One of the cornerstone processes of being a data-driven business is customer segmentation, grouping a broader audience by specific traits, characteristics, or behaviors. This is how we create buyer personas for targeted marketing campaigns, customer experience (CX) personalization, and strategic brand development.
Establishing those customer sub-groups is certainly important, but it’s just as important to remember that everyone within those groups is unique. Two individuals who share an anchor characteristic can be completely different in every other aspect. Here we find ourselves in somewhat of a “customer segmentation dilemma,” facing key decisions about which traits to build around and how many personas to create. Getting these decisions right is a crucial first step toward successful implementation.
Why this matters…
In making those decisions, there are inevitable trade-offs. When you group audiences by a similarity, there will be differences across the other traits. If you incorporate more traits to compensate, the audience size gets smaller. Having fewer total personas will streamline targeted marketing strategies but will limit the levels of personalization. Creating more personas will allow for hyper-personalization but can leave marketing tactics overly complex and convoluted. When facing these decisions, it’s easy to get caught up in paralysis by analysis which can stall progress. But making decisions for the sake of making decisions carries its own risks. Ultimately, it’s about determining which trade-offs are in your best interest based on your primary goals and objectives.
This topic came to my attention as I was chatting with my sister about our weekend plans. She was going to be up early for a trail run, whereas I was going to lounge by the pool with coffee and a book. We laughed about how we’re so similar in so many ways, yet still so different in others.
Here’s an example…
My sister and I are twins, so we share the same demographics. We co-own two businesses together, MacKenzie and Next Gen Collaborative. We’re both married with two daughters around the same age. We both live in Orange County. We’re both passionate about philanthropy and our non-profit work. We are the same in many, many ways. However, in other ways we are very different. While she’s out running or hiking, I’m swimming laps. She’s a detail-oriented planner, and I’m an eccentric brainstormer. While she’s camping in the woods, I’m on a beach somewhere.
We perfectly represent the “customer segmentation dilemma” and the challenge faced by businesses trying to connect with us on a personal level. Here’s a real-world example:
My sister bought a pair of running shoes after registering for a half marathon. She loved the shoes and suggested I get a pair of my own, which I did. She liked the arch support and sole durability. I liked the overall style and comfort. She wore down the tread in about 8 months. I wear them often but have only been truly active in them about 8 times.
Now, let’s look at this from the shoe brand’s perspective. We both bought the same type of shoe. We match up in virtually every demographic and sociographic category. So, if segmentation analysis were based on any of those traits, we’d be receiving the same brand messaging and customer experience personalization. But the messaging and experience would only be relevant for one of us, and not the other.
Images and content focused on distance running would be relevant to her, and I’d connect more with pictures of a mom at the park with her kids. The re-purchase timeframe would be different based on how, when, and why we’re using the product. She might be interested in accessories and add-ons, whereas have don’t have a need for them. To truly connect with us, that shoe brand would need to understand us on a deeper level.
What brands can do…
The examples above highlight how things have evolved in the world of customer insights and data-driven decision making. Brands need to go beyond the traditional buyer metrics such as demographics and purchase patterns. There needs to be an emphasis on thoughts and feelings, purchase intent and usage, lifestyle preferences and interests. By understanding who we are as people, that shoe brand could identify more nuanced segmentation categories that showcase our distinct personalities.
As a customer insight professional and enthusiast, I’m passionate about bridging the gap between brands and their audiences. I love finding data-driven ways to strengthen relationships, craft memorable experiences, and deliver meaningful value – all while empowering brands to achieve their bottom-line goals.
Over the years, technological advancements have brought behavioral tracking and passive data collection to the forefront. Many brands focus on “what” customers are doing, which is certainly valuable and necessary. But too often I see brands overlooking the “why” of consumer behavior. They build personas and base decisions on behaviors and actions, while missing out on the additional psychographic context of thoughts, emotions, and reasons. Both are necessary to fully understand the people behind the purchases and to stay relevant in an ever-changing world.
This is where gathering customer feedback comes into play. By stepping into the minds of consumers, seeing things from their perspective, and understanding the “why” behind the “what”, brands are better equipped to address the segmentation dilemma. They have more detail, context, and information on which to base their decisions and navigate the trade-offs. Those insights won’t come from passive behavioral data or deductive reasoning alone, because there are a variety of factors and nuances at play. Hearing directly from the customer, giving them a voice, and asking tactful questions will provide the human insight needed to take behavioral data to the next level.
A great first step is conducting a “Getting to Know You” survey. Not just for new customers, but all customers. Our lifestyles, interests, and overall environments frequently change. So, the more we know about the person behind the purchase, the better equipped we are to connect with them in unique, memorable, and relevant ways. To learn more about these types of surveys, check out this video I posted on LinkedIn – Watch Here.
If you ever get caught up in the segmentation dilemma, I’d love to help you navigate through the process! There are a number of helpful tips and solutions I’ve learned over the years, it’s just a matter of finding which is the best fit for your situation. Feel free to call or reach out any time, I’m more than happy to share some thoughts, ideas, and recommendations.
