Geodemographic Customer Segmenting: How to Segment
The most important steps to creating geodemographic target audiences through segmenting
You’ve planned your segmentation and decided what’s important. Now it’s time to take all the geodemographic and demographic data to complete the actual segmented groups. From postcode insights to spending power, you have what you need to develop audience profiles.
Step One: Divide your customers by demographics
The simplest way to divide customers is to use demographics. This includes physical attributes like age and gender as well as information about occupation, education level and income. Demographics also cover marital status and household information like number of children. The division that occurs by demographics can be valuable and useful data. It’s a great first way to segment. One example would be generational divides. Millennials have vastly different buying patterns to those over 65. The way in which you would market and message is different. The types of products or services are likely to be different, too.
Step Two: Separate by location
To begin location segmentation, you can start with postcode insights. This provides a clearly defined area. It’s an opportunity to get very granular, which can be relevant if your brand is local, regional, national or international.
Beyond actual physical locations, there are considerations related to population density, climate and rural versus urban living. The needs of your audiences change dramatically by where they are and how their location impacts their lives and lifestyles.
If you are a clothing company, the climate may determine the specific pieces you promote. Not every region needs thick coats or rain gear. The needs of urban and rural dwellers is dramatically different. Those in a large metro may use public transport whereas those in rural areas would most likely require a vehicle.
Step Three: Segment by purchasing history
What and when people purchase is a treasure trove of data! It’s a timeline of how they’ve interacted with your brand. You can divide them into groups by products they buy, how often, and how they purchase each product (online vs. in store).
As you begin to track data, you’ll be able to notice trends or patterns. Looking at a segment with similar purchasing history helps you group them. From this data, you can glean insights. For example, if you have a group of customers that orders makeup supplies every 90 days, you can market to those customers specifically and try to upsell them on other items that are related. In this example, you would have been able to ascertain the habit cycle (90 days).
Another part of purchasing behaviour is context. In what channels or situations does a customer buy? How can you leverage this information?
Additionally, you can look at the amount of purchases (both times and pounds). There’s the first time buyer, the returning customer and the occasional customer. Messaging to each should be different because they are at different phases of the relationship with your brand. The average spend of the customer impacts segmenting as well. The buyers who purchase first class seats wouldn’t receive the same message as those in coach.
Step Four: Try psychographic segmentation
This process is a bit imperfect. It’s about lifestyle choices, values, opinions and attitudes. This could be a number of things: vegetarians, religious practices, those associated with a disability, condition or cause. There are so many ways to segment in this step. Don’t get overwhelmed. Think about what makes sense for your buyer as far as lifestyle attributes. This type of data is typically collected through surveys or focus groups.
Step Five: Assign customers to benefit groups
This perspective is to segment based on the benefits your product provides. The more benefits or uses of a product, the more chances to divide the group. It can get very granular. Different buyers use your product in different ways. Drive that message specifically to these target audiences. Examples of this would be price/value, service or quality.
Segmenting equals great returns
These five segmenting steps can help you drive excellent consumer intelligence. You’ll see great returns based on segmenting because you’re being relevant to those audiences. DoordaStats has the data you need for segmenting.
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