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.