Anyone who has touched on the subject of marketing is familiar with the phrase “market segmentation.” It is an integral part of any effective marketing campaign, but this was not always the case. To understand the importance of targeted segmentation, you must first understand its history and just how complex it has become.

A Brief History

A few decades ago, there was very limited market segmentation. While a few marketers had a vague awareness of the value of demographic data, most marketing campaigns involved a singular marketing approach that one hoped would appeal to the masses. In the 1950s, things started to change. The concept of market segmentation was founded upon the now ostensibly important principle that all customers are not alike and, therefore, should not be treated the same regarding how you market to them.

Some of the earliest market-segmentation-based approaches were enacted by department stores that started sending out catalogues based on their customers’ demographic data. This was well-received and resulted in huge sales gains.

Then came the Web. As the use of the Internet became more ubiquitous, the amount of consumer data in existence became immeasurable—a data big bang occurred. This data allows direct insight into a customer’s wants and needs; knowing this, consumers expect you to tailor your marketing approach to perfectly match their lifestyle—in addition to their product wants and needs. Because of this, targeting based solely on demographic data will no longer work.

In order to keep up with it all the data that constantly floods the airwaves, an organization needs live updates—and the ability to instantaneously analyze and use that incoming data—at all times. Unfortunately for that purpose, this data is varied, is complex, and comes from many sources, so managing it can be overwhelming, unless you have the right tools for the job. With automating market segmentation, effectively targeting your marketing campaigns is less difficult and more efficient. Some examples include putting all new customers in an automated welcome or onboarding campaign, triggering an automated retention program when a customer has not been active for a while, or even automating the management of an event (webinar or tradeshow) from promotion, to registration, to follow-up.

Leveraging the Data

I recently worked with a major beauty retailer that uses RFM (recency, frequency, and monetary value) scores to determine which of their 12 different print catalogs to send to their customers. As I mentioned in our article about creating an integrated customer profile, customer data from all sources is important for the success of your cross-channel marketing strategy. This is because it allows you to identify customers and prospects more effectively across all your outbound, inbound, digital, offline, and real-time channels.

Having this data is especially important for effective market segmentation because you need to know something about people before you start trying to send them personalized messages.

In essence, targeted segmentation allows you, the marketer, to take the information you have gathered and use it to address your brand’s marketing needs. Traditional segmentation, however, only addresses how to approach the outbound element of your marketing strategy. In our next article, I will be discussing the inbound approach, visual campaign orchestration, and how to connect everything with an automated customer experience.

As always, feel free to post any comments or questions below if you’d like to further discuss targeted segmentation.