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How to Use Lead Segmentation for Targeted Marketing Success

March 25, 2024

The true purpose of marketing is to match your product offerings with consumer needs. You’re encouraging leads down the sales funnel by appealing to the audience that most desires your goods and services. However, there’s no one-size-fits-all approach. 

Different audiences have different wants and needs that can’t be satisfied by a single advertising initiative. Enter lead segmentation, a strategy that lets you offer varied products to a range of consumers.

Segmentation plays a critical role in personalizing marketing messages with the aim of turning leads into customers. Siphoning your target audience into specific customer types based on shared characteristics helps your company reach out in the most targeted and effective ways. 

All this results in better lead retention and sales. It’ll also help you understand your customers and thus keep you informed of the best direction to grow your business. Read on to learn more about how and why you should segment leads. 

What is lead segmentation, and why is it important?

Lead segmentation is the process of dividing a leads list or existing customer base into smaller groups according to specific characteristics, interests, or behaviors. 

This might include demographics such as a customer’s income level, job title, or location. Alternatively, you could create lists for online user actions like content downloads or transactional information like purchase history. 

Interchangeably known as audience or customer segmentation, it can help you tailor your approach to customers based on their readiness to buy or potential lifelong value to your business. 

Why does all of this matter? Segmentation is effective. It allows organizations to create personalized content for specific groups of potential customers. If you work with marketing agencies, it also gives them a clear strategy for creating targeted, effective campaigns.

Take L’Oréal, for example. The personal care company used behavioral data from Google to create 12 ad variations, each with music targeted towards a different demographic’s preferences. Here, L’Oréal managed to maintain its relevance among multiple customer bases. 

It’s applicable to other industries, too. Say you’re a financial institution looking to improve your debt management lead generation. You might utilize customer segments to determine which customers have outstanding debt and send them payment reminders. 

The benefits of using lead segmentation in marketing

We’ve touched on a few benefits of creating meaningful segments for your marketing efforts. But there are several other ways it can help you develop a more targeted marketing strategy.

Refines content marketing relevancy

Without segmented lists that address the specific needs of a subset of consumers, you’re casting a broad net. 

Do you want to generate leads using content that is relevant to your consumers? Then you need to categorize your audience into particular shopper subsets and refine your content distribution strategy to target each group. 

Look at how Coca-Cola tailors its adverts and the products it pushes depending on the tastes of local demographics. While it focuses on Coke as its top product in America, in Brazil, Fanta takes center stage.

Allocates marketing resources effectively

When it comes to optimizing marketing efforts, you don’t want to waste time and money on audiences that aren’t receptive to particular campaigns or strategies. 

With relevant and targeted campaigns, you can better allocate resources while reducing customer acquisition costs. This means it’ll be cheaper to attract high-quality leads and move them down the sales funnel.

Looking for inspiration for personalized social media posts? Consider utilizing segmentation to tailor your content to specific audience subsets, maximizing engagement and conversion rates. 

By leveraging social media analytics tools, you can gain valuable insights into audience preferences and behavior, allowing you to refine your segmentation strategies for even greater effectiveness.

It also means you can focus on the sales and marketing channels that are most effective for each customer subset. Personalized social media marketing might be the best strategy for Gen Z and Millennials, while Gen X could prefer email marketing. 

Provides insights to identify new opportunities

Implementing segmentation can help you uncover new opportunities in your industry. Specifically, it will help you identify high-value prospects and opportunities to drive growth. 

Netflix, for example, employs behavioral segmentation to personalize content recommendations based on user habits. 

Suggesting movies and shows that different customer profiles will be interested in means viewers stay engaged and ultimately increases customer retention. The customer data gleaned from this also helps Netflix to determine what types of shows and films to produce next.

They’re not alone. Many modern companies across different industries use data to seek new opportunities internally and externally. Johnson & Johnson uses data intelligence to optimize their supply chain. 

What is supply chain optimization? It’s the process of making tweaks to improve efficiency in everything from processing orders to identifying cost improvements. Combined with segmented lead data, it means you’ll be armed with insights to better serve customers.

Develops targeted lead nurturing strategies 

Segmented campaigns help you build meaningful and ongoing relationships with customers. You can anticipate their needs by interpreting habits and behavioral data. As a result, you can offer subgroups the right incentives and benefits to make further purchases.

You’ll also reduce churn by identifying the key reasons that customers abandon your business for another. More targeted incentives show shoppers that they’re valued, keeping them loyal and interested in your brand. 

Let’s say you work in the renewable energy sector, for example. You could boost solar leads appointments and reduce churn with targeted nurturing strategies for specific demographics. So, you might offer a reduction in the cost of installation for young or first-time buyers. 

