Pick-Up Trucks, how would the people interested in used, economy cars feel? Maybe they’d wonder why they were being sent information on products that they’ve shown no interest in? Quite possibly they’d unsubscribe.

In figure 2, we have done a simple segmentation based on the buyers’ needs; New or Used cars. Here we are heading in the right direction and even this most basic cut of customers will target so much better than no segmentation at all. Less chance of delete, unsubscribe or worse.

In figure 3 we are getting down to some serious segmentation based on a customers’ interests and then the ability to really personalise our marketing opens up . If we layered our segmentation; New/Used + the segments in figure 3 we can really start hitting the mark with customers.

You don't have to end there. What about a customer's value to your business? Loyalists, big spenders, new, repeat? Figure 4 adds a customer or prospects value to you. So, slice them again based on their value to your business.

By doing multiple segmentation's, you can produce some very focused marketing lists that will hit the mark and yield significantly better results than just throwing mud on the wall to see what sticks.

By doing this detailed segmentation, we have inadvertently achieved the second part of our strategy - TARGET! You now have lists ready to target your prospects with their interests!

Conclusion

Without segmentation, you are relying on luck to find and interest your customers. It’s just scatter gun and you will likely yield very poor click through rates and high unsubscribe rates. See more on email statistics here.

In 2020, prospects expect and appreciate some degree of personalisation beyond just a first name greeting. Marketing Automation takes much of the work-load away from you and allows you to become more strategic with your marketing. It also removes the need for repetitive marketing actions so you can concentrate your marketing efforts on the final part of the equation. Brand positioning and creating marketing assets.

Unlock the power of your database, segment your lists and reap the rewards.

Want to know more about marketing automation, then take action today

More Segmentation from our blogs.....