Your Piece of the Pie: Five Steps for Segmenting Your Audience
ADOTAS – GM or Ford … Grand Canyon or Paris … What do buying a car and planning a trip have in common? Both activities are among the most common types of online search. Data shows that 85 percent of people purchasing travel do research online (Google) and more than 70 percent of new and used vehicle buyers said they used the internet while shopping for their vehicle (Autotrader.com).
The journey that car buyers, travelers, and consumers of all types of goods and services take from awareness to purchase is now a multi-touch journey that most often begins online. This change in our buying behavior has happened extremely rapidly, and the pace isn’t slowing. Consider these statistics:
• 83 percent of shoppers make their purchase decisions prior to entering a store. In 2007, only 60 percent did.
• 70 percent of Americans say they look at product reviews before making a purchase.
• 79 percent of consumers use a smartphone to help with shopping.
• The average shopper now uses just over 10 sources of information to make a decision, up from five a year ago. (Google, 2010)
These statistics demand a new approach from marketers. Instead of being exposed to brands linearly from awareness to engagement to purchase through a predictable series of channels, consumers now journey through multiple channels simultaneously to pull the information they need. This change – along with the Social/Local/Mobile revolution and consumers’ expectations for personalization — means one can no longer address internet users via one channel only or a one size fits all message. It’s harder than ever to engage the attention of these multi-media multi-taskers. Mass marketing, while it does present a consistent brand image, will simply seem irrelevant to a majority of consumers, waste valuable marketing resources, and lower overall ROI and conversion value.
The most successful marketers will be those who integrate the right channels to engage some targeted users with a consistent relevant message across that journey — while making the consumers’ experience appear seamless.
Delivering only relevant messaging to each customer segment is one way marketers can satisfy customers’ demands
and avoid reaching out to uninterested customers who will likely ignore unwanted information, or worse, become annoyed by it.
Integrated digital marketing requires a deep understanding of how and where your customers engage with your brand. This means thoughtful and thorough analysis of suspect, prospect and customer behavior, even before they indicate interest in your product or service. Audience segmentation will enable organizations to target only those customers who will be positively influenced by a marketing campaign, helping to reduce campaign costs, improve customer experience, increase customer lifetime value, and improve retention.
“Audience segmentation is both the anchor point and pinnacle of digital advertising. The degree to which segmentation is applied during a campaign is the degree to which a brand creates relevance for the consumer,” said my colleague Nick McLain, vice president of strategy at Geary LSF. “As digital marketers we must continue to refine audience segmentation until we can reliably communicate at the ‘individual’ level. We have only begun to break the surface of automated, one-to-one, communication strategies — where audience segmentation is the means and the end.”
For decades, profiling and clustering systems have made predictions and assumptions to classify customers or prospects into similar groups for marketing segmentation. Such systems use demographic and marketing data points to categorize customers or prospects into distinct groups that supposedly fit a certain lifestyle or behavioral profile. Newer, more sophisticated techniques now allow companies to identify and predict online consumer behavior.
For example, online ad serving networks have developed the capability to analyze the behavior of users and build “look-alike” profiles that can be used to predict the behavior that prospects exhibit prior to beginning an active search for information on specific industries or products. This insight can be used to serve display ads to prospects before
they have “raised their hand” by performing a search. This increases the likelihood that when consumers do begin to seek information actively, they may search for a specific brand or even use terms in their query that they picked up from a display ad purchased through a paid search campaign. This improves the probability that a prospect will
ultimately land on your website rather than your competitor’s.
It’s possible with a multi-touchpoint approach and some effort to understand and reach your target audience. Here are five steps to developing a solid segmentation strategy:
1. Invest in your database.
The capacity to define, investigate, segment and target the most promising consumers depends on investing time and money in database building and management. In addition to capturing important demographic criteria, newer platforms also enable identification of online habits and behavior. Understanding their media habits will enable you to offer relevant content or calls to action based on demonstrated or anticipated needs.
2. Define consumer needs.
Any CPG marketer can vouch for the different consumer needs of new parents, recent graduates, families with children, and empty nesters. Identify and target the segments that are relevant to your industry to make timely offers to each and reap the benefits of relevant, engaging and useful messaging.
3. Reassess regularly.
For many marketers, setting a segmentation strategy becomes a one-time tactic, often done in line with a site redesign, technology change, or annual marketing campaign. Make it standard practice to revisit your segmentation methods and reassign individuals to new segments as their behaviors — or demographics (e.g., age) — change. Continually
rebalancing your segments increases your ability to run super-specific marketing that resonates, engages, and maximizes response.
4. Don’t assume.
Digging into your customer data — demographics, offer responses, media preferences, survey answers and more – allows you to verify or dismiss assumptions about your customers that may be untrue. Unique segments deserve unique treatment. Get to know who your customers really are and be prepared to invest the time and resources needed to connect with them.
5. Avoid the easy out.
Though many marketing tactics may offer an “easy out” via large-scale generic campaigns, consider the financial and image risks of appearing irrelevant to a majority of recipients. For example, email blasts may seem like a quick, low-cost way of addressing a company’s entire customer base, but untargeted emails miss the opportunity to engage
customers on the personal level that those customers now expect and worse, can drive customers away with irrelevant products or services.
Effective audience segmentation demonstrates to consumers that you know them, have anticipated their needs and, most importantly, can offer them something relevant. Only marketers who understand their needs, behavior and habits — and target them appropriately — will be able connect with consumers on their digital journey.