Customer Segmentation: Definition, Three Benefits and a Best Use Case

Reaching your targeted audience is crucial to the success of any marketing campaign. If the data you’re using isn’t yielding positive results, you might as well be throwing darts blindfolded in the hope of reaching your target. This is where customer segmentation can make all the difference.

Customer segmentations help marketers and advertisers create promotions and content relevant to their ideal customers. 

Suggested Read: Using Behavioral Data to Ramp Up Segmentation

Defining Customer Segmentation

Customer segmentation is simply narrowing down an audience to receive your targeted, relevant messaging — whether it be solely or by any combination of:

  • Age
  • Gender
  • Life events
  • Socio-economic factors
  • Geographic area
  • Interests (including fitness)
  • Seasonal/holiday interests
  • Purchasing histories and more.

Precisely defining your audience is effective, whether you’re trying to connect with a business professional or the “at-home” consumer. An essential step is first deciding which channel(s) to utilize, whether by email, social ads (Facebook, Twitter, etc.) or other forms of digital or traditional advertising.

Three Benefits of Customer Segmentation

While there are a variety of benefits brands and companies can realize from effectively segmenting their audiences, let’s focus on three key benefits:

1. Targeted, relevant ads equal higher engagement.

Make targeted creatives that “speak” to your relevant audience. Whether you’re marketing to millennials, seniors or those in business, create compelling images and content that appeal to your target audience. Studies have shown that open rates were more than 14 percent higher and click-throughs more than 100 percent higher in segmented email campaigns versus non-segmented ones.

2. More bang for your buck 

Greater efficiency and lower ad spend equals increased ROI. Customers want ads that are relevant to them. Precise segments help accomplish that without wasting ad spend on the wrong audience.

3.  Ability to A/B test and gauge response rates

Not sure which creative to go with? Consider A/B testing to analyze which creative design and/or content has greater responses. While it may work best with longer campaigns, an experienced and agile team can make changes relatively quickly and painlessly.

A Best Use Case of Stirista Data for Customer Segmentation: L’Oréal

L’Oréal, the largest cosmetics company in the world, has a wide variety of personal care and beauty products for both men and women, ranging from professional to high-end/luxury to indie to mass market/drug store brands. So, it’s important that they market the right products to the right customers to maximize ROI and gain market share among their target customer segments.

For example, it wouldn’t make sense for L’Oréal to target consumers who bought their cosmetics at drug stores with ads for its high-end brands, Lancôme or Urban Decay.

Stirista has provided L’Oréal with segmented data for their various campaigns using several factors including age and gender, life events such as new moms, newly married, and holiday/seasonal segments. By using different customer segments provided by Stirista, L’Oréal is able to tailor its marketing message and creative to fit their specific audience.

For one recent project, Stirista connected individuals (L’Oréal’s prospects) who followed a competitor’s Twitter handle and matched it to both names and postal addresses to create segments instrumental for competitive conquesting. The result: L’Oréal realized a lower cost per click and a greater than 12 percent increase in product usage, month over month when analyzed over five months.

Conclusion

With so much competition for a share of consumers’ purse, it only makes sense to cut through the marketing clutter to get your message in front of the right customers.

Segmenting your audience, whether based on age, gender, economic, life event or holiday/seasonal factors, does this effectively, as it helps to reign in “spend” and better targets your relevant message and creatives while increasing your brand’s ROI and market share.

Related Content

Customer Identity Resolution: What It Is and Four Benefits To Help Boost Your Next Ad Campaign

Visitor ID Graph from Stirista: Breaking Barriers Between You and Your Website Visitors

First-Party Data: What It Is, Its Benefits and How to Maximize It

Third-Party Data: What It is, Its Benefits and Best Use Case

About the author

Stirista began as an ambitious project from an apartment in San Francisco. But as office space expanded, so did our client base. After a few short years, we have worked with the largest healthcare insurance provider in the world, the biggest telecommunication company in the US, and some of the most prestigious universities in the country. We are on the preferred vendor list for a handful of Fortune 500 companies, with three of the ten largest companies in the world turning to us for...


Read more