Managing Marketing Audiences With a Segmentation Strategy

The explosion of data analytics in financial marketing places new emphasis on automation and personalization — hinging on audience segmentation.

It used to be fairly easy to run a marketing program in the banking industry. But now, there is constant focus on improving efficiency, increasing ROI and enhancing the customer experience. What changed?

For starters, financial institutions have turned their attention to data. Generally speaking, the assumption is that the more data we have, the better we can become at dealing with prospects and customers. Identify a customer group, develop an offer and then pursue them. At the same time, customers have become more demanding, with the expectation that their financial services providers “know them” and treat them as individuals on a personalized basis. The good news is that the interests of both groups — marketers and consumers alike — can be better served by data.

One area where financial marketers can realize significant value is in the implementation of processes to better manage audiences. What is “audience management?” It’s an approach that puts the customer at the heart of the strategy, with all messaging, offers and contacts managed in an intentional, sequenced rhythm across all marketing platforms and touchpoints — from online display ads and email campaigns to social network posts and the corporate website. It isn’t about keeping track of how many direct mail and email pieces have been sent to people so you can figure out who has been over- or under contacted. Rather, this is a well-rounded, fully-designed system intended to holistically manage all interactions, communications and marketing messages.

The best place to start with this type of communications management strategy is by segmenting your audience. At its most basic level, segmentation is about using an analytical methodology to group individuals together who share similar characteristics. A number of different dimensions can be used to define how segments are clustered, including attitudes, preferences, behaviors, motivations, needs, value triggers, and life stages. Financial marketers must be very careful when deciding how segments will be defined — how many and for what purpose? It can be very easy to lock onto one segment or become transfixed by a group of segments that seem particularly promising… only to be greatly disappointed down the road.

Your segmentation strategy should be constructed from a multi-dimensional perspective, allowing for different methodologies to be used for different, clearly-defined purposes. Some uses are more strategic in nature, such as product development or assessing potential entry into a new market. Alternatively, segmentation can also serve to drive more tactical decisions like crafting a marketing campaign or determining how to personalize a message. The key takeaway here is that different segmentation methods can be used for different purposes.

Anyone who has been in marketing for any significant amount of time has likely experienced a situation where a segmentation project was developed only to find out later that the output wasn’t what was really needed. Sadly, this happens much more than we all think. So what are some of the red flags that indicate your segmentation methodology may not live up to expectations?

  • Using demographics as the primary basis for segmentation. Demographics represent only one dimension and should not be considered for segmentation on a stand-alone basis. It might be extremely easy to understand, but will it make an impact? Not likely.
  • Placing too much focus on the technical mechanics. This occurs when the analytical effort becomes one of layering in as many variables as possible, which results in a very complicated approach. The one thing that typically gets forgotten in these cases? How is this ultimately going to be used to drive results?
  • Believing that a segmentation methodology is all that’s needed, and the rest will take care of itself. Segments do nothing on their own unless there is a sound business strategy to go with them. Data without execution is worthless.
  • The misconception that segmentation equals targeting. Segmentation is not designed to specifically target for individual campaigns. That function is better left to predictive modeling.

Now what are some of the different types of segmentation and how can they be used to support your audience management strategy? Here are a few examples:

Enterprise Segmentation. This type of segmentation is more strategic in nature and generally includes a combination of attitudinal and demographic variables. This type of approach is most effective in efforts such as developing of a new product, analyzing a potential market, and building a large scale marketing initiative. It can play a role in the management of audiences as it serves to establish overall target groups for the company. Individuals not in these segments would not typically receive a heightened treatment.

Webinar
REGISTER FOR THIS FREE WEBINAR
Turbocharging Landing Page Success: Leveraging Advanced Analytics and AI Tools
How can you optimize your landing pages for success? The answer lies in harnessing AI-led solutions to deliver seamless, personalized user experiences. Learn more in this webinar from iQuanti.
WEDNESDAY, April 3rd AT 2:00 PM (ET)
Enter your email address

Value Segmentation. This methodology focuses on the grouping of individuals according to current and predicted value. It can be very effective in identifying the amount of resources to direct at audiences, either prospect or customer, so that the company is making the best use of its resources.

Life Stage Segmentation. This type of segmentation differentiates individuals according to where they are in life. Examples include distinguishing between those individuals just finishing college versus those who are recently retired. This can obviously help in the management of audiences, as it supports the identification of the next most likely product purchase for an individual.

As consumers become more demanding and their expectations increase, the importance of managing audiences will continue to grow. Ultimately, the approach that you employ will depend on your financial institution’s strategy, goals, customers, and the target audiences that you desire to serve.

This article was originally published on . All content © 2024 by The Financial Brand and may not be reproduced by any means without permission.