What is Audience Segmentation?

What is Audience Segmentation?

Marketers talk a great deal about audience segmentation, but rarely explain how it works.  That may be because, in part, they don’t really understand it themselves, or because it’s such a knee-jerk reaction for them at this point in their career that they assume everyone has this notion down.

But if you’re just now putting a hard effort into improving your marketing results, the concept can be confusing.  Even if you know what to do with audience segments (sell them stuff!), defining those segments is another story entirely.

Audience Segments 101

Segmenting audiences makes it easier to deliver a message that has real impact.  At the heart of every sale, after all, is a problem that needs to be solved.  Whether that problem is a dishwasher that’s refusing to wash or finding the perfect anniversary gift, the audience is experiencing a real stressor and needs a fix.  The big struggle is that sometimes your general audience, made up of all the people possible, have different ways of looking at the issue.

Let’s take the dishwasher as an example.  The younger members of your audience, who have not had much time to establish a rainy day fund, just need the thing to work for the least amount of money possible.  Your middle-aged audience, however, sees this as an opportunity to upgrade to a better, faster, cleaner, fancier model.  These two audiences require very different approaches, since their concerns and needs are so different.

By recognizing the differences in your audience, it makes it easier to start to filter them into groups that will potentially respond to a more targeted message.  Your younger dishwasher audience might call after seeing an advertisement for a dishwasher repair special, where the older group wants a repairman who can recommend a really good dishwasher, source it for them and then install it.

This is what a segment is, but establishing your segments is a much less precise process.

Who Do I Segment?

The thing with advertising is that much of it is strictly intuitive. Sure, you can do market studies to see who responds best, but as a small to medium sized business, it’s kind of unnecessary since you’re far more intimate with your client base than, say, Coca-Cola.  Coca-Cola needs marketing studies because it doesn’t really deal with its customers directly, it just shows them ads, stocks markets with products and kicks back.

Since you’re not Coca-Cola and you do deal with your customers in person much of the time, you kind of already know your segments, even if you don’t realize it.  People tend to sort of self-sort in these situations.  But, if you want to do this formally, here’s a basic outline of the process, using the dishwasher example again:

  1. Determine the scope of your current audience.  This might be something like “all homeowners under age 70” or “first-time homebuyers with home warranties.”
  2. Consider the concerns that different types of people in your audience would have that you can address.  Things like “saving money on dishwasher repair,” “making dishwasher upgrades simple” or even “expert advice on whether to replace or simply repair the dishwasher.”
  3. Look at your customer problem list and really think hard about who would be expressing the concern.  “Saving money on dishwasher repair,” for example, may be young homeowners, families with children and income at or below the median for your area, single women or older homeowners living on retirement income.

As you start to break your audience down into base component groups, you’re actively segmenting them.  Now you have retirees on a fixed income, you have younger homebuyers, you have budget-conscious families.  These three groups should be acknowledged separately, but because their concern on this one issue is so similar (saving money on dishwasher repair), you can often use the same marketing message for all three segments.

You wouldn’t want to use the same bargain dishwasher repair offer on a the high-earning middle aged professional segment, since their main concern is getting the job done quickly and buying a machine that will last.  So, for the purpose of this example, you can sort your multiple types of customers into two main segments (the subsegments you identified may not always be in the same group, so keep those different groups intact): your budget buyers and your busy professionals who have no time to really deal with the whole dishwasher thing.

Crafting Different Offers

The offer you craft for a budget buyer could be anything from a coupon to a special deal on a new dishwasher if they sign up for regular dishwasher check-ups.  They need a fix that’s cheap, they’re probably even willing to put in a little effort to earn it.  “Save 10% when you share our page on Facebook” could work beautifully.  The tone should be friendly, helpful and engaging because one of these days, part of this segment will see a substantial increase in income and they’ll still need an appliance repair service.

The other segment, the people the younger portion of your first segment could become, get an entirely different message.  They need people they can trust alone in their house so you can fix the problem while they’re at work.  This advertisement would maybe talk about your years in business, your core philosophy, how you’ll leave their house clean as it was when you got there, do all the work and even get rid of their old dishwasher.  It’s not cheap, but it is complete service, and that’s what they want.

These, of course, are imaginary segments to give you an idea of how this works and fits into the greater theme of marketing.  Your segments could look completely different, and that’s ok, too.  You’re the one who determines the segments, except in the cases where something easily self-sorts (gender-specific products, age-specific offers, etc).  It’s a super simple process, it just takes a little reflection on the needs and motivations of people that could be very different from you.

Go forth and segment!  See you next week!