So You Think You Can Segment? Part 2 of 3
As we mentioned in Part 1 of the Segmentation Strategy, many companies often overlook the value of proper segmentation in planning their e-marketing strategy.
In fact, Marketo found that segmentation for email marketing has the greatest impact on ROI when compared to other tactics like drip marketing and dynamic content.
Today, we'll explore some best practices for segmentation in multi-channel marketing.
Using an undifferentiated strategy, all consumers are treated equal, with no specific efforts to satisfy particular groups. This may work when the product is a commodity where one particular competitor can't really offer much in terms of differentiation.
When you apply a concentrated strategy, a company chooses to appeal to one of several segments while (conciously) leaving others to competitors. For example, an airline deciding to focus on the "price sensitive" customer who is willing to forego meals and assigned seating for a lower price. Southwest is an example of this strategy.
A differentiated strategy, followed by many airlines today, further leverages the data they have collected and offers higher prices to those who are inflexible with their travel plans and find it impractical to stay over a weekend. These passengers, usually business travelers, pay higher fares. The same airline then sells the remaining seats to price-sensitive customers (non-business travelers) who plan and buy in advance and don't mind the weekend stay.
Proper segmentation calls for you to make tough choices. There are many variables that can be used to differentiate consumers in your product/service category. Yet, in practice, it becomes impossibly cumbersome to define and work with more than a few at a time.
This means you need to determine which variables are most valuable in determining different groups of consumers to help you achieve your campaign objectives. Using the right segmentation strategy delivers a big difference to your bottom line.
In the 3rd and final part we will look at some of the variables we can use to segment correctly.