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It has been a while since an update and the reason has been unprecedented work (from my day job). I promise to be back as soon as possible. Please bear with me.

Digital Segmentation by consumer channel preference

This is yet another way to segment consumers and is based on the premise that is inherent in a multi-channel environment. While it may not work across all kinds of needs, it helps determine which channel is more likely to be used, especially when a business needs to continuously invest in multiple channels.

The fundamental premise of this is what is known as a "Technology Acceptance Model". This has several elements. When confronted with the option of using a channel, the consumer has a perception about the usefulness of the channel (PU). This is layered with the perception of the ease of use of the channel (PEOU). If the channel is perceived to be useful but not easy to use, the likelihood of its being used reduces. Similarly, although the channel is perceived to be easy to use, if its usefulness is questionable, the channel is unlikely to be actually used.

It is only when both PE and PEOU get high scores in the minds of the consumer that the intention to actually use that particular channel is validated - and confirmed upon actual usage. The preferred channel in the model is therefore the channel with the highest intention to use.

The model can be explained with a simple example. Let us assume a consumer wants to buy (for the first time in her life) a life insurance policy. Her channel set is caused by her experience with channels in former service settings or as a result of external factors like social influence of her family or marketing campaigns. Her channel set might consist of for instance three channels: telephone, Internet, branch office. She might use the Internet to gather information and might go to a branch office for closing the contract. After evaluation of her experience, her (presumably quite subconscious) expectations will be confirmed or disconfirmed. This will have impact on the preferences of the three channels within the channel set, which will determine the channel choice during the next purchase of insurance.

Studies have revealed some interesting insights into how men and women rate channel preferences.

• In evaluating channels women are more outcome-oriented; men are more convenience-oriented
• The evaluation of the channels shows that men are more positive about the Internet; women on the other hand are more positive about the mobile Internet.
• Although for all groups the Internet is the most popular channel, the face-to-face channel is most popular among the lowest educated, the telephone among the highest educated.
• The middle educated score highest on the satisfaction scores with the experiment; the highest educated score lowest. The higher educated might be more critical in general or they might be more critical because they have more experience with buying travel insurance.

So there you have it! A usable segmentation model based on usage of various channels by consumer preference. Try it out the next time you are faced with a budget allocation conflict across multiple channels. It will surely help you identify the channel that will give you the best return on investment!

Digital Marketing Segmentation on the basis of purchase behavior

Purchase behavior in the online world is a very different entity when compared with the traditional world. With the rise in social and digital media platforms, consumers are constantly evolving and changing the ways in which they research and purchase online. New shopping paths are emerging depending on behavior, device, location, and intent. It’s not just what consumers do that is important; it is also how, when and why they do it.

Consumers are increasingly distracted, but smarter. Marketers don't need to lag behind! Digital marketers need to take a hard look into the data trail that consumers leave behind. Analysis of this behavior can provide actionable insight into how consumers arrive at their purchase decision.

One of the chief ways in which this can be done is in terms of the purchase behavior of the consumers. In order to implement some key questions need to be answered. They include, what does your consumer buy online? How frequently? Each time they buy, how much do they spend? Do they buy products only from a particular category? Or do they often buy from a variety of categories? The answers to these questions will enable you to do what is commonly known as a FRAC Analysis in the digital marketing world.

Simply put, FRAC Analysis involves:

• Frequency = the number of transactions the customer has made in a fixed time period
• Recency = interval between the times when the latest consuming activity happened and the present
• Amount = monetary value of each purchase action
• Category = types of product purchased, singly or together

This is an excellent way to segment your existing customer base and slot them into buckets. Some buckets will respond better to offers and promotions than others, so your email marketing or App marketing efforts can be concentrated on them for best results. Not only that, over time, the FRAC Analysis can also begin to help you predict how the customer lifetime value changes over time and to spot trends that help you maintain/retain the hold you have on your most profitable customers.