Aligns marketing and sales efforts 

With a better understanding of the key issues, characteristics, and shopping habits of your target audience, your sales and marketing teams can work more efficiently and effectively. What’s more, they can use segmented data to collaborate on their sales and marketing plans to focus on specific products, demographics, and sales locations. 

How to get started with lead segmentation

To implement segmented campaigns, you should outline a goal for the project and segment leads that are most likely to generate the target sales. Consider the following in your segmentation plan:

Define your target audience

Lead segmentation starts with identifying the consumers you’ll target based on their transaction histories, demographics, locality, etc. To aid in this step, you can create a selection of personas that represent each consumer subcategory. 

Developing these will require you to collect data on an ongoing basis. You can find this type of data using tools and platforms like your CRM, web analytic services, and marketing automation platforms like Marin.

Analyze customer behavior

Analyzing customer behavior means identifying patterns and commonalities in your data that’ll help you group your target audience into categories and create personas to represent each subgroup.

Consider using AI to save time here. AI tools can automate the process of identifying trends in customer feedback and provide relevant insights about customer activity and identity. For example, sentiment analysis will categorize consumer opinions based on the feedback provided and the demographic of respondents. 

Furthermore, AI-driven talent management can assist in optimizing marketing efforts by identifying skill sets within a team that align with specific segmentation strategies, ensuring effective execution and continuous improvement.

By leveraging AI-driven talent management, marketing teams can not only refine segmentation strategies but also foster a culture of innovation and adaptability, driving long-term success in targeted marketing campaigns.

Utilize marketing automation

Advanced marketing automation tools can even go as far as segmenting customers for you based on common characteristics. You can determine if these groupings are broader (e.g. by geography) or more specialized (e.g. customers that use a specific payment method on your website).

A marketing data pipeline tool like Marin can unify all your data so that it's simpler than ever to analyze.

Additionally, personalized email marketing campaigns can be automated to target segmented customer groups with relevant content, driving higher engagement and conversion rates.

A quick word of advice here: ensure any automation tool you use prioritizes safety. Just as vendor risk management benefits include making efficiencies to your systems, be aware that there are risks associated with automation, including cyber-attacks and data breaches. To mitigate these, monitor your software diligently and take steps to encrypt your network. 

Create segmentation criteria

You want to focus on market segments that are the best for your business in terms of profitability, size, and growth potential. 

The key to finding the right segmentation criteria is tracking patterns in the customer data you’ve gathered. Research your audience behavior and consider the practical value of different segmentations. 

Throughout this process, consider market segments that are:

Measurable: Do you actually have data on a specific audience regarding sales value and volume?

Substantial: Is this segment large enough and sustainable enough to make it worth spending resources on?

Accessible: Do you have the resource capacity to reach and target this group effectively?

Actionable: Is this practical? Is your chosen segment likely to be receptive to your marketing efforts?

Choose the right segmentation methods

With that criteria in mind, it's time to divide your leads. Methods will vary from business to business, and you should pick strategies that work best for your team. 

  • Demographic segmentation: Based on factors related to human populations, such as age, gender, nationality, marital status, and income.
  • Psychographic segmentation: Based on studying users' traits and values. This might include personality, desires, attitudes, interests and lifestyle differences. For example, you might choose to target eco conscious customers.
  • Transactional segmentation: Based on users’ online behavior, such as purchase and browsing history, frequency of purchases, total spend, type of items bought, and date of last purchase. Customers who purchase frequently or spend a significant amount with your company each month make great leads to target.
  • Geographic segmentation: Based on where people live, this method considers weather, regional holidays, and languages. This means you would promote swimwear during warmer seasons, for example.

Integrate with CRM systems

You can streamline segmentation efforts with the integration of various CRM tools. The best CRM systems will identify your leads and present the relevant information associated with them. You can create groupings using CRM rules and workflows. 

A subset of CRM, platforms like call center lead management software will simplify the process further by gathering insights from a high volume of calls and categorizing them automatically. 

Conclusion

Lead segmentation crucial for understanding the diverse needs of customers and creating personalized and targeted marketing strategies that appeal to their interests. It allows more accuracy in the marketing and sales process and results in better customer retention, satisfaction, and improved profits. 

The role of AI is one of the most powerful marketing developments of the past year. It has simplified the process to a point where most companies are capable of effective segmentation. There’s no longer any reason why businesses should miss out on this sales-boosting personalization strategy. If you're interested in exploring an AI-powered marketing automation platform, speak with a Marin Rep today.

Lisa Leight

Convoso
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