Audience segmentation is one of the cornerstones of effective demand generation. It helps in the quest to deliver personalized and relevant experiences that engage prospects as well as customers. Segmentation practices have evolved in more recent years thanks to the explosion of digital technologies that effectively bring data sources together to create unified profiles and perform more robust modeling.
The role audience segmentation plays has also changed. It impacts all channels and crosses many parts of the organization. For this reason, it is important to think through the best segmentation approach for the business, not just for a department or a particular project. By unifying audience segmentation and aligning strategy to key business objectives, organizations create a common framework for sales, marketing, product, and customer success.
Like many other aspects of marketing, audience segmentation strategies follow a maturity curve and have several key dependencies. Data and technology integration is critical to the success of segmentation. Siloed and outdated information hold organizations back due to a lack of quality, timely and actionable data. In addition, poor customer insights and marketing immaturity can also impede progress for segmentation. This is why persona development and journey mapping have become valuable tools for many organizations.
Predictive modeling is often grouped into the segmentation conversation due to machine learning and the ability to bring first and third-party data together. This is a powerful combination for organizations, and for many it goes hand in hand, but typically segmentation comes first.
Curious about types of segmentation other organizations use? Here is a quick overview of the typical approaches:
- Demographic/Firmographic: traditionally the most common approach to segmentation due to the relative ease of collecting or appended the necessary data. Audience segmentation is based on the profile information known about the customer or the business they are part of. Campaigns and content can be tailored to a specific industry, company size or geography for example.
- Persona or need based: in this approach audience insights are used to help differentiate key groups of customers or prospects. By understanding the motivating factors of each segment, campaigns can become more personalized and the specific needs of the audience can be addressed. This is becoming more important for organizations who deal with large buying committees and have multiple stakeholders involved in the buying cycle.
- Lifecycle: much like persona or needs based segmentation, this approach helps differentiate the audience based on their relationship with the business. New prospects will require different content and campaigns compared to existing customers. Also, inactive customers or inactive prospects should be differentiated further.
- Tiered: with the rise of Account Based Marketing this approach has gained in popularity over the last few years. Segments are created based on the value or importance of particular groups of customers to the business, much like the RFM (recency, frequency, monetary) models of the past. Campaigns and content can be developed to target very specific audiences and allow teams to prioritize resources accordingly.
What is the right approach for your organization? Should you combine different strategies? Working out what makes a useful segment and where to focus your attention is key. Consider these questions to help inform your decision:
- How relevant is this segment – can you meet its wants/needs?
- How distinctive is it – do these individuals have characteristics sufficiently different from other segments?
- How big is this segment – is it large enough to make it worth targeting?
- How easy is it to communicate directly with this segment?
- Do you have the data necessary to support the segment?
If you decide to take a new approach to your audience segmentation strategy, don’t forget to test it to determine if it is delivering value. Measuring the lift in engagement, conversion, and revenue are all important to understand what the right approach for the business is. Analyzing data from multiple sources will also be key. Web analytics, campaign performance and social engagement will be early indicators, but sales and customer support information is also valuable.
Optimizing your audience segmentation strategy can provide many benefits to your demand generation efforts. If you would like to take a closer look at your approach be sure to reach out. We would love to hear from you.