Smart online segmentation through search behavior

While search is the number one activity that most people do online, not many realize that searchers reveal more than they conceal! Thanks to the power of big data it is indeed possible to use search behavior to indulge in some informed and powerful segmentation. Let us take a couple of instances.

1) You work with a company that is launching a fitness tracking watch

• You would definitely be interested in people who are looking for fitness-related information. So the usual keyword suspects would include terms like "Gym", "Fitness Center", "Healthy Living", "Exercise recommendations", "Healthy Eating", "Fitness Tracker", "Fitness Tracking" etc.
• Additionally, you would be even more interested to know which of these searchers went on to visit the website of health related companies and organizations.
• Further insights could be gained if you could filter down to searchers who actually looked at competing brands/products from your competitors
• A glance at Analytics data would give you a precise fix on the age group, gender skew, attitudes, opinions and interests.
• Combing all of these would provide you with a laser-like focus on exactly the right audience. No reach wastage, no unnecessary spends!
• It would also inform you about the precise price-point that will attract these searchers.

2) You work in the travel vertical, booking custom vacations for customers

• You would be interested in searches around terms like "Best Vacation Option", "Best place to visit in October", "Vacation for two to <Destination>", "Best family vacation in <budget>", etc.
• You would be even more interested in finding out which of these searchers went on to check travel aggregator sites, individual operator sites or even airline and package tour websites.
• Specific information on people who looked at online shopping sites for travel-related purchases could give you an alert that they are seriously planning things.
• Further insights could be gained if you could filter down by searchers who visited your closest competitors for similar services
• Again, analytics data would give you age, gender, attitude, opinion, interest specific information.
• You could even look for specific inputs on people who browsed through ratings on sites like tripadvisor and kayak.
• These channels could also give you a wealth of social media information helping you pin-point the right prospects.
• All of this information would help you collate a list of active searchers who are inclined towards the product/service that you are specifically selling!

All of this is possible even with free tools available online. Even more specific information like where people came from, how long they spent, which specific parts of your site and where they went on-wards can be gained by deploying the free and simple Google Analytics on your blog or website. Getting analytics on your website should therefore be your number one priority. After all, here is an opportunity to see the power of segmentation work for you. Up, close and personal!

Digital Segmentation Experiment

The next time you are out shopping for home goods, groceries and daily consumables, try out this little experiment. In fact, you can do this even if you only ever shop online without having to physically get to a store. The experiment has to do with the way people purchase and it may reveal things about you that you probably never noticed before. Ready? Let us begin.

Price

Is price the primary criterion for all your shopping endeavors? I mean, is that the dimension you start with when looking for things to buy? Don't jump the gun just yet. Even if price is the fundamental criterion, there are several aspects of it. For instance:

• Are you on the look-out for the lowest possible price?
• Are you sometimes (with a specific set of products) willing to pay more for perceived quality?
• Would you consider buying products that are currently on a discounted price as opposed to their regular retail price?
• Would you consider buying items closer to their expiry date if they are discounted?
• Do you stop by the bargain discount counter or tab at all? Or frequently?

Quality

Similarly, is quality your chief criterion? If so, what are the parameters of your quality-centric shopping?

• Would you consider paying more for quality?
• Is higher price your most reliable indicator of higher quality?
• Would you pay more for organic products?
• Would you be willing to pay more for 'green' products?
• Does quality apply across all your purchases? Or is it limited to specific product types? For instance food items, skin care etc.

Brand

Brands exist for a reason. They seemingly offer consumers choice. But brands may mean different things to different people. Even the same brands! How do brands figure in your shopping criteria?

• Is there a specific brand you are fond of? 
• Do you have brand preferences across products lines?
• In your mind, do you have a hierarchy of preferred brands? Options if your first choice isn't available?
• On what basis did you develop this brand hierarchy?
• What factors influenced the brands in your consideration set?

Your answers to these questions will tell you a lot about the kind of consumer you are. Remember there are no right or wrong answers. To each one their own style! All we are trying to do here is to find out what kind of a value/price/brand shopper you are. More importantly, doe your preferred store or online destinations allow you to shop based on these criteria? Is it an over guidance or a tad more covert? Think about it!

