Digital Customer Segmentation and Personas: Tip of the iceberg

• Customer Analytics

The fall and winter 2016 holiday season has finally wrapped (pun intended). As you look to 2017, remember that customer segmentation and personalization not only pay off during the major holidays, but also other seasonal times of the year when customers open up their hearts (and wallets) such as Valentine’s Day. Marketing 101 – personalizing experiences are the right move irrespective of the company size, industry or timing.

In this blog, we will review customer segmentation, how can you develop digital personas, and what are the impact areas, especially during high volume sale seasons.

Creating Impactful Campaigns for Target Groups

According to Nielsen, 36% of holiday shoppers begin their holiday purchases before the end of September. The 2015 US Census Bureau reports that holiday sales make up almost 20% of the total annual sales for retail businesses. These statistics imply that you should do your research and be prepared well in advance to capitalize on seasonal sales. Not only are November and December the largest months in terms of revenue, but they also rank the highest in the number of website visits. As such, you must develop a deeper understanding of your target customer group and dominant industry.

In a marketplace where attention spans are akin to prime real estate and relevance is king, clear target strategies with distinct buyer personas are key to rising above the herd. It is extremely easy for customers today to opt out of irrelevant messages. You might have an extremely loyal and repeat customer base, but optimizing your campaign and inventory spends against your revenue remains the sweet spot. Each holiday, brings with it a plethora of campaigns trying to cash in on the spending frenzy. Impactful campaigns and promotions identify the important target groups, create relevant messaging in sync with the arc of the consumer journey, and build great relationships. To be able to provide your customers with the best experience, while also influencing their purchase plans, you need to know your customers like the back of your hand.

The name of this game is digital segmentation.

Digital Segmentation for Effective Marketing

Digital segmentation is the art of splitting your consumer database into multiple homogeneous actionable groups. These groups are as distinct from each other as possible. It is an irreplaceable tool in your arsenal when trying to send appropriate messages to a specific audience. It allows you to stretch budgets and make the most of your marketing buck by serving the right product or service to its intended end users.

Customers are more than just gender, age, and locations recorded in your database. There are a myriad of ways to segment the market to reach your ideal customers, but customer needs and values are the foundations of effective marketing segmentation – truly indicative of the intent and the propensity to purchase.

However, how does one go about extricating the “need” in a customer database? Your data warehouse might not have information on whether a customer is more of a couch potato or an adrenaline junkie. How do you mine for that information, and most importantly, how can it be operationalized for a marketing decision such as the tone and the timing of the product?

Deloitte predicted that digital interactions would drive 67% of the retail store sales generated during the holiday season. An increasing number of consumers are viewing and purchasing products online. Given the level of engagement observed across all digital platforms today and the reams of behavioral information generated by the users sub-consciously, understanding the digital body language of target segments become paramount. Brands also need to address concerns such as extremely short attention spans, competitive landscape, and the phenomenon of little to no brand loyalty.

How to Develop Comprehensive Buyer Personas

Developing comprehensive buyer personas is part of the approach to proper customer segmentation for marketers, who are collecting and processing millions of digital interactions in the form of big data and feeding it back for almost real-time consumer profiles. Such “personas” or “segments” should be taken into account that meets product needs, demographics, traditional market research, likes and interests, brand affiliations, tone of voice, social networks and degree of influence, endorsed competitor brand(s) and more from extensive digital research. Taking it a step further, the depth of information available from online platforms can be granular to the “most active time of the day” and “most active day of the week” for various buyer personas. Fortunately, this is only the beginning of what is available. The ability to mine and utilize this digital information has a long-lasting impact on both marketing strategies as well as revenue.

However, which digital platforms should take precedence when looking for information about real-time customer behavior? Most B2C platforms are driven by engagement. The behavior of an individual on any one platform might not always represent a complete picture of their psychographic attributes and behavioral patterns and preferences. It becomes essential to look at digital body language in its entirety to be aware of intent and propensity toward a purchase. Overlaying demographics with digital information is the first and the most important step toward understanding your audience more holistically. This produces insights not only related to your customers’ digital personas, but also content plans, email campaigns, promotional offers, and cross-sell/ or up-sell opportunities.

Related: Segmentation Excellence in Post-pandemic World

Based on the Pareto principle that 80% of sales come from 20% of the customers, your business should finalize on personas for each intended target group. The value of zeroing in on personas enables you to deliver the right messaging and increase engagement for more sales and higher ROI. A small and medium enterprise might need only 2-3 dominant customer personas, as compared to a larger business that would require 5-8 dominant personas. Regardless, a business should possess the ability to create high-quality content that is targeted, yet diverse enough, to suit various audience groups.

Creating right Content for every persona

Overwhelmed customers often turn to websites to help them make gift decisions. As marketers, we need to be acutely aware of the pain points and customer journeys of the various personas. Using your customer data and digitally enhanced customer personas, you can craft relevant content such as videos. Videos take into account a typical customer buying journey across your ecosystem and convert most of the potential customers into realized revenues. Building digital personas is an excellent way to avoid sending irrelevant content to consumers. For example, a new mother might not be interested in beer coupons, but she might be looking for yoga pants.

Consumers interact with a brand at various touchpoints and stages. Some customers might just be exploring online, while others are ready to make a purchase. It is up to a brand to offer experiences that cater to each specific stage, moving the customer closer to conversion.

Conclusion

With consumer profiles continually being created and updated on millions of digital interactions, digital segmentation has proved its utility and is here to stay. Its potential will be lost if the insights are not operationalized with targeted offerings for specific audiences. The wrong message to the wrong audience can hamper your relationship more than a right message will repair it, so, think customer segmentation all year long.