Market segmentation is the art and science marketers use to group consumers into personas based on common characteristics to enable more effective campaigns, market research, products and services.
While the term dates back to the mid 1950s, the concept is perhaps as old as commerce itself. For example, imagine being a salt merchant in the Bronze Age. Would it make more sense to wander the countryside looking for homesteaders wanting to season their meals, or to focus on selling to farmers who need huge quantities of your product to cure their meats?
In the wired-up, digitized world we live in today, technology has wholly transformed this practice. With the rise of big data and digital marketing, customer segments based on general demographic information such as postal code, age group or income bracket have evolved into finely pixelated customer personas of seemingly infinite detail; targeted in real time through a wide variety of channels.
We’ve posted about segmenting your customer base before, but as a vital weapon in marketers’ arsenal in a rapidly evolving market, this is a topic that’s not likely to fall out of fashion anytime soon, so it bears revisiting. As customer data experts, we have a big stake in driving better digital strategy for our clients. Take a look at some recent examples of forward-thinking businesses creating and leveraging customer segments to drive real business value:
Driving Ad Revenue with Personalized Campaigns
UK-based publisher ESI Media dramatically improved click-throughs and campaign yields by creating forty-five premium audience segments based on combinations of subscribers’ profile, identity and social data.
Optimizing Email Campaigns with Customer Data
Venerable American institution American Kennel Club (AKC) boosted email campaign open rates by 50%, and click-throughs by 100% by segmenting customers based on first-party data gathered from socially logged-in customers.
Fostering Community Engagement to Build Brand Loyalty
Online art retailer Art.com increased conversion rates by 58% and saw a 65% increase in curated online galleries by creating rich, detailed customer profiles based on users’ permission-based profile and social data.
In short, customer segmentation may be as old as the hills, but that doesn’t mean there aren’t plenty of new opportunities to strengthen your marketing programs.
By David Kerin