How-to guide to segmentation analysis

Picture a live audience at a Cleveland Browns game. Save for a few fans rooting for the visiting New England Patriots, the vast majority of the crowd packing the stadium share a love for their long-suffering Browns. Yet, if you dig a bit deeper, you will begin to see that there are a myriad of unique differences within the larger crowd.

You have the bulldog-masked rabid fans crammed into the notorious Dawg Pound. Several sections over, you find the family area where parents sit with young children clutching Bobbleheads. Peer up into the plush box seats, and you can glimpse executives milling about as if they were at a cocktail party.

If you were to work your way through the crowd, you could identify plenty more subgroups, or segments, of what makes up the Browns nation as a whole. And if you surveyed fans after the game, you could break them down by a wide array of  different distinguishing characteristics, including demographics, geography, and shared behaviors related to their fandom. Through this segmentation analysis process, if you’re part of the Browns marketing team these segment-by-segment insights can help you reach each of these groups in ways that hold the most promise to effectively connect and resonate with them.

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When your company is engaged in audience segmentation you are, in essence, engaged in the same practice, but instead of your customers being crowded into a stadium they are scattered across your town, the nation or even the world.

Through segmentation analysis, you can effectively identify and then reach your target audience, and then take the right actions to connect with each group in unique and authentic ways. Surveys can be the foundation of your segmentation analysis efforts, offering an efficient and effective way to gain a deep understanding of the wide range of segments that exist within your target audience. You can then turn those survey results into action to help foster stronger connections with specific audience segments to build brand loyalty, guide marketing and product development efforts, and ultimately, drive stronger sales and growth for your company.

What is segmentation?

Segmentation is the process of dividing customers into groups based on common characteristics so your company can market to each group effectively and appropriately.

In business-to-consumer marketing, companies often segment customers according to demographics and other characteristics such as age, gender, life stage or specific niche interests. When it comes to business-to-business marketing, a company might focus efforts on segmenting customers based on factors such as industry, number of employees, location, and products frequently purchased from the company.

Segmentation is vital to your marketing efforts because it allows you to get deeper visibility into your target audience, and then to craft messages that will resonate more effectively with individuals within each segment. This can lead to stronger engagement and greater affinity with your brand, while also providing insights and information that can lead to better decisions across your company such as product development, inventory control, and if it looks like sales will be booming—preparing HR to hire more staff.

Segmentation analysis

Segmentation analysis is the work that goes into ultimately identifying specific segments of your audience and developing the most effective ways to communicate and engage with people within specific segments. The analysis aims to understand specific characteristics like behavior, age, income, personality or interests to lay the groundwork for campaigns that can be highly targeted and precise to the characteristics of each group. Instead of blasting out messages to the masses, you are sending targeted missives to audiences that are likely to be interested in what you’re selling or sharing.

Analysis tools from SurveyMonkey 

SurveyMonkey offers a range of analysis tools that help to facilitate and enhance your segmentation analysis efforts. These help through every aspect of the segmentation analysis process from getting AI-powered insights to easily filtering results to conducting sentiment analysis and benchmarking.

For instance, SurveyMonkey offers advice on effective market segmentation surveys to help you understand what different members of your target market have in common—and how they differ.

Examples of segmentation

There’s a place for segmentation for just about every business, both large and small or B2B or B2C. Segmentation can be useful for companies just getting a foothold in the market to build brand loyalty, as well as companies that have been around for decades that want to make sure they are keeping pace with their customers' changing needs, preferences and interests. Here are some examples of segmentation in action.

School’s In: Back-to-school shopping is an American tradition. For a retailer skilled at effective segmentation, it can also be a highly profitable time of year. By studying and segmenting their customer base, retailers such as Target can tailor their advertising and social media messaging to speak in ways that connect with students and their parents to drive greater interest and stronger sales.

Married with children: Lots of people drink coffee, and there is a growing number of coffee companies brewing up a range of options aimed at setting themselves apart in the competitive space. Through segmentation based on marital status, coffee companies can learn how to connect with different groups of java drinkers. A while back, Diamond Coffee found fertile ground appealing to married men, delivering an advertising campaign that speaks to their busy lives in a way that is both lighthearted and effective.

Firming up business: Segmenting by demographics is a tried-and-true methodology for companies selling to consumers. However, B2B marketers often put a twist on the demographics approach by focusing on “firmographics,” or grouping firms they do business with by industry, revenue or other distinguishing factors. For instance a company that manufactures paper products, can segment by industry, tailoring messaging, products and pricing to resonate with local retailers that need paper for receipts and in-store brochures to schools that require a range of different types of papers for students and teachers.

Frequent buyers: Whether you are marketing to a B2C or B2B audience your company likely has a swath of customers that purchase particular products more frequently than other customers. Segmenting by usage rates can help you identify heavy, mid-level and light users of your products, with an eye toward connecting with each, as well as finding ways to encourage light users to expand use of your products. For instance Orvis is a name that is well known to those who have a passion for fly fishing. Yet recognizing that there can be a lot of complexities and terminology associated with the sport, Orvis offers a range of advice and products for beginners. However, the company also speaks fluently with highly experienced fly anglers, some of whom are willing to shell out close to $3,000 for a bamboo fly rod.

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Customer segmentation vs. market segmentation

By gaining an understanding of the different types of segmentation, you can better determine what approach might be most effective for what you aim to accomplish.

Customer segmentation

Customer segmentation focuses on dividing customers by various metrics or differentiating factors. Through customer segmentation your business can get a clearer picture of the needs and preferences within a certain segment and then find ways to communicate with each segment in the most effective way. This helps assure that your marketing spend is efficient while also having increased potential to deliver strong results.  

