121 marketing is the dream of all businesses and whilst even the big brands cannot realistically achieve this, with the tools and data now available, they can get closer than ever before. But do you know the secret to how they do it?
It’s not massive marketing budgets, it’s not expensive software or even working with big-ticket agencies.
The answer is segmentation.
Segmentation in a marketing sense dates back to the 1920s, as the market size increased and businesses started to differentiate products to sell to different groups of the population. In the last 30 years, its become a lot more sophisticated due to the data the internet has given us and the systems available to access and maximise that data.
But again, this isn’t a great secret that small businesses cannot hope to achieve. In fact, segmentation and the use of data are great levellers in modern marketing.
As a small business, you can utilise segmentation in two key ways — Understanding your customers’ lifecycle through segmentation and then segmenting down those lifecycle stages so you can create campaigns that deliver the right messages to the right people at the right time.
Let’s look at some examples of these segments, the data they utilise and the campaigns you can deliver.
Segmenting the Customer Lifecycle
This is the absolute bedrock of a segmentation strategy and will improve your marketing tenfold. Everyone has a different flavour on lifecycle stages but they all come back to a similar theme.
Prospect; Customer; Advocate; Lapsed; Lost
Prospects are leads, potential customers, maybe signed up to a newsletter but have not made that first purchase, they might just be site visitors that you have not yet engaged fully.
Customers are exactly that, someone that has taken the key action. Remember that for some businesses this might be downloading an article, it isn’t always about a purchase.
Advocate, otherwise known as a VIP to big brands, but advocate is a much better term when it comes to small businesses because it is advocates that tell the rest of the internet about you and grow your business. Identifying them and treating them differently is critically important to any campaign. This is all about segmenting your repeat customers, those that buy as frequently as is sensible to expect for the product you are selling. For example, if you sell bread, then you can expect an advocate to buy weekly, so anything that is at least weekly or better would be classed as an advocate.
Lapsed customers MUST have purchased at least once previously and have not purchased in what’s a sensible period to have expected them to purchase, for example, with our bread business above, it’s reasonable to say if they have not purchased in over a month, they are likely to have lapsed and will need a targeted message to get them back.
Lost customers have moved past the point of being classed as lapsed and moved to the stage where it’s reasonable to assume they have made the decision not to purchase from you again. With a lapsed customer, reminding them of your product/service can help return them to your site, but when they are lost, you will only succeed in annoying them and lead to them complaining, junking your emails or maybe even moaning about you online, the exact opposite of the advocate. It takes a lot to put someone into this segment, but it is important to be aware of them.
One thing to not confuse is the difference between the lifecycle and the level of engagement you have with the individual. As I’ll explain next, it is possible to be engaged with a brand but not buy anything. It’s also possible to be disengaged with all marketing but still be an advocate.
- — Not quite the same level of use as in the early days of direct mail, but clearly men and women look at different products and thus campaigns can be targeted accordingly. It’s key nowadays not to assume too much about gender and market in a stereotypical fashion, for example using pink colours for woman
- — The most common form of segmentation, due to the ease of data collection (Date of Birth) and how useful an age range is. Over time people’s buying habits and needs change, so understanding the age group they fall into really does inform your messaging
- — knowing the buying power of your audience can help you change the nature of a campaign or in fact if you target people with some specific products
- — information like if they have kids are great ways of changing a message or selecting product ranges to highlight
- — The classic campaign driven by behavioural segments, where you identify all people that added to a basket but didn’t complete a purchase. It’s possible to further refine the campaign by looking at the pages seen before adding to the basket, plus understanding if they are an existing customer
- — Taking the segment of customers that have lapsed and then using the information you have on previous browsing behaviour or product preferences to tailor the campaign towards encouraging them back
- — A programme often aimed at subscribers that have looked at a product but not gone through the buying funnel
- — This style of campaign is normally reserved for post-purchase or maybe after a sign-up. Whilst the customers’ lifecycle stage is well known by their action, the campaign can be further refined by understanding what they have viewed or potentially, in the case of the subscriber, some preference data obtained when they signed up