Segmenting the Digital Shopper | Thoughts and Observations

Is there a fundamental difference between shoppers online and offline? Marketers have constantly been grappling with this question. It is no so much the matter of need or infrastructure but more on the lines of ability and willingness. Using segmentation to understand them will help us answer this perennial question.

Let us try to take a look at consumers and their behavior on online channels. This only includes those consumers who have made use of some digital channel at some point in their purchase journey. Whether it is Research-Online-Purchase-Offline or otherwise. A while ago, a leading media agency (associated with a big network) came up with six distinct segments for these consumers. 

The segments include:

• Basic Digital Consumers
• Retail Scouts
• Brand Scouts
• Digitally Driven Consumers
• Calculated Shoppers and
• External Shoppers

The details pertaining to each of these segments are as follows:

Basic Digital Consumers: these are not savvy digital users. While they may have a basic level of comfort with online research and shopping, the are not as prominent on mobile or social channels. However, in terms of overall likelihood of buying offline, they are the second highest segment.

Retail Scouts: These consumers exhibit a market preference for a particular retailer over brands. This is not to say that they are brand averse, rather that they look at their preferred retail outlet to inform their shopping. They have a decent presence on mobile and are likely to use it more at home than elsewhere. They are comfortable buying online but don't show a marked preference for that or offline.

Brand Scouts: These consumers are very similar to the Retail Scouts except for the fact that they have a favorite brand as opposed to a retail outlet. The majority of them begin their shopping research with a particular brand in mind. They may however be motivated to buy other brands.

Digitally Driven Segment: These consumers use every digital channel to inform and conduct their online shopping. They use social and mobile more than any other segment, value convenience above all else and they do everything in their power to avoid physically going to a store. While they have a healthy user base at present, they are only likely to grow in numbers and importance as a segment.

Calculated Shoppers: These are the "wait and watch" consumers. They know that they want to make a purchase but are trying to narrow down the consideration set to pick one clear brand. There is no urgency in their shopping pattern. They prefer to take their time to get the best deal.

External Shoppers: These are the window shoppers of the online world. These are non-mobile shoppers. They typically make use of fixed web channels to conduct their research and try to find compelling reasons to buy and to buy a specific brand at the same time. They too take their time to make a purchase.

So, various clearly-defined segments do exist in the online shopping sphere after all! The important thing to understand is that the purchase journey or paths taken to purchase differ for all these consumers. While price may be a core concern, it is the nature and length of the journey undertaken that becomes the dominant factor. Price and promotions are relegated to secondary positions.

The other thing to remember is that like all journeys, these paths to purchase will also change over time. The increasing shift to mobile devices will fundamentally change the way consumers look at and experience online shopping. Demographics alone will be of little aid in helping us track these journeys. Marketers therefore need to keep a keen eye on intent - the triggers that influence each of these segments - in order to devise a strategy to cater to these segments. That and continuous refinement over time to co-relate to changing behaviors.

Digital Segmentation in the Automobile Industry

Answer this quickly! What do the following Automobile brands have in common?

Porsche, Audi, Bentley, Lamborghini, Bugatti, Skoda, Seat, Scania, Man and Ducati

For those who don't know (and frankly, neither did I before I researched this post!) these are all automobile brands owned by Volkswagen! 

While that bit of information is startling enough, a closer look reveals another facet. Many of these brands compete against one another, especially in the Luxury segment. What this means is that consumers, irrespective of the brand preference, are actually putting their money into Volkswagen's pockets. In most cases, they don't even realize they are doing so. Call it underhand marketing or brand segregation at another level, it clearly works for Volkswagen.

This brings us to the topic of today's post. How exactly does segmentation work in the Automobile Industry? In previous posts we have already examined in detail why demographics are not the ideal way to segment. However, does the automobile industry have a specific type of segmentation that works? They answer may surprise you. For there are not one, but three non-demographic ways to segment for this industry vertical.

