How to Build a Marketing Segmentation Strategy?

Definition

Marketing segmentation is a technique that involves dividing customers into multiple groups based on different criteria.

Each consumer segment has a common characteristic or interest.

Marketing segmentation helps us to better target the audience and to better know how to meet the needs of customers.

Asking specific questions and understanding the clientele improves the performance of marketing actions and, consequently, the performance of the business.

The questions a company must ask to succeed in its marketing segmentation strategy are as follows:

• Who are my customers?

• In what market are my customers located?

• What is the lifestyle of my customers?

• What are the behaviours of my customers?

Marketing segmentation is a concept aimed at dividing your customers into several homogeneous groups.

In marketing, attention to detail only leads to better results.

Here are 9 benefits of market segmentation:

• More targeted and stronger messages

• More effective marketing strategies

• A more engaged audience

• Targeting the right audience

• Gaining more loyal customers

• Differentiating from the competition

• Growing your business

• Developing your product

• Increasing your return on investment (ROI)

We understand that marketing segmentation is based on several criteria. Here are the most commonly used segmentation criteria:

In demographic segmentation, the following factors are considered:

• Age

• Gender

• Nationality

• Income

• Social status

Geographic segmentation is done using geographic data such as location.

It's one of the easiest segmentation criteria. Indeed, you can locate your target very easily.

Firmographic segmentation is the division of B2B customers based on the shared characteristics of companies.

It is essentially the equivalent of demographic criteria, but for businesses.

Here are some characteristics of firmographic segmentation:

• The type of industry

• Annual revenue

• Company size

• The status of a company

• Performance

Psychographic segmentation focuses on the lifestyle of consumers:

• Interests

• Personalities

• Opinions

• Values

• ...

This type of information is usually obtained through questionnaires, either sent by email or available on the website.

Behavioural segmentation is about dividing consumers into subgroups based on their history of habits to better engage them.

Of course, understanding customers is done in two ways:

1. Online or immediate behaviour: use browsing data such as time spent on a page, the number of clicks, the time of leaving the site...

2. Offline or historical behaviour: use the purchase history, the number of visits, or order data (RFM = recency, frequency, monetary value)...

Now that we understand marketing segmentation, it's time to learn how to establish your own segmentation strategy:

For this, discover the 7 steps to achieve it.

Let's get started!

#1 Define Your Objective

Defining an objective is a very important step for success.

In marketing, you should always start by defining your objective in order to create your strategy.

In other words, you need to know how far you want to go with the established strategy.

After choosing your objective, it is crucial to choose the segmentation criterion. The segmentation criterion helps you better understand the approach to take with each market segment.

In fact, there are two segmentation methods, the "a priori" method and the "a posteriori" method.

1. The "A priori" Method:

This is a manual division approach of the audience according to predetermined criteria.

This method is used, for example, in the automotive sector. If the company has data on who has bought a particular model of vehicle, it can use this technique.

To use the "A priori" logic, you must have an idea of the audience and the dominant criteria.

Although this approach has proven effective, it also has its limitations. For instance, just because someone bought a model X of a vehicle and visits the site, this does not necessarily mean they are looking for accessories for their vehicle.

This method is a technique of observation. We observe the data of each visitor, and afterwards, we form our segments or "clusters."

It's an approach based on data and their analysis.

For example, it is used in the world of cosmetics. For instance, when visitors have bought a shampoo, they become potential customers for conditioner.

This approach suits companies that do not have enough information about their customers or the market to know which message to deliver.

Take the example of Facebook; when you log in for the first time, the website does not have enough information about you.

No "a priori" criterion can be used. For this, Facebook uses predictive algorithms to define the market segment you belong to.

Simplicity is beauty.

The same goes for marketing segmentation; you should always be simple in your choice. Do not complicate the segments. Opt for simplicity.

The main reason is that each segment must:

• React differently

• Be profitable

• Be accessible

Nowadays, market segmentation is done using advanced marketing tools like Actito, which allows you to quickly and easily find your ideal audience.

When using segmentation, your segments should be:

1. Relevant

The relevance of segments is very important for achieving optimal results.

When your segments are relevant, you're assured that you've utilised your resources well to know your audience.

2. Measurable

You need to ensure that your segments are measurable.

Indeed, 'measurability' gives you the necessary information to know how much your group will spend on a product.

A measurable segment, for example, contains individuals who are more likely to buy during sales.

3. Accessible

Accessibility gives you the possibility to easily reach your audience.

Understanding the behaviours of your clientele helps you to better reach them.

If you wish, for example, to address a younger segment, you will disseminate your messages on media where you are sure to reach them, like Twitch or TikTok.

Segmentation marketing allows you to effectively test your segments to achieve optimal results.

Segmentation is usually done with marketing tools such as Actito.

The platform offers you the possibility to:

Create Segments:

By reconciling all the data within the tool itself, Actito gives you the ability to create segments that take into account your needs.

With Actito, you can segment your customers in 2 different ways:

Exclusive Segmentation: It groups profiles sharing common characteristics into a segmentation containing multiple segments. A profile's membership to one of these segments is characterised by its level, by reaching a threshold.

Example: RFM Segmentation: Gold, Silver, and Bronze. Online activity segmentation: Very active, Active, At risk, Inactive. Segmentation of prospects, customers, and former customers.

Simple Segmentation: It groups profiles sharing common characteristics into a segmentation containing a single segment. A profile's affiliation is characterised by true or false: either it is a member, or it is not.

Example: 'Interest field' segmentation: Sports, 'meat-eater' segmentation, 'promophile' segmentation.

By creating customised segments, you will have a complete understanding of your audience.

This understanding allows you to have a better product positioning and know how to reach each category of customers.

The key to a successful personalisation strategy lies partly in the precision of the segmentations and targeting performed. Having all data in one place gives you the ability to truly know your customers.

Indeed, Actito offers you a rich and complex data model that can bring you closer to your clients.

Another key feature of Actito is the personalisation of messages.

The multitude of personalisation tags and the ability to condition blocks within email templates allow for the messages sent to segments to be personalised in such a way that messages will differ from one segment to another.

In this way, you will satisfy every customer.

An example from our client Don't Call Me Jennyfer, who, following the segments set up, personalises the contents of their email campaigns:

The goal of segmentation is rarely to be set in stone, but rather to reflect the evolution of your profiles over time. A prospect can indeed become a customer, a Silver customer can reach the Gold category... while an active customer may become inactive.

Continuous analysis is necessary to ensure the relevance of your segments.

Establishing a segmentation strategy and not checking it afterward will only yield short-term results.

For long-term results, it is necessary to analyse and determine the change in audience behaviour in each segment.

In this way, we can be sure that our marketing strategy will continue to benefit.

• Leverage your 360° customer view to use any type of customer data as the starting point for your segmentation.

• Build your segment using its code-free targeting module.

• Calculate the size of your segment to determine its relevance.

• Use your filters in any report to visualise the impact of your message at the segment level.

• Use segments as triggers for highly proactive scenarios, such as loyalty and nurturing campaigns.

• Track customer behaviour over time with RFM segments.

• Identify inactive customers to protect your delivery capacity (and your budget).

• Segment based on crucial age brackets, to automatically tailor your message when your customer enters a new life cycle.

• Identify ambassadors and reward them accordingly.

Throughout this article, we have explained what marketing segmentation is and how to establish your own strategy.

By using marketing segmentation, you can optimise the positioning of your product and increase your revenue.

However, it's important to remember that segmentation alone is not enough.

You must be aware of other marketing methods to combine them with marketing segmentation.