Segmentation is the process of identifying specific customer groups. The process is very important for businesses in personalizing marketing and communications. Usually, segmentation is done by performing large-scale market studies on a broad business market or consumer group and then use the information collected such as the shared characteristics to divide the group into sub-groups. This way, the companies are able to identify consumers that are more likely to purchase their products.
While the segmentation process can be long, difficult and tiring, it can make a marked impact on a business. However, mistakes happen and some companies might find themselves making avoidable errors while doing segmentation. Here are 5 common segmentation errors and how to avoid them.
- Depending on the Obvious
Demographics, purchase behavior and stated needs are examples of the most obvious characteristics that a lot of companies get stuck looking at. While such data is useful for marketing, they are far less effective when it comes to informing messaging and also communications targeting.
Studies that solely depend on such data points mainly end up being tactical and don’t give you the tools required to build around a customer strategy. The point is, people don’t make decisions only based on their age or past behavior, and therefore, companies should look into more data that actually drive decisions.
How to avoid this: The way individuals see themselves, values and firmly held beliefs are fundamental players in a consumer’s way of viewing brands as well as frame their choices. Companies should use approaches that emphasizes on values and attitudes and this way they will be able to cluster consumers by how they think alike rather than how they look alike.
One approach that can be used to achieve this is by developing segmentation surveys that use in-depth quantitative research or qualitative research that explores the mindset of the consumers. Doing a thorough exploration eventually leads to a more dimensional and distinct segmentation that goes a long way into making your marketing successful.
- Using Segmentation Done Long Ago to Inform Strategies
Changes happen everywhere, all the time. For instance, in the last couple of years, many industries such as television, banking, retail, healthcare have all undergone dramatic changes. Categories are also shifting quickly and so are the consumer’s expectations, wants and preferences. In short, what gave you success years ago can turn out to be a recipe for disaster today. But still, a lot of companies find themselves turning from segmentation done years ago to inform their strategies now.
How to avoid this: No company wants to hear the word overhaul since it can be an expensive endeavor. While some segmentation may need to be scraped off entirely, not all of them do. Checking for and making updates on your segments after a set period, preferably one year, is not only wise but also not such a heavy lift. This way you can determine which segments are still valid and which ones are not as well as the pros and cons of doing segmentation from scratch.
- Ignoring Audiences that Could be Important
Most times, companies go into undertaking their segmentation studies with a preconceived idea of who their audiences are. This way, they end up ignoring other segments that might have turned out to be important and even your brand’s best prospective customers. These segments are known as ghost segments.
How to avoid this: What companies need to understand is that things change and so do customers. They should ensure that their segmentation studies challenge their assumptions by being widespread and future-looking. Examine your noncustomers. You might be able to convert them through a specific offering or the right message or even with a new product in the future.
- Misuse of Big Data
Many marketers and consumers often find themselves wondering how to use Big Data effectively. When it comes to segmentation, some companies end up relying on the customer Big Data entirely which is a risky approach since it largely ignores the ghost segments as well as the over-reliance on behavioral data that ignores values and attitudes. You can definitely use the information on Big Data for segmentation but be careful on where and how you use it.
How to avoid it: First thing you should do is use primary data and other relevant inputs to create your segments rather than starting with Big Data. The Big Data then follows at the tail end to round up your segments and efficiently target them by giving you insight into the interests, products, services and media your segments tend to gravitate toward.
- Doing Segmentation without a Go-Forward Plan for Implementation
Unfortunately, this is a sad reality in most companies. Segmentation results need to be used in every section of a company, but sometimes, they end up being indigestible data points that take residence in the hands of a select few.
How to avoid this: Before or during the segmentation process, companies need to already have the comprehension of how the results will relate to each department, their benefits; and have measures put in place about how the segments will stick into the business and be relatable to ensure that they are both used and embraced across the organization. Just like marketing, effective segmentation studies should be customized and unique. Using common segmentation techniques usually end up ignoring the matters that are more specific to your business. To avoid these five errors, it requires customization, a lot of care as well as collaboration with experts. While at the beginning it might be intriguing to take the easy route by skipping some steps, it might end up costing your business a lot in terms of meaningful and relevant consumer engagements.