Segmentation is the practice of dividing a large group of people into sub-groups that share characteristics. A group of Millennial men, for example, might be broken down into “Busy Dads” or “Striving Singles.” Whether it’s the hokey persona names or debate about whether dividing consumers into distinct categories actually works, segmentation studies have their skeptics.
In the coming years, that skepticism will diminish. We’ve never had more data about consumers, and we’ve never had more powerful ways to analyze them. We’re about to enter a golden age of segmentation.
Melding New Tactics With Old
Demographic segmentation will always have a place, since it makes sense for some businesses to target their offerings by age, gender, or region. That said, the increasing amount of compelling data available on consumers, in conjunction with improved research techniques, allows sophisticated researchers and marketers to go well beyond basic demographics. Researchers who model their customers’ perceptions and behavior more accurately will:
- Stay ahead of trends
- Validate new target audiences
- Anticipate customer needs before they happen
- Give a face to a target audience—bringing them to life beyond demographic stats
We’re proud to use these emerging techniques that help our clients stay ahead of the competition.
Customer data is valuable, but doesn’t tell a complete story. It doesn’t tell you anything concrete about people who aren’t yet customers, and it may be thin on your audience’s unanticipated needs. Often, companies have more than one customer or user database. Which one to use?
To remedy these challenges, we do original research on a company’s customer base, then fuse it with their existing databases and applicable secondary sources.
Secondary sources answer questions that a customer database can’t. Have they done recent home repairs? A survey a customer filled out five years ago won’t say. Do they have cats or dogs? An appliance company is unlikely to have asked. What do they value? Customer questionnaires rarely achieve such a deep level of understanding.
By combining primary research, existing data, and reliable outside data we’re able to develop a deeper understanding of an audience. This understanding goes well beyond demographics and can drive a more nuanced, more successful strategy.
Thanks to Internet browsing data and social media advertising, companies can now target customers in ever-smaller numbers. These micro-segments can be incredibly profitable—if you know what they are.
We define micro-segments as sub-groups within a larger traditional segment, defined by niche behaviors or interests. While there is a near limitless range of criteria to create a micro-segment, we suggest identifying micro-segments that have directly actionable marketing implications. For example, a marketer may generally target young music fans. Micro-segmenting could allow that marketer to advertise a new vinyl record release to vinyl enthusiasts from one of their favorite bands, while advertising that same record in digital or streaming formats to that band’s other fans.
Often we find that the same person belongs to more than one micro-segment. Smart marketers can use this information to deliver near-personalized messages to their target consumers—employing machine-learning and artificial intelligence to help.
The Glorious Future of Segmentation
As data collection increases alongside processing power, segmentation will only get better. We envision a world where, consistently:
- TV executives drive social media buzz with a guest appearance from an actor beloved by an influential micro-segment
- Product managers anticipate features based on the changing Internet browsing behavior of their target market
- Fashion brands identify and successfully target potential consumers by matching their social media behaviors with those of existing customers
The era of mass marketing is coming to an end. From media to fashion, brands are finding success by starting small, making a strong connection with consumer needs, and riding a wave of deep engagement. Increasingly, companies will vie for supremacy within smaller and smaller customer niches. Advanced segmentation techniques will help them stay ahead of the competition.