Traditionally, marketing was used to appeal to the masses. That was the quick and most effective way to reach as many people as possible. These days, technology has provided us with many new ways to interact with our customers and communicate with them in a much more personalized way. Personalized marketing has proven effective and desired by consumers. In fact, 71% of consumers say they feel frustrated when their shopping experience is impersonal. For that reason, companies should strive to prioritize market segmentation. To do also requires continuous evaluation and improvement of data collection and implementation. Below are four tips you can use to help improve your market segmentation and consequently increase profits for your company.
1. Use data vs. instincts to segment your market
As easy and comfortable it may seem to go with your instinct, I challenge you to use concrete data. While instinct can be useful at times, using data can help justify your marketing efforts and spend. What you think is a great idea, may not produce the ROI you expected. Before you take a leap and invest time, money, and resources on developing different market segments or customer personas based on instinct, consider conducting a few tests or surveys to help solidify that the results are similar to what you anticipate.
2. Consider using “benefit segmentation”
We often default to segmenting our markets based on one of four types of market segmentation. However, beyond these four types of segmentation, you should also consider benefit segmentation. This type of segmentation is based on categorizing your target audience by the value they’ll receive from your product or service. By focusing on the benefits your customers seek, you’re better able to position your marketing efforts to appeal to solving a challenge or fulfilling a desire for that particular target group. This can also assist with improved conversion rates and customer retention.
3. Think beyond just the “who”
When we think about dividing our customer personas into different market segments, we can get stuck focusing on the characteristics of the person and mistakenly exclude other significant factors. Aside from just knowing the profile of your customer, you should also think about what communication channels work best for that group along with the appropriate time for engagement. This is important to consider especially when you are trying to implement your marketing efforts for that particular segment. Without considering the most effective way to communicate or what time of day would yield the best response rate, your efforts may not yield the expected results.
Overall, market segmentation is undoubtedly essential for any business to effectively and efficiently reach their target audience. There are several benefits of market segmentation that when strategically executed can result in a positive customer experience and greater profits for your company. The one-size-fits-all approach or heavy reliance on instinct is no longer as effective especially after many marketers have started to realize the lack of return on investment. By using some of these tips, hopefully, you can find ways to improve your market segmentation and prioritize the use of data to support your future marketing efforts!