Introduction To Micro-Segmentation: An Effective Way Of Targeting Customers

One of the most effective ways of targeting customers and improving customer experience in marketing is called micro-segmentation.

Just think of a time when you are buying something you really need. Let’s say, an electronic watch. Identifying which electronic watch you want among a range of brands and various types can be really time-consuming. You will likely look for answers to the questions like — Does this watch fit my style? How cool is it? Is it water-resistant? How long would it last? When was it produced? Can I afford it? and so forth…

Micro-segmentation is a similar process, except marketers are applying it to customers. A company selling electronic watches cannot just target everyone with the same messaging expecting great campaign results. Consumers who are buying watches are very different from each other in terms of demographics, lifestyle, and willingness to pay. Businesses have to conduct deeper research and identify their niche customer base based on their specific needs, styles, preferences, age, geography, and consumption habits. Thus, splitting your customers into different micro-segments can help you with effective ad targeting, personalized messaging, and predictive analytics.

What is micro-segmentation?

Micro-segmentation is a practice of categorizing your customers based on their geographic and demographic traits, and what kind of behavioral and psychographic patterns users demonstrate:

• Geographic — regions, states, cities, neighborhoods
• Demographic — age, gender, education, income, parenting, ethnicity, marital status
• Behavioral — frequent purchases, seasonal-only purchases, coupon-only purchases or “window shoppers”
• Psychographic — lifestyle, values, social class, personality

Moreover, micro-segmentation is essentially a process of pulling different variables from the aforementioned categories and preparing a persona of your customers.

Example Growth Channel Persona Dashboard

For example, a company selling low-cost electronic watches may target young people, hipsterish college students living mostly in urban areas, and listening to a particular kind of music. If you pay close attention to each of these phrases — “young people, hipsterish college students, urban areas, like music”, you will see that the company has identified a micro-segment which it wants to target. Knowing which micro-segment you want to target makes it easier for you to plan your marketing campaign and eventually turn this segment into your loyal customers.

Why is micro-segmentation important?

First of all, micro-segmentation allows you to tailor personalized content to your micro-segments. For example, advertising low-cost electronic watches to 45 years old wealthy corporate professionals would not be such a good idea. These customers will not develop any brand loyalty and will ultimately abandon this company for a business that really cares about their interests and preferences. Micro-segmentation is not only a good strategy for bringing in new customers, but it is also extremely helpful in retaining the customer base.

Micro-segmentation makes it easier to target the right customers. If you look at data saying that your website has attracted 100 000 new users, you would not know what to do about this data and how to target these new visitors. However, if you have enough information about what demographic groups and lifestyle patterns they represent, then you would know what kind of content to deliver to these segments.

In addition, by applying micro-segmentation marketing you can determine the highly profitable segments and target them with personalized content to increase your return on investment. According to the findings of the 2018 study by Epsilon, 80% of consumers are more likely to make a purchase when businesses offer personalized content.

How do micro-segmentation campaigns work?

Here are a few marketing examples to reach your micro-segments:

In-app messages

• Mobile app providers can use their in-app messaging to deliver personalized content to their customers. For example, music apps may recommend listening to a 60s jazz music playlist while you are listening to jazz music.

Text messages

• In many countries, text messages are widely used. If you own a language teaching business that is offering a conversation club in English on weekends, then you can use text messaging to reach out to your customer and ask them to attend your conversation club.

Emails

• According to Campaign Monitor, email marketing is still ahead of other forms of marketing when it comes to increasing ROI. If you design well thought out emails that are taking into account the needs, interests, and preferences of your customers, then the likelihood of your customers to purchase your product would increase.

Web notifications

• Web messages can help collect customers’ contact with other relevant data, thus being able to further personalize customer’s experience on websites. For example, you can target high valued micro-segment by showing them a web message containing content on your new arrivals.

Source: Tune

If this is way out of your comfort zone, you can also use various tools to help you identify these micro-segments and then develop the most appropriate marketing strategy for each of them. Growth Channel is one delivering personalized marketing planning, which you may want to check out 😉

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With so many products and services to choose from, customers very often get confused with all the alternatives out there. Micro-segmentation marketing is an excellent opportunity for brands to show their customers that they really care about their needs and preferences. So, here are key takeaways:

• Allocate a significant amount of time into researching your customers — demographics, geography, lifestyle, and behavior patterns they represent.
• Identify a list of micro-segments your company intends to target. If you know who you are targeting, then it is easier to organize your marketing campaign.
• Determine how you are going to target your micro-segments — email marketing, targeted ads, text messages, web messages, in-app targeting, etc.

If you are a startup that has already identified key micro-segments, then I would be happy to hear about your experience. Please comment under this post 😃