What is audience segmentation—and how can it help your business?
Audience segmentation might sound kind of clinical, like splicing a lab sample or isolating a control group for an experiment. But there's no need to get your goggles out—segmentation is a relatively simple science. In short, it's all about reaching people with content that grabs their attention and speaks to their interests.
For advertisers, delivering a personalized experience is more important than ever. Recent research by McKinsey & Company found that more than 71% of consumers expect personalization from brands, and 76% become frustrated when they don't receive it. In fact, 67% want relevant product recommendations in particular, and 59% want timely communications tied to key moments.1
So, how can advertisers meet those expectations and get in front of the target customer with the right message? That's where audience segmentation comes in.
Here, we'll unpack just what audience segmentation is, what it looks like in action, and how you can build your own strategy for success—no microscopes or Bunsen burners necessary.
What is audience segmentation?
Audience segmentation is the process of dividing your audience into subgroups based on certain characteristics and behaviors. A fashion retailer, for example, might segment audiences by age, gender, and interests. Or a technology company might create unique audience segments based on location and device usage.
Why is audience segmentation important?
Ultimately, a segmentation-based marketing strategy can give you a better chance of getting your message in front of the right people at the right moment.
You can always launch a one-size-fits-all digital marketing campaign, but you risk wasting budget on generic messaging that might land with some customers and fall flat with others. With audience segments, on the other hand, you can launch personalized campaigns built specifically for each subgroup.
After all, you wouldn't want to reach Gen Zs with an ad about Social Security options or a vegan with an ad about the best burger joints in town, right? Different people respond to different products and content, well, differently! This is just one of the reasons why audience segmentation is so important.
Audience segmentation examples
There's a nearly endless number of ways to divide your audience for campaign targeting. The types of segments you choose will ultimately depend on your business goals and audience makeup.
Say you want to bring back inactive customers. You might fine-tune your segmenting strategies by sorting audiences into loyal customers, active customers, and inactive customers. This way, you can target just the right people, and you won't confuse frequent shoppers with an ad that says, “We want you back!"
Diving in further, here are some audience segmentation examples to get you started:
- Demographic segmentation: age, gender, location, income, language, education, occupation
- Behavioral segmentation: interests, habits, shopping preferences, purchase frequency
- Psychographic segmentation: beliefs, values, lifestyle
- Contextual segmentation: devices, platforms, content topics
How to build an audience segmentation strategy
Now, we'll get into the nitty-gritty of it all: building your own customer segments. You still don't need a lab coat or pipette (unless that's your personal preference; we don't judge), but you will need a few audience segmentation strategies in hand.
- Collect and analyze existing customer data. First, gather the data you have across sources like email campaigns, social media channels, customer service and sales departments, and website analytics. Then, analyze that data for any notable trends. Do your customers skew younger or older? Do they live in cities or suburban areas? Do they engage with your brand more on smartphones, tablets, or desktops?
- Set your business goals. Use those insights to inform your marketing strategy and goals. Perhaps customers prefer mobile devices, but you've been launching desktop campaigns. In such a case, your goal might be to reach customers on the go with targeted ads optimized for mobile.
- Define your audience segments. It's time to start segmenting your audience. Say you've cornered the Gen X market but still want to engage millennials—you can segment your audience by age range. Use your existing data on millennial customers to learn more about who they are and what they want from your brand. You can use a marketing automation platform to help with this process, or you can sort through the data manually.
- Target audience segments with customized campaigns. Now for the fun part: creating ads and targeting your customer segments with relevant messaging. With Spotify, you can reach audiences in the right context—like when they're studying, cooking, or just hanging out.
- Measure and optimize results. Customer behaviors are constantly changing—and your products or services probably are, too. So don't forget to frequently measure campaign results and reevaluate your audience segments based on your goals. This way, you can keep finding opportunities to boost results for your business by focusing on the most appropriate customer base.
Learn more about the different types of audience targeting or how to create audience-based campaigns with Spotify Ad Studio.
SOURCES: 1. McKinsey & Company, “The value of getting personalization right—or wrong—is multiplying," November 2021.