Most companies who pitch their products and services at a consumer audience will already understand and see the value in customer segmentation. In fact, most of these companies will already be doing it in some form or another. Segmentation in the offline world has traditionally been based on factors such as location, buying behavior and, to some extent, how they use different channels. It has enabled brands to view their customers in distinct categories and shape their marketing based on those categories.
These days, however, the online environment has added a new layer of complexity. It isn’t just about the fact that consumers are interacting with brands across a range of new channels (and devices for accessing them) – it’s also about the way they interact with everybody else on those channels. Digital channels are in many ways unique because in our use of them we are making these interactions public.
We are responding not just to what we are being presented with ourselves, but to the way in which our friends are interacting with brands and even our friend’s friends. Our decisions on what we buy, like, connect with and respond to are now visibly influenced by our personal networks. And interestingly, according to Forbes, our interactions on social channels impact what we choose to buy offline as much as online.
The temptation is to become fixated on this new (and complex) digital environment. But we have to remember that consumers don’t just exist online. In many organisations there is a separation between the online marketing (often incorporating analytics) and the offline (where segmentation and profiling often sits). The (often unintentional) side effect to this is that customers end up being viewed separately, depending on whether they are viewed through an online lens or an offline one.
With the focus so firmly on customer experience for so many companies, this parallel view of the customer is unhelpful. Most customers interact with brands on and offline and move seamlessly between the two. The same customer that you have spent time (and money) on understanding offline has now moved online.
The difficulty for marketers is how to develop a single customer view that brings together the online and offline. The issue is that, while offline data (name location, contact details, transactional information, etc) is very structured, online data isn’t. It can be quite hard to identify a particular customer from online data because, unless you are capturing identifiers early on, it’s far less easy to determine who they are, let alone map that data back to a customer profile you hold within a traditional CRM database.
This is where multi-channel segmentation can help. It enables you to create rich customer profiles based on behavior both on and offline. Using these, you can then identify types of customer and segment them according to location. This may seem old-fashioned. But the reality is location is actually increasingly important, even when marketing online. Take, for example, the launch of the new AdSmart tool from Sky. This enables marketers to target people consuming Sky content according to their personal preferences. According to a study last year by YuMe, people are still consuming the majority of their content in the home. So segmenting consumers based on their location, demographics and preferences is still very relevant.
The key to effective segmentation has always been in the quality of the data and ensuring that the segmentation is both dynamic and flexible. This is more complex than more traditional methods. But by putting the work in up front to ensure the data is right and the analysis is effective, you are setting a strong foundation for effective consumer targeting.
One of the most critical elements of this is understanding what data to use and what to ignore. This is even more important when you are looking to integrate digital insights purely because of the sheer volume of what is available. All data is not created equal. It’s understandable that, when faced with the share volume of what might be available through digital channels, many marketers baulk at the idea of trying to integrate it into their segmentation. But if you are able to hone in on the insights that will really add value, then the task will seem a lot less daunting.
These days, so many of us spend so much of our lives online that it is really impossible to get an accurate picture of your customers if you don’t incorporate that data into your mechanism for understanding them. On average, most of us will certainly spend more time online than we will on almost any other channel that exists - even if we are not directly interacting with a specific brand.
The value of segmentation is in helping us to understand customers so that we might ensure that we are giving them what they want. To carry this out effectively, marketers must combine location and demographic data with online information. As smartphones and tablets become the connected device of the future, our online life is set to become richer and more engaging, so we will spend more time there. Better to make data the common currency across channels now than wait before the deluge becomes overwhelming.