Defining audience segmentation is fairly easy, it simply means splitting your audience into smaller chunks based on different characteristics. Actually carrying out effective segmentation is another matter entirely. It requires thought, planning and extensive data-collection.
If this sounds like a lot of work, don’t be put off. Audience segmentation has the potential to transform your marketing efforts, helping you target specific groups of consumers with the right message to encourage them to become customers (or repeat customers if they’ve already bought from you).
There are many ways that you could divide up your audience, but this blog post will focus on two: demographics and psychographics. As we’ll discuss, those terms describe types of data that you can gather to build a detailed picture of who your customers are, allowing you to sell them products that meet their needs.
The data-first philosophy behind audience segmentation is what gets us at Company Check excited about its application – data is at the heart of everything we do, and we want other people to appreciate it as much as us. In this post we’re going to look at both types of data in depth and how you can combine them to effectively segment your audience.
What are demographics?
The word ‘demographic’ comes from two Greek words: demos, meaning ‘people’ (think, ‘democracy’), and graphe, meaning ‘writing’ or ‘drawing.’ If you put the two together you get the meaning: pictures (categories) of a large group of people.
Demographics organise people into groups based on quantitative data. Common demographic categories include:
- Country of origin
By splitting your audience into these categories, you can start to build a picture of your typical customers. For example, a premium online suit retailer might find that their typical customer is male, between 40 and 60 years old, and with an annual salary of £75,000+ (this is just an example, not a reflection of actual statistics).
This information is immediately useful for marketing purposes. The marketing team could match it with research into which social media channels people in those categories use (likely a high percentage use Facebook and LinkedIn, whilst not many use Instagram).
Perhaps you own a small cake-baking business with a customer base concentrated in one city, in which case you know that advertising in the local paper or investing in location-specific search ads will be a good way to bring in customers. Knowing this kind of information stops you wasting time on ineffective marketing strategies and helps you to invest more wisely in the areas that are likely to provide a good ROI.
What are psychographics?
If demographics tell you who is buying your products, psychographics tell you why. The psycho part of the word comes from the Greek word for ‘mind,’ which tells you that this type of data is more concerned with deeper insight into people’s attitudes, intentions and behaviours than in the surface-level insights of demographics.
Psychographic data looks at these kinds of categories:
- Hobbies and interests
- Religious and political beliefs
- Behavioural patterns and routines
These categories ultimately give businesses information about the motivation that people have for buying their products.
Let’s return to our examples from the previous section to see what insights psychographics could bring. Our online suit retailer might have a customer base centred in particular demographic categories, but psychographic information might reveal more diversity than we thought. For example, in our group of high-earning, 40-60 year old men, there might be a distinct group who are buying suits for one-off occasions like job interviews, whereas there might be another distinct group who buy suits regularly because they have the spare cash to do so and they enjoy looking sharp.
The marketing messages that these psychographic groups will respond to will be completely different. The second category isn’t going to respond to an ad asking them what they’re going to wear to their job interview, whereas that is exactly what the first group needs. Conversely, the first group aren’t going to become repeat customers, no matter how much remarketing you do, although the second group would be very likely to respond to an email about a new designer collection.
The same kind of thinking applies to our local cake-baking business. Although everyone lives in the same place, the marketing methods that will make a young, engaged couple buy a cake are different to those that will encourage a parent to buy a birthday cake for their child. Psychographic information helps you to understand what kind of cake these people are looking for, the service that they expect to go along with it and the marketing channels that you should use to reach them. Knowing that they’re based in one location thanks to demographics is a helpful start, but psychographics help you to make your location-specific ads highly targeted and more effective.
Gathering useful data
To build deep, insightful audience segments you need both demographic and psychographic information, but you might be wondering how to get it. Thankfully, there are a number of methods you can use, including:
- Customer questionnaires. Why not send a short questionnaire out with an order confirmation email to get some information about who your customers are and why they made a purchase? You could offer a prize at the end of it like a discount or voucher. This works particularly well if you know your customers tend to be quite loyal and are actively invested in your products or services.
- Interviews with clients. If you work with a smaller number of clients and have regular face to face contact, you could ask them a few questions in person to find out psychographic information. Depending on your relationship with them they might be happy to answer some questions up front, or you could simply stay alert in your meetings to see what you can pick up. Humans like talking about themselves, so let them.
- Website analytics. Google Analytics already provides some demographic information, such as age, gender and location, which can be turned into demographic profiles relatively easily. You can then look at user behaviour information, such as which pages they stay on and which have a high bounce rate, to determine psychographic information such as why people are visiting your site. This data collection method takes some skill, but it is free and doesn’t rely on putting together questions.
Making demographics and psychographics useful
The point of gathering demographic and psychographic data is to segment your audience by building typical personas that will respond to certain kinds of marketing activity. The trick is to identify trends and commonalities in the data to find the types of people who are most likely to interact with your brand.
Our suit company knows that they can divide up their audience based on career stage and spending habits, which allows them to produce distinct marketing strategies that target those groups. Our cake-baking business knows it only needs to target one location, but it can segment its audience based on age and occasion.
It is important to remember that this kind of audience segmentation is not necessarily trying to put every potential customer in a box – though it could – it is trying to identify groups within your audience that you can target with specific marketing messages and channels that take into account demographic and psychographic information, i.e. messages that show you understand who you’re speaking to and why they would be interested in your products.
As with any data-led approach, audience segmentation can and should be continually optimised. If a group isn’t responding to your marketing efforts the way you expect them to, it might be a sign that you need to refine your message or refine the data that you used to build that group. The whole point of gathering demographic and psychographic data is to build campaigns that have a good ROI, so you shouldn’t settle for mediocrity. If you keep at it and improve how you structure your campaigns and gather your data, you should start to see measurable positive results.