So You Think You Can Segment? Part 3 of 3
In Part 1 (Why Segmentation?) and Part 2 (Segmentation Strategies), we demonstrated how best practices in segmentation can greatly impact the success and profitability of any marketing campaign. In this article, we'll look at some variables that impact our segmentation strategy. These variables can be assembled to arrive at various combinations to be evaluated and tested.
For example: Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size.
We can take this a step further and segment on lifestyle/value variables. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd.
Another basis for segmentation is behavioral variables. Some consumers are "brand loyal" i.e. these "regulars" tend to stick with their preferred brands even when a competing one is deeply discounted. Some consumers are "heavy" users while others are "light" users. For example, industry research reinforces that good old 80/20 rule i.e. 80% of the product is consumed by 20% of the consumers.
You can also segment on benefits sought, essentially by-passing demographics in some cases. Some consumers, for example, use toothpaste primarily to promote oral health, while another segment is more interested in whitening teeth.
Using the right combination of these factors can measurably impact your ROI. In a study on email marketing, Marketo found that proper segmentation alone (excluding all other factors – copy, design, etc.) contributed to 23% of email engagement.
Using data from research, identification and careful segmentation could be the most important factor in the success of any marketing campaign. Use it wisely and you may be surprised at your results.