8 Market Segmentation Mistakes You Might Be Making
There’s a huge paradox at the heart of digital marketing. You have to communicate on a huge scale, potentially to millions of people. But you have to create personalized messages and try to have one-to-one conversations with each lead. How can this be achieved?
If you said market segmentation, you are correct. Segmenting your audience allows you to figure out the kind of marketing messages that will work for each lead, which then allows you to guide each person through a sales funnel. Get it right, and you’ll enjoy a steady stream of new members.
That’s the theory, anyway. Sometimes, however, your segmentation strategy may not result in the kind of conversion rates you had hoped to see. Let’s take a closer look and find out why.
What is Market Segmentation?
Gathering leads can be tricky. Figuring out how to sell to those leads is trickier still. After a lead generation campaign, you may end up with a huge database of contact details but no idea of how to guide them through a sales funnel.
First, you have to understand them. It’s tricky when you don’t have a lot of information, so you have to break the audience down into smaller groupings, united by common characteristics. Each of these segments will have unique needs and expectations, and each segment will have a unique response to your messaging. This is market segmentation.
Put it this way: a successful segmentation strategy makes marketing feel like shooting fish in a barrel. Your leads are the fish, and your segments are the barrels.
Market segmentation is nothing new. In the days before big data, associations divided the membership into smaller groups using available data points, such as:
- Chapter membership
- Membership type
All of these data points are still useful when segmenting modern audiences. However, improved data collection methods allow us to drill down and discover illuminating traits of individual members such as:
- Psychographic information, i.e., emotional response to various marketing messages
- Records of website activity, including searches and pages visited
- Decision-making processes
- Price responsiveness and responsiveness to other kinds of offers
- Preferred communication channels
- Preferred delivery methods for association programming
- Brand loyalty
With this information, you can start to segment audiences into better-defined groups. This segmentation allows you to deliver highly personalized messages, understand pain points, anticipate needs, and predict future behavior.
However, it doesn’t always go according to plan. Sometimes, improved segmentation doesn’t lead to improved results, and it’s usually for one of the reasons below.
8 Common Market Segmentation Mistakes You Might Be Making
Segmentation requires a lot of fine-tuning to get right. If you’re not seeing results, it may be for one of these reasons.
You don’t have enough data
Segmentation is about identifying patterns in your data. Each layer of data adds new depth and detail to these patterns and allows you to gain a better understanding of each segment.
You may not be capturing enough data to build effective market segment profiles. Take a look at the sources of data, such as website analytics tools and email automation reports, and see if you’re capturing everything you need.
It’s also possible that you have the data, but it’s not getting through to the market team. This is why tech stack integration is so important. Your data-gathering systems – such as email automation, Association Management Software (AMS), and website analytics tools – need to be connected to your data-processing systems, such as Customer Relationship Management (CRM) and marketing automation platform.
Check the whole tech stack and make sure that valuable data isn’t languishing on a server somewhere.
You’re trying to reinvent the wheel
As mentioned before, every association has done some kind of segmentation in the past, even if it was done manually by the membership team. Talk to them and find out how past efforts fared. You may discover some quick wins you can implement right away – or you may learn about past mistakes that you’ll need to avoid.
The same goes for automated segmentation. If your association has already had some marketing email automation, for example, take a look at click-throughs and open rates. See if there is anything you can use.
Don’t forget to talk to the people on the association management team and ask them for their insights into segmentation. People can tell you a lot about what members want, plus they can give you some creative ideas for marketing to each segment.
Your market segmentation strategy is too simplistic
If you’re thinking, “segmentation sounds fine, but people don’t always fit into neatly-defined categories,” you’re correct.
A good segmentation strategy is as dynamic as your membership. Individuals can move between segments, or they can straddle the border between two different segments. You may encounter outliers who don’t fit into any identifiable segment.
In all such cases, be ready to adapt your segmentation strategy on the fly so that each individual gets a message that’s relevant to them. This is only achievable if you keep a close eye on engagement data and see if you’re getting the results you expect.
Your segmentation is too granular
Segmentation is about breaking down your audience into smaller and smaller groups. There comes a point, however, when your groupings are too small to be of any use.
For example, it’s useful to segment according to career stage, so you might have one segment for recent graduates and another for established professionals. You could then segment recent graduates by city so that you can create messages relevant to their locale.
But if you further subdivide by, say, shoe size or favorite color, does that help you better understand the needs of your audience? Probably not.
If you have two segments that consistently respond in the same way to messages, you can probably look at unifying them into a single segment. This will allow you to focus your marketing resources where they’re needed.
You’re confusing market segmentation and lead scoring
Lead scoring overlaps with segmentation a lot. Both of these activities are about trying to predict a person’s behavior, with the ultimate goal of making some kind of sales conversion.
That said, it’s important to remember that they are two different activities with two different goals. Lead scoring helps you figure out where to invest marketing resources by identifying the most promising prospects.
Market segmentation tells you what kind of resources to invest. When you understand your segments, you’ll know what kind of programming and promotional offers are likely to entice each group. Get this part right, and you’ll see lead scores go up for each person within the segment.
You’re confusing segmentation with personalization
Segmentation and personalization are inextricably linked, but it’s important to know that they are not the same thing.
Segmentation is a form of analysis. It’s something that you do on your end by looking for patterns in the available data. The result of the segmentation process is to have a good understanding of your audience.
Personalization is the way that you communicate with this audience. You’ll use marketing and email automation tools to send targeted messages, based on insights gleaned from the segmentation process.
These are two distinct steps in a single process: analysis, and then communication. Make sure you tackle them in the correct order.
You haven’t included time as a data point
We’ve talked about all the data that is relevant in segmentation, from basic information like age and locale, to more complex information like psychographics and data analytics. But some people forget to include the most important data point of all: time.
Meaningful segments look at audience behavior over a period of time, rather than one or two interactions. That means studying the things they read, the offers they respond to, and the triggers that cause them to make a buying decision.
You have to understand how each segment moves through the buyer’s journey. This allows you to predict how other individuals might make the same journey.
If your segments are based on limited interactions over a short time span, then you need to start fleshing them out with more data. Remember also to review your existing segments over time, as people’s needs can and will change according to circumstance.
You’ve lost sight of your goals
Market segmentation can be a very involved process. There’s a lot of data to work through and, along the way, you’ll learn a lot of insightful things about existing members and prospective leads.
But this is not an academic exercise. Segmentation is something you do for a specific reason, such as trying to increase conversions, upsell new products, or improve retention. Have some clear, measurable goals before you start looking at segmentation.
Along the way, keep asking if you’re still on track to meet those goals. Is your approach to segmentation helping you to identify promising leads? Is it helping you to personalize messaging and hit people with targeted offers?
Automation – The Key to Market Segmentation
Effective segmentation isn’t just about data. It’s also about responsiveness to new data.
To make this approach work, you need a fully-integrated tech stack that can automate the segmentation process for you. With the right tools, you can use analytics to identify segments and use automation to send targeted messages.
If you’re not seeing the results you’d hoped for, talk to an integration specialist like High Road Solution. Find out if your market segmentation strategy is everything it could be.
About Aimee Pagano
Aimee joins HighRoad Solution with 15+ years of integrated marketing and communications experience, primarily in client-facing roles within the association and SaaS space. Her specialties include persona development, content strategy/management, lead gen and awareness campaign development, and website development/optimization.