1. Value-based segmentation

Value means different things to different people. Hence, this method of segmentation can be further sub-divided into three distinct categories.

a) Those who buy cars for their economy (fuel or otherwise)

These people are looking for the cheapest car that will serve their needs. Brands aren't that important to them. They prefer to go with the brand or dealer who offers them the biggest savings or discounts. They are particularly concerned with fuel economy. After price, that is their chief concern.

b) Those who buy the best car they can afford

While a bit more brand conscious, these people are looking for the best car they can afford. They typically have a budget in mind and use a checklist to find a car that checks the most boxes. Build quality, durability, reliability, fuel efficiency, service availability, cost of parts are all factors they look at. Price is a primary concern but not the only one.

c) Those who buy the car that enhances their status

This category of people may not readily admit their desire, but status or the prestige value of the car is an important factor in their consideration. Their version of status may not realistically represent the luxury market - rather, it is an upgrade to the next level of car that they desire. Owners of hatchbacks moving to sedans and sedan owners upgrading to an SUV are examples that represent this category.

2. Aesthetics-based segmentation

Again a complicated segment simply because aesthetics (or the lack of it) differ greatly among individuals. For some buyers an expensive car is a showy automobile that has a lot of chrome and ornamentation while for others it is a much more subtle, bling-less appeal. The key to understanding this segment is identifying cues from other aspects of their life. What does status represent to them? How do they define class? How good or contemporary is their understanding of style? What trends in fashion and lifestyle appeal to them? The answers may not be readily available or forthcoming. So the best way is to use cross-category information to identify their sense of aesthetics.

3. Evolution-of-choice segmentation

This is an important segment in the automobile industry. These are people who bought a particular brand. The reason could be one of many - the discount was great, the deal was attractive, the version that year had great styling etc. Post this, they fall into a wide spectrum. On the one hand there are hardcore loyalists of a particular brand. They have only ever owned one make of car and will continue to do so. Possibly moving up the value chain with other brands across categories from the same manufacturer. On the other extreme of this spectrum are the brand flirts - those who buy whichever make of car catches their fancy at that particular point in time. They can be easily persuaded to buy another make. In between these two extremes lie the susceptible consumers. They have a particular brand preference to a greater or lesser degree. However they can be persuaded to consider another make - if the motivation or rationale is strong enough.

Depending on the kind of segmentation approach chosen, a digital strategy could be put together to identify the best approach. When catering to the Value buyers, product features that confirm their needs can be highlighted. When catering to the aesthetics seekers, content marketing with a lifestyle or fashion slant could prove effective. When playing to the evolution-of-choice consumers, influencers and endorsements from trusted category experts could swing things in one's favor. 

What is important however to start segmenting. If an automobile marketer chooses not to do so, they run the risk of using the wrong way to market to the wrong audience. And that is never a good way to build a brand in any sector!

Digital Marketing Segmentation for the Education Industry

When it comes to education and higher education in particular, it is tempting to view the student community as a homogeneous mass. The traditional approach has been that all students are the same and that the same motivation – acquiring a good education – motivates them. However, increasingly, this is not the case.

What is more important is to understand why students are interested in education. What do they expect to get out of it? What purpose drives their efforts? When marketers explore mindsets to define the right approach, it makes for more relevant targeting and positioning. This is diametrically opposite to the old technique of listing out all the features and benefits that an institution offers prospective students. This may or may not be relevant to all kinds of students.

Coming to the kinds of students, as mentioned earlier, they are no longer a homogeneous mass. This is where a dated, yet still relevant report by the Parthenon Group (currently a part of Ernst & Young LLC) throws some light on segmentation in the higher education sector.

Titled “The Differentiated University”, this report separates students into six distinct and defined segments based on their motivations and mindsets rather than just demographics. These segments include:

• Aspiring academics
• Coming of age
• Career starters
• Career accelerators
• Industry switchers and
• Academic wanderers

The details of the various segments, as defined in the report are as follows:

Aspiring Academics - 24%

The Aspiring Academics are the segment most similar to the picture of the “traditional student” that most colleges are so aggressively seeking to serve. They are 18-to-24-year-olds with impressive academic profiles, and often come from wealthier families. They are academically driven with plans to go to graduate school, so the availability of a specific major and the presence of top-notch research faculty are valued by this group. While this segment is the largest of the segments found in the survey, it remains only a quarter of the market.

