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Audience Segmentation in Marketing


Why practice segmentation? It’s a marketing strategy that helps us reach the right users with our media. Identifying subgroups within our target audience in order to deliver the right message through the correct channel.

Segmentation helps marketers know their audience better, making it easier to set up campaigns in platforms like Facebook, Linkedin or Google. If we know our audience in advance, we can easily look for segments that reach that audience.


What are the benefits of segmentation?


Audience segmentation is an important technique that helps businesses to understand the different needs of your customer and what is the profile of your buyer persona. Using segmentation helps us better understand our audience and plan our marketing in a smarter way. Some of the benefits according to Mailchimp are:


Types of segmentation


We can divide segmentation into four main forms: demographic, psychographic, geographic and behavioural.

Demographic segmentation includes factors like age, gender, marital status, income, and education level.

Psychographic segmentation refers to values, motivations, and beliefs. These variables are more difficult to identify because we don’t always have this information, or know the internal thoughts of our audience.

Geographic segmentation is important to consider the location where your target is, and use this tool to divide the location.

Behavioral segmentation is a variable that comes in two forms. The first is the relationship that the user has with your service or product, including the spending habits and the perceived benefits of using it. The second form of behavioral variables is the actual behaviors of the user themselves.


Another segmentation point that in these times it is important to consider, is the behavior that the users have with the social media you will use as a broadcasting channel. Since it is of great importance to identify if they are more active on Twitter, Linkedin, Tik Tok, or others.


Let's look at an example from a hypothetical company Techlis. Techlis is a leasing company that leases electronic devices and also sells them. They want to get as many clients at the three-years-leasing as possible. After identifying that the loyal clients who remain on a three-years-period contract are the ones hiring the one-year lease since the first purchase. So they decide to segment out their database of clients who already have a one-year contract and target them with an ad on Facebook urging them to upgrade to a three-year contract lease with a big discount. This is a basic example of segmentation using customer data.


Segmentation in Paid Advertisement


Did you know that according to Infogroup, over 90% of consumers say that messages from companies that are not personally relevant to them are annoying?


Creating a good ad addressed to the right people is part of preventing this experience to happen. Understanding how the algorithms and statistics categorized good ads plays a big role on the topic. Advertisers use Personalization to reach their target based on their interests and demographics. Performing ads with personalization is an effective way to deliver the right message in front of the right audience at the right time.

There are 4 kinds of personalization: Wisdom of the crowd, semantic understanding, segmentation and targeting, and one-to-one personalization.

Wisdom of the crowd is focused on finding items and ads you might like if others who look like you also like them. Companies use this technique to target from many people to a few, believing that only a few people will convert as they will be more interested in the message.

Semantic understanding is used to understand the context behind the words on a page. This can be used in contextual advertising, for example, people who may convey a search about “dolphins”, can, later on, be advertised by the “dolphins team” match.

One-to-one personalization is the approach that looks at individual characteristics to deliver a unique experience to a user. Examples of this personalization are the ads you are served when you visit a website or your search results.

One-to-one personalization can be very hard to carry out in scale, but it is effective in the information the algorithm has regarding user behavior and serves you the most ideal experience to drive that behavior.


CDP - Customer Data Collection


Personalization is data-driven, so the effective way to conduct it is by keeping your data structured and with easy access. Tools like a customer data platform or CDP can help organize your data to serve more relevant experiences to users.

Customer Data Platform is defined by the CDP Institute as “packaged software that creates a persistent, unified customer database that is accessible to other systems.”

Some of the data options might include transactional behavior, demographics, events, customer attributes, transactional data campaign metrics, and customer data service. This tool helps marketers to segment their audience and target the users more efficiently; crossing the data with other platforms such as Facebook or Google, in order to better reach users with relevant messaging.

Once the data is in the CDP, you will be able to execute segmentation strategies based on calculations including lifetime value prediction, cluster analysis, predictive customer scoring, and other similarities.


Clustering

According to the Carnegie Mellon’s School of Computer Science clustering is a predictive form of segmentation that organizes data into clusters such that there is:

  • high intra-cluster similarity

  • low inter-cluster similarity

Clustering finds natural groupings among objects.




K-means is an iterative approach, where you start by randomly selecting K data points in your data set and defining each as the centre of the cluster. After you can reevaluate how good your random selection was and if the results gave you a split-up of your data in K-clusters that will serve you.


Succeed with this method

How to segment your audience successfully is a matter of database and applying the right technique to come up with a target that you are looking for. Marketing analysts use segmentation to the fullest, which helps them to create marketing messages tailored and choose the channels where to deliver them.

Finding the right characteristics to divide your audience into groups will result in unique variables. These variables will describe the profile of the individual you are looking for.

I encourage you to try these techniques before launching your next marketing campaign. Ziel Digital can support your team segmenting your audience and identifying your ideal buyer persona.





References:

Audenaert, Anke and Coursera with Meta. Data Analytics Methods for Marketing. Data Analytics Methods for Marketing. https://www.coursera.org



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