Segmentation is an art you need to master to be able to create Personalized Marketing & Communication. In this post we will cover how to master Segmentation to create Personalized Marketing & Communicaiton. Solarplexus helps you cluster your data and do the segmentation for you, but it’s important to have a basic understand on what segmentation is and how to do segmentation for marketing.
Why segmentation?
In today’s competitive landscape, one-size-fits-all marketing strategies are no longer effective. Consumers crave personalized experiences, and business must respond by tailoring their marketing and communication efforts to meet individual needs and preferences. Segmentation, the process of dividing a market into distinct groups with similar characteristics, lies at the heart of creating individualized marketing and communication assets. Therefore, we will explore the importance of segmentation and provide a comprehensive guide on how to effectively implement it.
What is Marketing Segmentation?
Segmentation involves breaking down a heterogeneous market into smaller homogeneous groups based on different variables. These variables can be demographics, psychographics, behavior, and preferences. By segmenting your audience, you can better understand their unique needs, pain points and motivations, allowing you to deliver targeted messages that resonate to each segment.
Why Segmentation is important
Segmentation is important for several reasons:
- Personalization: Segmentation enables personalized marketing and communication, leading to higher engagement and conversion rates. By tailoring your messages to specific segments, you can deliver content that speaks directly to their interests and desires. 78% of consumers expect personalized and tailored communication from the brands they interact with.[1]
- Efficiency: It is getting more difficult to cut through the noise and conversion is steadily on the decline, from 2022 to 2023 conversion rates droped with -5,5%.[2] Rather than adopting a broad approach that may only resonate with a fraction of your audience and will be perceived as spam to the rest, segmentation allows you to allocate resources more efficiently by focusing on the segments that are most likely to respond positively to your efforts and enables you to interact in a more interesting and relevant way with them.
- Competetive advantage: Businesses that effectively segment their audience gain a competitive edge by offering a superior customer experience. By understanding their audience on a deeper level, you can anticipate their needs and deliver solutions before competitors. Expected revenue lift from personalization is 5-25% depending on ability to execute.[3]
No one has perfect data. So you start with what you got and take it from there. With the above arguments and when you see how much better personalized content performs, it will be easier to convince the rest in the organization to put down the work to collect and document information needed in your CRM.
How to do Segmentation
Now, let’s delve into how you can implement segmentation to create individualized marketing and communication assets:
- Define your Objective: Clearly outline your marketing objectives and what you hope to achieve through segmentation. Whether it’s increasing sales, improving customer retention, or expanding into new markets, your segmentation strategy should align with your overarching goals.
- Do a bottom-up analysis. Conduct a segmentation analysis to identify distinct groups within your target audience. Use statistical techniques such as clustering or factor analysis to group similar individuals together based on the segmentation variables you’ve chosen.
- Identify your best customers and which variables are most relevant for them depending on your business. These may include:
- Company (industry, no of employees, turnover…)
- Geographics (zip code, country, language, climate, urban vs rural…)
- Demographics (title, education, age, gender, income, family status…)
- Psychographics (lifestyle, values, interests…)
- Behavior (purchase history, frequency…)
- Personality (openness, consciousness, extroversion, agreeableness, neuroticism)
Most often it’s a combination, but not all, of the factors above that are relevant.
- Do a top-down analysis. When you have identified your best customers, then identify their twins, the ones that have similar caracteristics but are not yet your customers. Start filling your CRM with them as suspects and prospects.
- Collect Data: Gather data on your target audience using various sources such as customer surveys, website analytics, social media insights, and purchase history. The more data you have, the more accurate your segmentation will be.
- Develop Personas: Create detailed personas for each segment, outlining their characteristics, preferences, pain points and communication preferences. Personas humanize your audience segments, making it easier to tailor you marketing and communication assets to their specific needs.
- When doing segmentation in Solarplexus you can either connect with your CRM-system that we have connectors to and drag the fields you want to use for segmentation into the application. This might be Industry, Title, Customer status, Purchase history and more. Or you upload your list in excel and mark the fields you want to use for segmentation. If you want your output in different languages, then select language as a field to segment on and you will get it directly in chosen language.
- Craft Tailored Assets: Finally develop marketing and communication assets tailored to each segment. Solarplexus will help you do this and tailor your communication to each segment. This may include personalized email campaigns, targeted social media content, customized product sheets, or segmented advertising campaigns. Do a quality check to ensure that your messaging resonates with each segment and speaks directly to their unique needs and preferences, and you are ready to go.
Conclusion
Segmentation is the cornerstone of personalized marketing and communication efforts. By dividing your audience into distinct segments based on relevant variables, you can deliver personalized messages that resonate to each group, driving higher engagement and conversion rates. Follow these steps outlined in this guide to effectively implement segmentation and unlock the power of personalized marketing and communication for your business.
[1] McKinsey, Next in Personalization 2021
