Reasons for Market Segmentation – A Path To Better Marketing ROI

When designing a marketing campaign, it can be tough to know how to best reach your ideal target customers. When you start to think more deeply about all of the ways a prospect will develop their perception of your business in their mind, it can really be mind-boggling to know where to find the best leverage point. And since customers are constantly bombarded with advertisements throughout their day, it is even more difficult to come up with a campaign that stands out among the rest.

Whether they know it or now, most marketers adopt a “spray and pray” method of marketing. This is where they design a marketing piece or ad and attempt to put it in front of as many people as possible with the hopes that a handful of them will take the bait. Much like a presidential candidate attempting to appear as moderate as possible for mass appeal, when you design a generic marketing campaign, it often has the effect of not really interesting anyone.

Most customers simply fail to respond to this kind of impersonal marketing. Luckily, the process of market segmentation allows marketers to appeal to specific groups of customers through the creation of much more targeted campaigns. Market segmentation involves gathering and analyzing demographic and behavioral data on existing and potential customers.

Marketers gather this data in many ways. A host of useful information can be gleaned from the home address data of existing customers (in the case of B2C businesses that target households rather than other companies). Your own customers’ data can be triangulated with externally-available databases that offer any number of types of information on each household in the country.

Once the data have been gathered, you can apply various analytical techniques to build models of your best customers. Your efforts can range from employing simple descriptive statistical techniques to much more advanced techniques such as data mining and artificial computer learning algorithms. With this information in hand, businesses are able to determine what groups of customers will be the most profitable for them, as well as what methods and how often these customers shop for their products.

With this kind of very detailed information in hand, the sky is the limit in terms of how well a campaign can be tailored to a high degree of specificity to appeal to certain groups of consumers. You can determine which marketing methods work best and which methods might actively turn customers away from your business. It can also help you to make smarter media-buying decisions, since you will know when and how often specific segments tune in to consume specific types of newspaper, radio, and TV content.

Since customers are constantly being bombarded with marketing messages, you can also use segmentation to write higher-quality copy. Given that you have so much information about your customers likes, dislikes, and general lifestyle, you can create engaging pieces that will speak directly to their own motivations, needs and desires.

This kind of specific targeting results in conversion rates that are three to five times better than the traditional “spray and pray” marketing campaigns. Customers these days do not respond nearly as well when they are treated like just a number. Instead, they appreciate when a business actively tries to build a relationship with them. Market segmentation allows you to do just that.

When you segment your market to specifically target groups of customers you increase the return on investment of your marketing efforts. It allows you to actually spend less money on marketing, and still achieve greater rates of conversion.

Your customers are more than willing to give you information to better serve them. In fact, your customers are already engaged in a dialogue concerning your business. It is up to you to tune in to that dialogue, take note, and use that information to develop closer relationships with your customers.

Contact MindEcology today to get started.