The most common example of segmenting customers is doing so based on assessing characteristics or demographics and creating customer groups based on the attributes they share. For instance, customers over the age of 50 might be buying your products for reasons that are far different from those under the age of 25. By segmenting by age you can target messaging that resonates with people in various different life stages.

Another example of customer segmentation is taking a needs-based approach. For instance, sometimes customers purchase a product for different purposes. Segmenting customers by the reasons they need a specific product can help you communicate about those needs more effectively.

Check out our complete guide to customer segmentation for more detailed insights on how to identify specific segments within your customer base. Want us to do your Consumer Segmentation for you? Learn more.

Market segmentation

While sometimes the terms customer segmentation and market segmentation are used interchangeably, there are actually some key differences between the two approaches. Market segmentation is focused on dividing target markets into smaller, more easily defined categories to create groups of customers sharing similar characteristics, interests, locations, and more.

Market segmentation can be accomplished by conducting market research that provides a more in-depth picture of the market you are targeting, identifying unique characteristics of the people that exist within the market being studied.

Understand your target customers and how they make purchasing decisions with Momentive Usage and Attitudes Solution.

Customer satisfaction surveys can also help support market segmentation effort, by breaking the market down based on levels of satisfaction with your product or services.

Types of segmentation

There are several different ways to slice the segmentation pie, and which one you choose depends largely on what you are aiming to accomplish. Each type offers its own unique benefits.

Demographic segmentation

Likely the most common approach to segmentation,  demographics can offer up some of the most critical data points on existing and potential customers. These can include income, gender, race, education level, and marital status.

Because of the ease of segmenting by demographics—and the fact that many within the segments you identify have shared characteristics and preferences—demographic segmentation is often a useful way to divide up your target market.

Examples of demographic segmentation include:

  • Age – customers are segmented into age ranges or life stages.
  • Gender – customers are segmented by the gender in which they identify.
  • Income – customers are segmented into income brackets.

Demographic division made simple: Fast-track your demographic segmentation efforts through SurveyMonkey Audience. 

SurveyMonkey automatically pipes five types of demographic data directly into your survey results: gender, age, household income, type of device used to take the survey, and the US census region of every survey respondent.

Geographic segmentation

You don’t have to travel too far in the United States to understand why geographic segmentation can be useful when trying to identify target customer groups within your larger customer base. For instance, in Pennsylvania, if you try to sell someone in Pittsburgh a “hoagie” you might have to explain that you're actually offering up what they’ve come to know as “subs.” Yet, if you make the same hoagie offer in Philly, mouths will start watering.

Where people call home can significantly influence how they respond to interactions with your company. You can connect more effectively in different geographic areas if you tailor your marketing efforts to account for their local values, whether they live in an urban or rural area, their climate-specific needs and behaviors, and other traits.

Examples of geographic segmentation include:

  • Cities – customers are segmented by the cities or towns where they live
  • State – customers are segmented by the state they live in
  • Region of country – customers are segmented to account for regional differences and preferences.

Psychographic Segmentation

Psychographic segmentation allows you to divide your customers into groups based on their lifestyle—their attitudes, values, habits, and opinions. By doing so, you help unlock some of the emotional elements that contribute to the buying process to reveal subtle but powerful marketing insights

Psychographic segmentation may initially sound more complex than demographic or geographic segmentation, but SurveyMonkey can help walk you through the process to start generating crucial insights that might be missed through other segmentation approaches.

Some examples of psychographic segmentation include:

  • Opinions: Customers are segmented based on the opinions they hold about a product or other issue.
  • Values: By segmenting based on values, marketers are able to craft messages that are likely to resonate with different groups within their target audience.
  • Habits: Customers are segmented by buying habits, helping marketers identify highest value customer groups as well as those that only use products or services sporadically.

Behavioral segmentation

Your customers likely interact with your products and services in different ways for different reasons.  Behavioral segmentation helps reveal, for example, how customers use a certain product, how often they buy it,  and where they buy it. By unearthing these insights you can position your marketing differently based on different behaviors. For instance, you might segment customers by those who use your product as a daily necessity versus those who use it sporadically, as well as those that see the product as a luxury and use it only sparingly.

Some examples of behavioral segmentation include:

  • Interactions: Customers are segmented based on how they use your products
  • Interests: By identifying specific interests of your customers, you can target your messaging to groups of people who share an interest in a certain activity or type of product.
  • Desire: Customers are segmented by their specific passions or aspirational goals.

Technographic Segmentation

Technographic segmentation is used to identify and profile the characteristics and behaviors of consumers through the types of technology they use, how they use it and how often.  While market researchers have long focused on  demographic, geographic and psychographic factors technographic segmentation has emerged as a means to segment based on the role technology plays in consumers lives

Some examples of technographic segmentation include:

  • Apps: Customers are segmented by types of apps they are apt to use most frequently.
  • Video games: Gamers are segmented by the types of games they like, or the frequency in which they play.
  • Smartphones: Customers can be segmented by the brand of smartphone they own, or the activities they most frequently do on their smartphones 

Start segmenting your audience for success in your business & market

When it comes to segmentation, it ultimately boils down to this: The better you know your customers, the better chance you have to deliver the messages, design products, and position services in ways that will more effectively meet their needs. By identifying groups of customers that have shared characteristics, interests or unifying similarities such as age, income level or geographic location, you can leverage your marketing spend and gather key insights that can benefit those throughout your company.

Whether you’re trying to figure out who exactly makes up that crowd at an NFL game, or want to know what motivates your best customers to frequently visit your local hardware store, segmentation can provide answers that lead to better business and more profits.

Our tools and solutions such as SurveyMonkey Audience can help put you on the fast track to  analyzing and understanding your customer and market segments.

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