4 Tips for Using Audience Segmentation to Improve Your Marketing ROI

You’ve spent countless hours and put substantial investment behind truly understanding who your target audience is. You feel like you know them so well you could be their friend… grab a drink perhaps? But now what — how can your audience get to know you just as well? By focusing your audience strategy on personalization, your target consumer will finally get that chance, and your brand will benefit through improved return on investment and increased customer lifetime value.  

When initiating a net new media strategy, many brands tend to speak to their various audiences uniformly, using the same message to reach the masses all at once. This strategy is typically an effort to save time and resources in developing creative and conducting audience analysis. However, by taking a more sophisticated approach in audience segmentation, you will inherently become more effective and efficient in your end goal of increasing your ROI.  

Audience segmentation is the process of dividing a broad target into smaller groups comprised of people who share certain characteristics and behaviors. Different types of audience segments can include those based on shared demographic information, lifestyles and behavior, or stage of the consumer journey. By further segmenting your audiences, you are structuring your campaign so that you can customize your brand or product message to cater to a specific user’s personality and characteristics. This customization will create an environment where the user feels known by your brand, and thus is more receptive to engaging with your ads and content.  

To set your audience strategy up for success, make sure you take these four key steps: 

1. Personalize Your Message  
 

When deciding how to divide up your target audience, the key question to ask yourself is, “‘How do I want to personalize my message to this group of people?”, or rather, “What does this specific group of people need to know about my brand to make it most appealing?” While you may have a solid understanding of your broader target audience’s aggregate preferences and needs, it’s important to recognize that each of the individual people within that broader audience has their own specific combination of preferences, wants, and needs. On the whole, your customer base may generally value features like reliability and low cost; however, two individual customers may assign entirely different weight to reliability versus low cost. This slight difference in customer preference is your brand’s opportunity to reach your consumer by making an impact on a personal level.  

For instance, say you sell trendy women’s outdoor footwear, and you know that the two main reasons women buy your shoes are because they are fashionable looking or because they are a fantastic running shoe. Half of your audience only cares about how they look, while the other half is focused on the durability and technology aspects of the shoe.  

With that insight in mind, you could divide this audience into two segments based on lifestyle and behavioral intent. This approach would allow you to customize your ad messaging and imagery to highlight each aspect separately and further personalize why each audience would want to buy the shoes: one ad/imagery combo for the Running Enthusiasts and another for the Fashionistas.  

2. Keep the Audience Segment Broad 

Wait… but you JUST said that the goal is to narrow down our audience.  

Nope! Our area of focus in audience segmentation is to customize our message, not to make our audiences so narrow that you only reach a handful of customers due to the specificity. Just like the example in the previous tip, you’ll want to zero in on a few large-but-defined segments such as ‘Running Enthusiasts’ or ‘Fashionistas’, rather than build out dozens of hyper-specific segments that will only reach a few hundred people (such as, ‘Running Enthusiasts Ages 20-25 Who Like Fashion and Live in Denver and Watch The Bachelor…’). Avoiding over-segmentation is crucial to ensuring you don’t artificially limit your campaign’s reach or stretch your resources too thin. 

The first thing I look at when breaking out a new audience is the estimated size of the target. Are you reaching 1,000 people with your advertising or 500,000? What size audience is worth the time and resources required to create customized messaging for each of those segments? Most of the time, broad audience segments benefit your campaign by allowing the platform’s algorithm more breathing room. The platform can then use automation to find the right people for your business, taking into account the thousands of signals the users provide.  

Another thing I like to keep in mind when building broad-but-specialized segments is how distinct the segments truly are from one another. Since some of the preferences you’re segmenting on could be shared between audiences, but just weighted differently by them, it’s possible you may see a lot of overlap of individuals within your targeting segments. That is, the same individual could be included in both targeting segments.  

If you fear there may be significant overlap between the two groups you’re wanting to message, this could be an opportunity to run a small test to see which personalized message best resonates within each target. If you find that each group responds better to the message tailored to its interests (e.g., running-focused versus fashion-focused), you can be confident that your segmentation is impactful.  

3. Data Analysis & Measurement 

If the first few audience segmentation strategies you try don’t achieve the results you’re looking for, experiment with other audience combinations until you land on the best balance of segmentation and personalization for reaching your potential consumers. Take time to analyze the data from your webpage and ad platform analytics to evaluate consumer engagement and see where you may be losing the consumer in the purchase journey. Incorporate these insights back into your strategy and try again!  

This learning phase is of paramount importance. Audience segmentation is not a one-size-fits-all solution, and it will take a series of learning cycles to find the proper structure that works not only for your potential customer, but for your internal business goals as well.  

Set defined goals for measuring the success of an audience segment. Is there a specific number of people you’d like to reach? Is there an efficiency goal for each consumer action? Is the goal to increase engagement with your brand? What KPI would be good, great, and out-of-this-advertising-universe that you want to reach? These goals will inform the team’s decision-making around your marketing plan moving forward, as different segmentation strategies will be better suited to different types of goals. 

4. Test, Test, and Continue to Test! 

After completely mastering the art of audience segmentation in a single media channel, you’ll still have only just skimmed the surface of what the advertising world has to offer in terms of segmentation and customization. Use a variety of channels to increase your reach as well as hit your consumers in different stages of the funnel. Just because one audience segment performs like Beyoncé (she’s known as Queen Bey for a reason) on Facebook doesn’t mean it will perform identically on Google. Different phases of the marketing funnel present different opportunities and challenges, which is why we are always testing out new ideas within each one. When you use an omnichannel approach to audience segmentation and testing, you’ll see return on investment manifest through revenue and lifetime value growth, as well as customer retention. 

By incorporating these best practices into your audience segmentation strategy, you will begin to reach your customers in a more authentic and customized manner. As a result, you will develop a test-and-learn process that will become the framework of your audience analysis.  

Could you use a hand getting started with effective audience strategies? Give us a shout

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