How to Use Market Segmentation in SEO & Digital Marketing
Getting clear on who your target audience is can be one of the most helpful steps in the business growth process. And as your revenue grows, you’ll want to consider who your most profitable customers are. This is best done through a process known as market segmentation. In this article, we will walk you through what market segmentation is, why it’s important for search engine optimization (SEO), what types of segmentation exist, how you can segment, and a few simple things you should and should not do in order to get the best possible results. Sound good? Let’s roll… What is Market Segmentation? The concept of market segmentation is pretty simple and straightforward. It’s essentially the process of dividing your company’s target market into specific and approachable groups. If you think of your customer base as a collection of colorful balls in a playground ball pit, market segmentation is the process of organizing these balls into color-specific piles. They’re all your customers, but each set has unique attributes. Typically, market segmentation involves creating subsets of your market based on factors like needs, demographics, interests, priorities, and other criteria. The goal is to be as detailed as you possibly can without mislabeling. In other words, be specific but don’t make illogical assumptions just for the sake of segmenting. The Top Benefits of Market Segmentation I’ll dig into more of the “how” regarding market segmentation momentarily, but first I want to make sure you’re clear on why it’s important and how it can benefit your business moving forward. Here are a few top perks: Better understanding. Who doesn’t want to know their customers better? When you get serious about market segmentation, your entire approach changes. You’re no longer taking shots in the dark and hoping something sticks. You know who your customers are and you’re able to reach each group in a very specific way that resonates with them. Stronger marketing. The key to successful marketing is to reach the right person with the right message at the right time. Market segmentation enhances your ability to accomplish each of these goals. Better targeting. Because you’re able to target each customer with a very specific approach, you’ll see your response rates increase, acquisition costs decrease, and conversion rates go through the roof. You’ll waste a lot less money barking up the wrong trees. Greater control. Market segmentation takes you from a reactionary approach and transforms your business to adopt a more proactive stance. In other words, you control the direction of your business – not the marketplace. Superior niching. As the saying goes, there are riches in niches. With careful market segmentation, you’re able to niche down and reach very specific demographics. In some cases, this may unlock totally new revenue streams that didn’t previously exist. When you target niche markets though, be sure your total addressable market (TAM) is big enough to sustain a viable business for you and your competition. Greater innovation. Through market segmentation, you become intimately acquainted with what your customers want and need. This can lead to better product innovation in the future. At the end of the day, market segmentation makes mathematical sense. Research from Bain & Company shows 81 percent of executives believe market segmentation is a crucial aspect of growing their bottom line. Furthermore, those organizations that have thorough and documented market segmentation strategies see a 10 percent bump in their profit margins when compared to those that don’t. 5 Basic Types of Market Segmentation Most marketers agree that there are four or five basic types of market segmentation. If you focus your efforts on the following “buckets,” you’ll see positive results throughout your business: 1. Demographic Demographic segmentation is the most basic. (And thanks to the rich data trails that people leave behind online, it’s also one of the easiest to work with.) It typically includes information like age, gender, income, location, education, ethnicity, family situation, annual income, and other key details. While demographic segmentation can be very generic for some businesses, it can be quite helpful for others who naturally need the ability to filter based on factors like age, gender, location, etc. Take a dance academy for example. They might have dance programs for women and dance programs for men. These programs may even be separated based on age and zip code. Knowing which demographic segment customers fall into makes it so much easier to target the right people with the proper offers. 2. Geographic Geographic market segmentation is pretty self-explanatory. It’s typically based on factors like country, region, state, city, zip code, climate, urban vs. rural, and/or proximity to a certain location. Geographic market segmentation is obviously important for brick and mortar companies and local businesses. However, it’s also vitally important for online businesses that sell physical products or services that may be impacted by something like climate. Geographic segmentation is what local SEO is all about. Amazon.com is a really good example. They’re very aware of where their customers live and have the ability to promote products that coincide with weather patterns. If a snowstorm is coming through the northeast, they’re able to recommend cold-weather products. However, a customer down in balmy Fort Lauderdale will see something totally different (bathing suits or sunscreen). 3. Firmographic Firmographic market segmentation is very similar to geographic segmentation, except that it’s designed primarily for B2B organizations. Firmographics look at things like company location, company size, number of employees, gross revenue, and other factors specific to the makeup of the business. In essence, firmographics help you properly target businesses in sales and marketing situations. It gives you the information needed to approach a small business with 20 employees with one message, while coming at a national corporation with 2,000 employees in a totally different manner. 4. Behavioral This is where it starts to get interesting. Behavioral market segmentation involves separating customers based on their decision-making patterns. This includes consumption habits, purchase patterns, lifestyle, and usage. In order to get clear on behavioral segmentation, you