The Importance of Audience Segmentation

For any marketing exercise to succeed and achieve the desired results, brands must have three fundamental things: a product/service to sell, an audience to sell to and a method of communicating the former to the latter.

As a brand, you can spend a lot of time, effort and money creating clever, well-written content. However, the important questions you need to ask yourself first are: How well do we know our audience? Are we talking to the right audience? Are we engaging with our audiences in a manner that convinces them to keep moving down the sales funnel or along the buyer’s cycle?

In an increasingly customer-centric world, bypassing this best practice to try and save money or reduce effort is completely shortsighted. It’s certainly not recommended for any brand that wishes to thrive amongst a sea of ever-evolving alternative choices for consumers.

Audience segmentation predates digital, but Big Data and Technology have changed how companies approach segmenting. According to John Forsyth, the old model, particularly in the market research world was, ‘I understand people’s needs and attitudes, and behaviours will come from that’. Today, in many situations, marketers have flipped it to say, ‘I’m going to segment based on their behaviours, and then I’m going to try to understand the needs that drive behavioural differences’. He warns, however, that this type of segmentation is “a lot harder to do than people think, and I don’t think we’re anywhere near being good at it yet.”

There is definite merit in taking a fresh look at audience segmentation, in light of a continuous fast-paced change in customer behaviour and expectations, as well as the digital evolution. This would not only lead to smarter segmentation but also the prioritisation of data-rich segmentation and streamlining search strategy – allowing your brand to cut out the guess work and drive the best results.

In addition, there are other considerations to keep in mind when looking at your approach such as the fact there is lot of movement in the area of segmenting emerging markets worldwide. This poses a number of challenges. For one, the scales marketers use to measure needs or behaviours in one country may be way off in another due to different cultural norms.

Regardless of your approach, any useful segmentation should include these six characteristics:

1) Identifiable. You should be able to identify customers in each segment and measure their characteristics, like demographics or usage behaviour.

2) Substantial. It is usually not cost-effective to target small segments — a segment, therefore, must be large enough to be commercially viable.

3) Accessible. It sounds obvious, but your company should be able to reach its segments via communication and distribution channels. When it comes to young people, for example, your company should have access to Twitter and YouTube and know how to use them authentically — or reach out to relevant influencers with active social presence to do some of your marketing for you.

4) Stable. In order for a strategic marketing effort to be successful, a segment should be stable for a long enough period of time. For example, lifestyle is often used as a way to segment. But research has found that, internationally, lifestyle is dynamic and constantly evolving. Thus, segmenting based on that variable globally might not be wise.

5) Differentiable. The people (or organisations, in B2B marketing) in a segment should have similar needs that are clearly different from the needs of other people in other segments.

6) Actionable. You have to be able to provide products or services to your segments. You could spend a lot of time and money identifying a segment, only to discover that you couldn’t find any customers for your product/service in that segment.

Now you can start breaking down segments by who buys, what they buy, and why they buy (or use or view, etc.). Examples of brands doing this well are: Vodafone, Nike and Netflix.

Doing all this will help you achieve:

  • Efficiency (across all communication channels and processes)

  • Brand Engagement & Loyalty

  • Measurement & Optimisation (across all communication channels and processes)

  • Revenue Growth

  • Maximised ROI

Audience segmentation is a crucial aspect of marketing, and is something that must be treated with respect, as it informs all other aspects of both marketing and advertising. If you know what makes your audience tick, you’ll achieve much higher success rates – and therefore drive sales and profits!

So, to conclude…How well do you really know your audience?