Segmentation Trends and Marketing Efficiency
The trend toward big data — capturing and using every piece of information about every customer transaction — is leading to increased opportunities to segment customers and increase marketing efficiency. Segmentation trends are evolving rapidly as companies try to figure out how to best use the plethora of customer data now available.
New segmentation trends tend toward more granularity, but this is not always optimal, according to Kevin Hillstrom’s white paper “Ten Things You Should Know About Customer Segmentation.” A company may want to use a higher level of segmentation to determine and communicate results to management while using a more specific level to implement marketing strategies. Reporting could require the division of data into only 15 or 20 segments while other business needs could call for focus on several hundred segments (provided there is technology to support such.)
Data needs to be segmented in a way that makes it actionable. Once the data has been segmented, what action will the company take to increase its profitability? Knowing that 40 percent of sales come from plaid widgets is not useful until you determine whether there are more customers for plaid widgets who you are not reaching, or if your plaid widget customers will also buy striped widgets.
Segmentation trends continue to evolve as the marketplace evolves. Segmenting customers based upon the social media platforms they prefer or knowing whether they purchase online or through a mobile device becomes a critical path for reaching those customers before they make purchase decisions. In his article “Four New Approaches to Customer Segmentation in a Digital and Social Age,” Joel Rubinson of Rubinson Partners, Inc., suggests segmenting based on targetable interests and values, brand loyalty and purchase behaviors, among other ways.
Just as companies are collecting more and different data on their customers, the recent United States Census collected more data on people living in the U.S. than ever before. In addition to collecting information on age, gender and race, the new census collected information on family structure, housing situations and much more. This information is useful to e-commerce companies as well as brick-and-mortar organizations, and plays into the trend of greater segmentation.