Segmentation – the process of grouping your customers based on a shared set of definable characteristics – is a powerful tool in a marketer’s bag of tricks.
By segmenting your audience, you create broad groups of the people you want to reach most, because they tick a few important boxes that make them more likely to go for what you’re selling.
Every marketer on the planet has embraced this kind of targeting, but are they using it correctly?
When you apply too many filters to your segments in the search for an ultra-specific customer group, you’re at risk of over-segmentation.
Marketers want more granularity. Once they’ve created a valuable segment, they usually want to tack age groups, income or geography to the initial findings, to make their campaigns more relevant and targeted. But, while it might seem counter-intuitive, this can actually be a hop, skip and a jump to worse results.
An unfortunate side effect of over-segmentation is that you’re simply decreasing the pool of people you’re making your brand available to. The more filters you add, the smaller the prospective audience. And the smaller the audience, the more people you’ll have to convert to make the campaign worthwhile. With a larger pool, there’s more chance for a greater commercial result, simply by there being more people to talk to.
Say you’re chasing 1,500 sales. You have a small segment of 1,500 people, and another bigger segment of 15,000. To hit your sales target, you’d need to convert the entire small segment. But you’d only have to convert 10 per cent of the bigger bucket to get the same result. That leaves you a significant audience that you can try to re-engage in different ways – rather than targeting the same smaller segment over and over again in the hope that they keep coming back.
To combat an overly narrow focus, look further afield. Casting a wider net with your segmentation can provide an insight you might not have seen or considered. For example, while your product is aimed at one audience, another group might be buying it.
Consider gaming consoles. It’s a rare child that has more than $500 to buy a console. But parents, grandparents and other relatives are all in a position to drop the required funds on that purchase. If you were to focus only on kids living at home aged between 12 and 18, the people most likely to play the consoles, you’re missing the group that are going to pull the trigger on the spend.
Looking for the one clear insight that will give you an avenue to your audience is a more desirable goal than seeking to define a hyper-relevant, granular segment. Clarity is the key.
It’s worth remembering that marketing is balanced between brand building (which doesn’t deliver on immediate sales but builds perception of the brand over time) and sales activation, which doesn’t create an emotional connection but can make someone purchase now. Brand is sowing the seed; activation is harvesting it.
With a larger segment, you’re able to reach a wider audience with brand awareness messages that position them for later sales activations. Building familiarity, knowledge of your offerings and an idea of who you are as a brand is a long-term strategy that will deliver significant returns, compared to focusing solely on a small segment you know will convert in the short-term.
While it’s critical to make sure your message is relevant to its target audience, making that audience too narrow could lose you potential customers. Focus on trying to gain one clear insight that links your consumer behaviour with the commercial outcome you want. This is your ideal audience segment. Once you’ve got it, stop looking for the gold at the end of the rainbow. After that, every segmentation step you take is eroding the value of that ideal outcome.
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