Coming of Age - 11%

A second, smaller group of traditional-aged students, the Coming of Age segment, is not yet sure what they want to focus on when they “grow up,” but have the luxury of taking the time to figure it out. These students are less academically driven than Young Academics and place little value on research opportunities, research faculty, or graduate school offerings. For them, college is about broad academic offerings, an active social culture, and trying a variety of activities without knowing exactly where it will lead.

Career Starters - 18%

These Career Starters are extremely job oriented and use college to advance their specific career prospects. These students are focused on life after college, and are looking for a college that enables them to reach their ideal career position in the shortest amount of time. Career Starters are one of the more price-sensitive segments and value job placement rate and career placement services in making their college selection.

Career Accelerator - 21%

Typically older, Career Accelerators are going to college with the aim of advancing their career at their company or within their current industry. These are primarily working adults with some prior college experience and are likely to be most interested in institutions that award credit for their previous academic experience, as well as their job experience. These students value non-traditional delivery methods, particularly online courses. Career counseling and career placement services are strongly desired by this group.

Industry Switchers - 18%

While in many ways similar to Career Accelerators, Industry Switchers have a different motivation for going back to school to earn their bachelor’s degree. Often in more precarious financial positions or unemployed, this segment is looking to start a career in a completely different field. Industry Switchers place a high value on an institution’s link to labor markets and its ability to put them in touch with relevant employers and prepare them for their career transition.

Academic Wanderers - 8%

Students attending college later in life, Academic Wanderers don’t know exactly what they want out of college, but believe that obtaining a college credential will open doors for them. They are more likely to be unemployed and potentially have lower incomes. Academic Wanderers are the most “at risk” of the student segments. They are the least satisfied with their college experience, do not place high importance on their academic performance, and are the least likely to believe they will complete their degree.

These segments have been created with a specific focus on undergraduate students. However, the way they are defined leaves a lot of scope for usage across all kinds of student communities. This approach allows college and university leaders to develop more sophisticated strategies for reaching the next generation of students with offerings and operating models to most effectively and efficiently serve them.

Fundamentally, all students are interested in the same thing – an education. But digging a bit deeper can help marketers understand the specific reasons why. The real motivations are what help one determine what students expect to get out of the educational institution can go a long way in helping marketers build brand relevance.

The Differentiated University complete report can be accessed here.

Digital Marketing Segmentation | Defining Personas

One of the tools that present-day marketers use to help with segmentation is what is known as ‘Personas’. Market segments are based on broad commonalities of a particular audience. These may include demographic data, psychographic data and behavioral data among a host of other things. From a strategic standpoint, they are really useful in identifying which part of the overall audience is worth going after.

In order to determine the how, we need to develop suitable personas. Personas are highly-specific representations of the actual individuals who make up a particular marketing segment. Think of them as a representative individual who is ‘personified’ – giving marketers the ability to predict behavior, usage and reactions.

Although segments are strategic in nature and personas are more tactical, they both share one goal – helping you understand your customers so you can market to them better! When your segments are well researched and clearly defined, they will result in the creation of better personas.

The origin of personas

Personas originated in the field of programming and user experience design. The practitioners of these fields needed a way to better understand how typical users of the products they designed would understand and work with them to resolve actual problems. Otherwise, the product/experience design team was likely to get carried away with ‘cool’ ideas that did nothing to add value to the lives of the intended users. All form and no functionality would result in an interesting but largely-unused product!

Visualizing the ideal persona

Whatever data you choose to include in your persona, remember to visualize how that persona would look. It is helpful to include some personal information about the persona as that humanizes it rather than making it a statistics-filled demographic drone.

