Market segmentation enables brands to launch targeted, personalized marketing campaigns, which, if done correctly, can lead to significantly more returns on their marketing efforts.
Segmentation is always undergoing changes, and marketers need to stay on top of these advances. Today, we’ll cover some of the top segmented marketing predictions to help your brand maximize customer acquisition and customer retention.
How Marketing Segmentation Works
The basis of market segmentation is separating your audience into groups, or segments, based on shared traits. You can segment your audience on a variety of factors, such as geographic location, age, career, life stage, or use of technology. These groups share interests and needs, so by catering marketing campaigns to certain segments—rather than attempting to reach everyone all at once—your brand can address those specific needs.
There are many benefits of market segmentation. After all, customers expect a high-level of personalization, with 76% of consumers saying they are more likely to buy from brands that provide a personalized shopping experience. Personalization makes customers feel seen and appreciated, which encourages purchases and drives customer loyalty. This, in turn, maximizes revenue; studies show that targeted campaigns are responsible for 77% of marketing ROI.
Why Does Marketing Segmentation Need to Evolve?
Segmentation is always adapting to shifting markets, consumer demands, and new technology. In recent years, the way we collect and use data has been rapidly evolving, and we can expect this fast pace to continue. Thus, segmentation doesn’t need to evolve because the current system is flawed, but rather because marketers need to stay up to date with their strategies to generate the best results.
7 Segmented Marketing Predictions
To stay competitive, you need to be looking toward the future and what’s next for segmented marketing. Here are seven of our top segmented marketing predictions:
Influencers Will Continue to Affect Buying Decisions
It’s no secret that consumers are more likely to buy something when someone they trust—such as a thought leader or a friend—recommends it. That’s the driving force behind celebrity endorsements, word-of-mouth marketing, and influencer partnerships. Due to the prevalence of social media, influencer marketing can be a powerful way to reach certain segments. With the influencer marketing field expected to grow 30% in 2022, we can expect this trend to continue, as consumers consistently look to public figures to guide their buying decisions.
When thinking about your audience segments, consider who these groups trust for product recommendations. Gen Z is likely to consume more social media influencer content, for example, while older professionals might look to business thought leaders.
Virtual Events vs. In-Person Events
The COVID-19 pandemic changed how the world operated, with more and more events moving into the digital realm. We can expect that some segments will commit to virtual opportunities while others will stick to in-person events. When marketing to different consumer groups, you’ll want to think carefully about their comfortability with online events and other digital tools.
Students and Gen Z, for instance, grew up with access to the internet at their fingertips, so these groups are likely to be comfortable with virtual events. In comparison, other segments, particularly older generations, will prefer in-person events. Whatever segments are most relevant to your brand, determine how much they prefer to interact virtually and adjust your marketing strategy accordingly. If you’re unsure, consider sending your customers a survey asking for feedback about how they like to attend events, learn about offers, and communicate with your brand.
Cause marketing—marketing that uses a brand’s platform to support social causes—can be an effective strategy to engage many audience segments. Social causes are particularly important to younger generations, with 77% of college students saying they want to support brands that share their values. But this will be a strong trend across segments; studies show that 91% of consumers prefer buying from brands that support important causes.
To marry cause marketing and market segmentation, think strategically about what causes matter most to the audience segments you have identified. Based on this, you can speak about these issues as a brand and take action, such as donations or fundraising events, to make your support more tangible. Just be sure to approach this technique with care and authenticity.
Personalization is already an important part of segmented marketing, but we can expect the level of personalization to become even more granular as time goes on. Hyper-personalization means going beyond broad segments and email templates where just the name is swapped out to drill down into more specific segments or attributes, such as career or affiliation.
The goal is to provide campaigns (including re-engagement campaigns) and content that is highly personalized to specific consumers in order to provide genuine value. For instance, if you know that a customer recently purchased hiking boots and that they are also a student, you could recommend they buy a backpack that could work for both hiking and school purposes.
If the level of personalization needs to become more granular, what types of segments should marketers be focusing on? It is most effective to group customers into consumer communities—that is, groups that share a life stage, career, or affiliation that they strongly identify with. Some common consumer communities include students, the military, and healthcare workers. Since this is a more personal angle, it tells you more about who these individuals are as people and what they want compared to information such as where they live or how much they make. And because members of these communities often know many other people in that segment, they will often tell others about your brand.
Privacy-Friendly Data Collection
You need customer data for segmentation, but the world of data collection is seeing a strong push toward privacy-friendly methods. Companies such as Google and Apple are phasing out third-party cookies while regulations such as the GDPR bolster the standards for data privacy. Consumers are concerned with how their personal information is used and want brands to prioritize data safety.
These changes have led 72% of marketers to struggle with data deprecation, which means they are having difficulty collecting data about their customers within privacy-friendly frameworks. In turn, many marketers have started to prioritize collecting zero-party data, which consumers knowingly offer up in exchange for something they want, such as a discount. Consumers feel more comfortable knowing exactly what data they are giving out and are more likely to share information if there is an incentive. And since it comes straight from the consumer, this data is also high-quality and high intent, making it perfect for use with segmentation.
With data enrichment, brands can enhance existing customer information with additional data that can provide deeper insights. The benefits of using this for segmentation are obvious; you need data to segment your customer base, and the more data you have, the more specific you can be when building your segments. Often, brands have only names and email addresses, so data enrichment allows you to categorize customers in a more cohesive way.
What data you choose to enrich is up to you, but consider a data append process that focuses on consumer communities. When you enrich your data with information such as which of your customers are members of the military, you can connect with them on a more personal level and can send them exclusive deals just for that community.
Stay Current with Your Segmentation Strategy
Marketing segmentation has already gone through many changes over the last few years, and it will certainly continue to morph as time goes on. For marketers, this means you need to be thoughtful about your segmentation strategy. Leveraging these segmented marketing predictions can separate you from competitors and enable you to target your audience in the most effective way possible.
To assist with your segmentation strategy, SheerID offers top-of-the-line tools to identify and acquire consumer communities like students, teachers, and the military. Our Audience Development product helps you determine what consumer communities your customers belong to, and our Verification Platform helps you build gated offers that reward these specific communities. Together, these products let you learn more about your customers, segment them, and use this information to boost conversions, drive retention, and increase your marketing ROI.