Too many marketers focus on the top of the funnel. Of course, lead generation is crucial to success. You have to make sure that you optimize your marketing for conversions for maximum ROI. But that doesn’t mean you can rest on your laurels once those leads enter your database.
Continued communications is key. After all, only 25% of the leads that enter your system are actually ready to buy. The others need to be carefully nurtured to get to that point.
In other words, you need to close the gap between building your email list and engaging existing customers. That requires not just a high-quality nurturing campaign, but also strategic lead segmentation.
That segmentation is key whether you operate in a B2B or B2C environment. The more personalized your marketing efforts, the more likely your potential customers will be to respond. Strategic segmentation can help you achieve that type of personalization. Consider this your complete guide to lead segmentation of your business and consumer contacts.
The Two Basic Types of Segmentation
You can segment, or split up your leads in a large number of ways. Depending on whether you build a B2B or B2C marketing strategy, you might look at company size, buyer intent, interests, purchasing behaviors, and much more. We’ll discuss how you get to those details below. First, let’s explore the two basic types of segmentation.
Demographic Segmentation
This type of segment is defined by its clear boundaries. Demographics might include age, gender, location, and more. In a business context, it might also include company size, industry, and any other characteristic that is rigid and externally defined.
Leads in these types of segments tend to be mutually exclusive. A 30-year old cannot also be 45. That allows you to draw conclusions about your audience based on their age range, location, and any other variable.
Of course, demographic segmentation also tends to be surface-level. You don’t get deeper into intentions, interests, and needs. It makes sense for some obvious efforts – targeting small business owners vs. managers of large enterprises, for example, but could fall short in other areas. That’s where need-based segmentation enters the equation.
Need-Based Segmentation
This type of effort requires you to dig deep. You have to understand your audience at more than just a surface level. This is where you get into buyer needs, buyer intent, typical pain points, and more.
Marketers who engage in this type of segmentation tend to rely on primary and secondary research about your audience. You might need to survey your existing customers to make estimations about your future prospects. Most importantly, you need to understand where and how you can make a connection from surface-level information (such as age) to the corresponding needs and pain points.
Most marketers engage in demographic segmentation. Fewer try their hands at need-based alternatives, which necessarily draws on multiple levels including demographics. Still, if you get it right, this is the single best way to build messaging flows that actually address your audience’s needs and pain points as you move them closer to the sale.
Building Personas as a Key Segmentation Feature
Perhaps the best way to build need-based segmentation is through buyer personas. You might have heard about this concept, which tends to lead to more leads, higher conversion rates, and more revenue. That’s because personas allow you to fully leverage need-based segmentation, digging deep into your ideal customer.
It requires significant research. You need to understand what areas to focus on, ask the right questions, and fit those questions into a template of a hypothetical customer. Ideally, you end up with 3 to 5 buyer personas that take all of the audience information you have gained and build a profile that has a name, face, and details to it.
Buyer personas are the best origin point for segmentation. They focus your efforts not on the average lead profile, but your ideal future customer. As a result, they tend to suggest improvement possibilities in not just your segmentation, but your targeting efforts as well.
With the right personas in hand, segmentation becomes almost natural. You now have three to five natural segments already built. Find their distinguishing characteristics, which allows you to build and sort your lists based on these features.
What Makes a Good Lead Segment?
All of the above may cause you to come up with a list of 4 segments that, in theory, make perfect sense. But then you start plugging it into your database and lead nurturing efforts, and something odd happens: some leads end up in multiple segments, one segment only has 2 leads in it, and another makes up almost 75% of your entire database. What happened?
The truth is that lead segmentation is an art as much as a science. It will require some trial and error until you find various groups of segments that are actually worth marketing to. Ideally, each segment should share these 4 characteristics:
- They are different from each other. Segmentation only matters if you can actually distinguish your contacts at first sight. Slight variations of the same audience won’t make sense.
- They are large enough to build a campaign. What that size depends on your company and overall audience. But while not all segments have to be the exact same size, you have to make sure they at least are substantial enough to make your efforts worth it.
- They are focused enough to allow for specialized messaging. In other words, it should be easy for you to build marketing and nurturing plans that are clearly different from each other for each segment.
They are built on usable characteristics for your marketing channels. This can be difficult for need-based marketing. It should be easy to find a few key characteristics, ideally demographics, that define your audience. That way, you can set up your database and digital ads specifically for that segment without issue.
Continuous Improvement: The Key to Sustainable Lead Segmentation
Focus on personas, make sure your segments have all four of the above characteristics, and you’ve mastered segmentation. That was easy!
Not so fast. All of the above are best practices that, generally speaking, are true across industries and for both B2B and B2C marketers. But in reality, your situation may differ. You may find that you build a great plan, only to see it fail to bear fruit because your audience simply doesn’t seem to find your focusing interesting or compelling.
That’s where a key focal area of digital marketing begins to apply. Put simply, and as with any other tactic, you cannot be successful without a continuous improvement mindset.
That means continually testing and monitoring your individual segments, and how your strategy affects conversion rates. It also means being willing and able to make adjustments, shifting segments around and setting up test groups to make sure your targeting decisions actually make sense for your audience. Tinker on a limited basis, then use the insights gained to roll out changes on a larger scale.
Wrapping Your Segmentation Efforts into a Larger Strategy
There you have it: the complete guide to B2B and B2C segmentation. Of course, all of this only makes sense if you make your segmentation efforts part of a larger marketing strategy. It only matters if you optimize your lead-generation efforts. Meanwhile, even the best segmentation can only work if you follow it up with a strong, targeted, and customized nurturing plan that drives new customers.
You might need help building that strategy. Segmentation may still be an area of improvement for your company. Either way, contact us. Let’s chat about the steps you can take to make sure your marketing is targeted, focused, and personalized specifically for your various audience groups.