For example: Think of your audience as “Fresh Graduate in his first full-time job with an active social life who gyms thrice-a-week” rather than “18 to 24 year old male who has just started working”. While both attribute statements are likely to define the target audience, the former is more personal and offers you a way to connect with the audience. The latter just spews facts at you.

Another example: Thinking of your persona in terms of “Middle-aged family man with two teenaged kids and home-maker wife who is paying for a housing loan and a car loan but is keen on a foreign vacation for the family”, will provide more insights into financial product selection motivations rather than “Salaried male 34 to 45, seeking personal loan”. You get the picture!

No matter how you choose to go about defining your audience persona, remember one thing. Personas exist in the minds of the marketer – not the minds of the audience themselves. Every member of the audience would like to view themselves as unique individuals with a custom set of circumstances and motives. So try to be a tad objective with persona definition rather than making it painfully specific. After all, the objective behind creating personas is to enable you to reach out to a reasonably similar audience with reasonably similar motivations!

Digital Marketing Segmentation | Audience Attributes

When it comes to segmentation – whatever be your audience – attributes are a key way of gaining a better understanding your target. Attributes are nothing but quantifiable characteristics and provide a way for marketers to understand the needs and motivations behind audience behavior.

Attributes can broadly be classified under the following buckets:

Personal attributes – What people are

These are attributes that tell us what people really are. They mostly pertain to demographic data like age, gender, household income, marital status etc. A secondary level of attributes may indicate life-stages as well. Things like graduation, wedding day, birth of child etc can indicate the current shift in personal attributes and may have repercussions on choice of product/services.

Behavioral attributes – What people do

Behavioral attributes are mostly observed. What media does the target audience consume most? What kinds of products do they typically buy? What online sources of information are consulted? What kind of content is most consumed on social media channels? This gives us very usable information on where they are and what they do while they are there. Marketers can use this information to create compelling content to cater to audience requirements.

Attitudinal attributes – What people think

Attitudinal attributes comes in two distinct types. Some are explicit when people clearly know what they think and feel about a topic. However, human being being what they are, some others are rather implicit. People may often not realize what they feel about a particular topic till they are confronted with a specific situation. In such cases, the attitudinal attributes have to be inferred from available data.

Once these different attributes have been gathered and analyzed, they can be applied to segments. When customer segments are mapped to needs/values clustering, insights will begin to emerge. This helps marketers identify things like the right price point, the ideal segment to target, the most compelling message, the most valuable customer, the trigger for behavioral change, the way to pitch product information etc. This informs the creative process which leads to better conversions and hence sales.

Digital Marketing Segmentation | How to Segment?

In a previous post we discussed “Why to Segment?” Today, we will look at some practical ways we can go about segmenting our audiences. There are two primary ways we can go about doing this.

1. Strategic Segmentation

Strategic Segmentation looks at groups of customers and tries to identify insights which will help in one of the following:

a) Targeting

What kind of a customer can be targeted? If it is an existing customer, is the customer happy or unhappy with the products and services of the company? If happy, is there the possibility of cross or up-selling? If unhappy, is the customer at risk of switching to a competitor? Is the customer worth retaining? Being able to segment and target audiences in this manner makes for more efficient processes and better customer service.

b) Messaging

Messaging tries to address the specific content that each of the identified audiences is currently seeking. For instance, those who have just stumbled across your product or service are probably interested in knowing more about you and your offering. While those who are already aware of what you offer will be more interested in the exact details of what’s on offer.

c) Product Development

Are your customer needs satisfied by your current product offerings? What else are customers seeking? What proportion of your customer base could benefit from those enhancements? What is the feasibility of offering those services? What does it take in terms of time and development effort? What could the resultant revenue be to the company? Segmenting on these lines makes use of listening to customer issues to enhance product features.

