It’s time to face the music — mass marketing is no longer the best way to reach new customers.  Marketing professionals can no longer send out a standard, one-size-fits-all email to thousands of contacts and expect a return.  The cold call is losing its value as more and more people refuse to answer the phone.  Even online adverts need to be altered, targeted and personalized to specific demographics if we want to see success.

According to SalesForce, the desire for a personalized marketing approach has become rather an expectation, with 62% of consumers expecting to see personalized offers and discounts based on previous purchases.  Personalization isn’t a new concept, and yet so many companies are behind the curve.

What is segmentation?

Segmentation is usually the first step towards personalization.  It is the term we use to describe how we, as marketers, break our target market into smaller groups that share similarities.  These groups are called ‘segments’.

In this blog post, we’ll be taking you back to basics with a look into the main types of market segmentation.  Apply these to your business’s marketing strategy and you’ll be on your way to success!  The four most popular market segmentations:

  • Behavioral segmentation
  • Demographic segmentation
  • Geographic segmentation
  • Psychographic segmentation

As marketers, we can use these segmentation tools to understand the wants, needs and expectations of our audiences.  This can help us make informed business and marketing decisions.  Let’s explore what each one can help you understand about your customers.

Behavioral segmentation

Behavioral segmentation also looks at why your audience does certain things.  In this case, it takes into consideration the buying process.  What do they think about your company?  How do they engage with it?  Are they a first-time buyer or have they been here before?  This is all extremely valuable data that can be used to tailor experiences to ensure the customer enjoys their brand experience.

Find out your customer’s behavioral traits and you’ll be able to determine how to keep them as a customer.  The same applies for B2B, too!  Think about the buying behavior of your key accounts or prospects.  What benefits are they expecting from your product or service?  Are they loyal or likely to shop around?  Who is involved in the buying process?  This will help you understand how likely or unlikely they are to purchase.

Demographic segmentation

As marketers, we throw the word ‘demographic’ around a lot.  But what does it mean?  A demographic can be defined as a particular sector of the population.  This is a pretty broad statement, so it’s important to clarify. This includes specifics such as:

  • Gender
  • Age
  • Income
  • Job
  • Religion or beliefs
  • Marital status
  • Education level

We can use these factors for research purposes, and to help us understand our audiences.  Each is extremely important and is likely to influence interests, values, and buyer decisions.  In fact, the way marketers communicate with their audience is heavily influenced by their demographic.

For example, according to Sprout Social, 74% of online women use Facebook, and so do 81% of people aged 18-29.  Compare this to Snapchat, in which 69% of 13-17-year-olds are using the platform.  Different communication platforms appeal to different demographics.  It’s important to consider this when creating your marketing plan!

As a B2B company, finding your customers can be a little more complicated.  Think about the demographics listed above and adapt them to fit a business.

  • How old is the company?
  • Is it well-established, or less well-known?
  • What is the revenue like?
  • What industry is the company in?
  • What are the demographics of the key decision makers in the company?

All these factors will impact how you approach the business and its decision makers.

Geographic segmentation

Put simply, geographic segmentation targets audiences based on their location.  This can be broken down by:

  • City
  • County
  • Country
  • Region

Marketers need to recognize the differences that can be seen between people living in different locations.  When working internationally, it’s important to consider geographical factors.  Time zones, temperatures, climate, politics, social and cultural events, and a general difference in interests all come into play when marketing across the globe.  Always consider the location of your audience!

In a B2B context, you need to consider whether there are any market-leaders in your field that are already established in the location in question. And, if it is a new area for your business, how are you going to make yourself stand out?

Psychographic segmentation

This one is a little more complicated.  Psychographic segmentation is about looking at the traits your customer might have.  What are they like?  What is important to them?  What motivates them?  What kind of life do they lead?  To achieve this level of in-depth information, marketers should conduct primary research into their audience.  Surveys, interviews, polls and focus groups can produce the qualitative and quantitative data you need to get a real insight into your customer.

Customers from the same demographic may be entirely different people when it comes to psychographic segmentation.  Well-educated men in their twenties with a high income may be your demographic.  But, are they a family man hoping to buy a house in the countryside?  Or, do they want to quit their high-paying job to go travelling?  Factors like this can make a big difference to the customer profile you are building.

For businesses, this is a little more difficult.  Think about the business’s values, what it boasts, and what makes people want to work there.

  • Are they employee focused?
  • Environmentally conscious?
  • Are they open-minded and open to change?
  • Technologically savvy?
  • Professional or informal?

The values of a brand will usually be reflected by its staff, and therefore its decision makers.  Understanding what is important to them will give you an edge over your competitors!

There are numerous different ways to segment a market and no one way is better than another.  It is down to you to decide which approach is most suitable and most effective for your business.  Market segmentation makes the personalization process easier, because you have already established a number of segmentation groups that can be targeted in a similar way. The next step is personalization, which works effectively with a segmentation or ABM strategy. 

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