For a related post, see 3 types of “Do-it” Customer Segments

2. Tactical Segmentation

Tactical segmentations on the other hand is more interested in segmenting users by the likelihood (or not) of their buying a particular product or service. For example, people searching for particular recipes could be segmented and targeted to purchase a specific ingredient by a food manufacturer. Or those looking at Housing or Real Estate websites could be target by a bank for a Housing Loan. Alternatively those looking at comparison and aggregator websites for interest rate information could be up/cross-sold suitable products by BFSI marketers.

When the Strategic and Tactical Segments are mapped to Customers and Prospects (Who to segment?) you can develop a right framework that helps position your products and services most effectively.

The 3 types of "Do-it" customer segments

In any planning endeavor, be it a vacation planning or a tax planning, three distinct types of customer segments manifest themselves. Do remember that segments are not in the minds of the customers themselves. Every customer chooses to believe that they are unique and that their wants, needs, aspirations and usage habits are unique as well. One reason for this could be the ego inherent in every human action. Another could be the lack of data to help them see themselves as part of a group or bucket.

Be that as it may, segmentation is largely a marketers’ tool to help them evaluate the buying journey and devise mindful interventions. This post looks at the 3 types of Do-it customer segments commonly found online.

1. Do-it-myself segment

These individuals prefer to do their tasks themselves. Whether it is a home improvement project, information gather exercise, trip planning or even tax planning. They have the patience and the ability to scour the Internet for information and the ability to sift through it all to learn how to do this by themselves! Such individuals are self-motivated and driven to seek out relevant information and to act upon it. They may not necessarily be cash-poor but definitely have the time to dedicate themselves to information gathering and sifting through.

2. Do-it-with-me segment

These individuals exhibit some of the characteristics of the Do-it-myself segment, but only up to a point. Post this, they get so overwhelmed by the information and options presented by the research process that they prefer to have a helping hand. While they are great at initiating things, they are not so good at finishing it by themselves. They often require a bit of help and motivation at the second leg of the journey to successfully complete the process. These individuals may be a combination of time-poor and cash-poor.

3. Do-it-for-me segment

These individuals could not be bothered with doing it by themselves. They either consider it beneath them or could not be bothered with it as they prefer spending time on more important things (according to them). They are the ones who typically outsource the entire process and prefer to pay for the service offered rather than spend any time or effort in trying to learn it for themselves. These are typically time-poor but cash rich individuals. They may not be driven individuals when it comes to their online habits and information needs and may merely essay a purely transactional role.

Once you have identified the different segments and understood their unique needs and motivations, it becomes much simpler to address them on digital channels. We wil dive deeper into that with another post.

Digital Marketing Segmentation | Why to segment?

There is absolutely no worse reason to segment than that everyone else is doing so. If you haven’t understood why segmentation is important for your business, then you probably are far, far away from the need for segmentation itself.

The simplistic rationale that all customers are different is not sufficient to warrant digital segmentation. You rather need to consider a number of thing to figure out for yourself if 1) your business is ready for segmentation and 2) whether you can realistically segment your customers and prospects?

They easiest way to do this is to start with defining your goals. The first thing about goal-setting is that it is entirely different for your customers and your prospects.

Customers

Your customers already know about you and probably communicate with you through digital channels. As a result you probably have a wealth of available information on their preferences, their behavior, habits etc. Good data sources would be website analytics, CRM data, POS data etc.

For existing users of your website, the goal could be to enhance the usability and ease-of-use of the website or other digital channels. Is the user experience simple enough? Is it effective at converting leads to customers? Are the calls-to-action compelling enough?

For existing customers, it could be enhancing customer experience or retention. This supposes that you are able to attract a greater share of wallet from your competitors for similar products or services.

Prospects

These are people who are likely to benefit from your product or service but as a marketer, you don’t have any primary sources of data about them. This is where you try and find about more about through access to external data sources. Some good places to start include syndicated data, third-party publisher data, market research data, government data etc.

Prospects who contribute to the growth of your business typically take the form of leads that you generate. These are individuals who have expressed an interest or inclination regarding your product or service and constitute those you know will benefit from it.

Prospects who contribute to product or service expansion are those whose needs are currently unmet by your product or service, but those you know would benefit from a differentiated one that you can offer in the future.

In another post, we will take a look at how you can strategically and tactically address your customers and prospects through digital segmentation.

Digital Marketing Segmentation | Who to segment?

With all these conversations about digital segmentation it is probably likely that marketers are in a bit of a rush to get back to their desks and segment the heck out of their customer databases. But hang on for a minute. The fundamental purpose of segmenting is to find that portion of your audience that is actually stable, addressable and unique enough to warrant reward with preferential treatment.

Confused? You shouldn’t be. Let us take that statement and analyze it. There are three key factors we need to look at:

Stable

Is the segment you have identified stable enough? What this means is that if you have segmented well, that particular segment should remain consistent for the foreseeable future. With all the rapid changes that social media creates in user behavior, it is clearly not likely that any user behavior will remain the same forever. But at least for the foreseeable future, your segment should be viable.

Addressable

There is no point in defining a segment, even a stable one, if there is now way that you can reach out to and communicate with that segment! The second most important consideration for a usable segmentation strategy is to figure out addressable segments. Do the members of the segment exhibit preference for one channel of communication over the other? If so, what about that channel appeals to them? Immediacy? Frequency? Figure this out and you will be set to communicate to them.

Unique enough to warrant reward

Is your segment all about figuring out your most valuable customers? Or is it people who have the potential to be your most valuable customers? Basically are they unique (and important enough) to warrant rewarding them with preferential treatment? This is really important. If you are going to spend time, effort and money in trying to reach out to and communicate with a particular segment, they better be worth it! Targeting the “unconvertables” is not only an exercise in futility – it is a misuse of the segmentation process itself!

In the next post, we will take a look at the step-by-step process involved in setting up the right goals to help you segment meaningfully.

How segmentation is helping the world's largest retail rewards program!

The Middle East is not usually known as a savvy digital market. This is why it was all the more gratifying to hear about how the Landmark Group - that operates more than 2000 outlets across the Middle East, North Africa and the sub-continent - is indulging in some really sophisticated marketing!

Reputed to have the World's Largest Retail Loyalty Program – “Shukran”, with an estimated 15 million members - Landmark wasn't always a sophisticated marketing entity. In fact, as with most conglomerates the data resided in too many silos across the enterprise with hardly any ability to communicate with coherence across the board.

All that changed in 2010, when the Loyalty program was extended throughout the region. Suddenly it was imperative to get a holistic view of the customer. So much so that Loyalty today is a core KPI across business categories. One way Landmark is achieving this 'holistic view of the customer' is by uniting purchasing trends, attitudes and transactional behaviour to create a multi-dimensional segmentation strategy. This is used to not only work out who to offer things to and when, but also what to offer different customers.

Specifically, Landmark’s loyalty team has grouped customers using a range of data identifiers. These include:

• Cultural (environment, subcultures, classes and trends)
• Social (such as community groups, family, role and status)
• Psychological (motivation, perceptions, learnings, attitudes) and
• Personal (demographics, purchasing power, lifestyle and personality).

It’s also attempting to tap into life stage segmentation in order to understand which products and services are most relevant to an individual. In addition, the team is using recency, frequency and monetary spend to categorise members for VIP and Gold status, but equally, to identify and convert the least valuable customers across its member base.

There’s also investment going into ‘headroom segmentation’ – based on purchasing patterns and items a customer has purchased – along with a digital user segmentation matrix that breaks down customers into six segments: Wannabes, mainstreamers, nomads, analogue users, paranoids and chameleons. By looking at which customers fall into each segment, Landmark can start to appeal to them in a relevant channel.

To support these activities, Landmark invested in Oracle’s Responsys platform. This state-of-the-art platform gives the enterprise the ability to plan, define campaigns, conduct A/B testing, continually refine and produce the right kinds of reporting across the enterprise. One current challenge they are facing is mining insightful data from social channels like Facebook. But they have indeed come a long way since the time they started. In fact, the 4P's of marketing have irrevocably changed to the 1R - a long-standing Relationship with customers!