Understanding Audience Segmentation: A Comprehensive Guide

If you are learning how to start a digital marketing agency, you should consider mastering the art of audience segmentation. This technique will help you improve your clients’ ROI.

In fact, according to NotifyVisitors, 760% increase in revenue is the ultimate reward that email marketers reap by segmenting their audiences before launching their campaigns.

In this article, we’ll discuss what audience segmentation is, actionable steps for implementation, proven best practices, how to measure its success, and more.

What Is Audience Segmentation?

Audience segmentation is the process of dividing your target audience into smaller, more manageable groups based on shared characteristics. 

The primary aim of audience segmentation is to deliver more relevant messages to sub-groups within the audience. It helps in optimizing marketing campaigns, improving engagement, and increasing conversion rates.

If before landing on this blog, you have been gathering information about audience targeting and why it’s important, you may have come across the term market segmentation. While the two terms sound similar, there are several key differences between the two: 

• Scope: Market segmentation is broader and focuses on dividing the entire market, while audience segmentation is more specific and focuses on dividing a target audience for particular marketing campaigns.
• Objective: Market segmentation aims to identify and target different market segments with distinct marketing strategies. Audience segmentation aims to deliver personalized and relevant messages to sub-groups within the target audience.
• Application: Market segmentation is used for overall business strategy, product development, and marketing strategy. Audience segmentation is used for optimizing specific marketing campaigns, such as by conducting a social media audience analysis.

Benefits of Audience Segmentation

If you are going to spend time and resources on conducting audience segmentation analysis, it’s worth nailing down the benefits. 

If you are just getting started with your digital marketing agency, here are some benefits of target audience segmentation you can highlight to your clients.

Personalization

Specific groups created based on audience segmentation have distinct preferences for marketing messages. For example, personalized CTAs can convert over 200% better than standard ones, significantly boosting engagement and sales. Additionally, personalized emails, an indispensable part of the target account selling strategy, are opened 82% more than generic ones. 

Improved ROI

Efficiently allocating resources to the most promising audience segments enhances the return on marketing investments. Email marketing, which heavily relies on personalization, generates an average ROI of $40 for every $1 spent. This shows the potential for significant returns when you strategically direct marketing efforts at well-defined segments.

Better Customer Relationships

Personalized interactions foster stronger connections and loyalty among customers. Email campaigns that tailor communications according to audience segmentation can lead to a 29% higher unique open rate and 41% more unique click rates than non-personalized emails. 

Furthermore, Dynamic Yield informs us that over half of consumers enjoy discovering targeted discounts and promotions in their email inboxes.

Types of Audience Segmentation

Depending on the needs of your clients, you may want to segment their target audiences into one or two of the most common types.

Demographic Segmentation

Demographic segmentation divides the audience based on age, gender, income, education, occupation, and other demographic factors. This type of segmentation is fundamental for understanding who your clients’ audience is and how to reach them effectively.

You can collect demographic data for your digital marketing agency’s clients through surveys, CRM systems, and website analytics. 

For example, Vendasta’s white-labeled websites come with built-in Google Analytics. This means that you have information about your users, such as their ages, interests, devices, and app versions, at your fingertips. 

Geographic Segmentation

Geographic segmentation targets audiences based on their location, such as country, city, or whether they live in urban or rural areas. This is particularly useful if your clients are businesses with location-specific offerings.

For example, Vendasta empowers you to leverage custom intent audiences. First, you may ask, What is a custom intent audience? A custom intent audience is an audience that you, as a marketer, can create for your clients on the Google Display Network outside of the bounds of predefined audience categories. With Vendasta’s digital marketing solutions, your target audience could be as precise as those potential customers who search for a “dental clinic near Griffith Observatory.”

Psychographic Segmentation

Psychographic segmentation categorizes audiences based on lifestyle, values, interests, and personality traits. This helps in understanding the motivations and preferences of different audience segments.

Surveys and customer feedback are valuable sources of psychographic data. Analyzing this data helps create more meaningful and engaging marketing campaigns. Vendasta’s Customer Voice is a powerful white-label tool that digital marketing agencies provide to their clients to help them collect feedback and reviews through a variety of channels, including text messages, emails, and Review Generation Widgets. 

Behavioral Segmentation

Behavioral segmentation divides the audience based on their behavior, such as purchase history, brand interactions, and product usage. This type of segmentation helps marketers understand how customers interact with their clients’ brands and what stages of the buyer’s journey they are currently on.

Technographic Segmentation

Technographic segmentation focuses on the technology usage and preferences of your audience. This is particularly important for B2B marketing and SaaS companies.

Understanding the technology stack and preferences of your audience can help tailor your marketing efforts to better meet their needs, ensuring your solutions are relevant and appealing.

Steps to Implement Effective Audience Segmentation

First things first, if you are just starting out with launching your digital marketing agency, you may want to consider choosing a particular niche. Here’s an overview of the best niches marketing agencies can specialize in. 

Because different types of audience segmentation work best for different industries, becoming a pro at marketing strategies for one industry can help you save time on audience segmentation in the long run. 

For example, if you choose to specialize in marketing for dental clinics, a demographic type of audience segmentation could work best. Segmenting patients into age groups can drive content marketing that speaks to different age needs. For example, you could write blogs on topics such as baby teeth and aligners for parents who are concerned about their children’s teeth and blogs on topics such as dental crowns and bridges for older individuals. 

Tip: Content marketing: how to speak to your audience can help you select a niche for your start-up digital marketing agency.

Now let’s take a look at the game plan for mastering audience segmentation for your clients’ success.

1. Collect Relevant Data

Gather data from various sources, such as CRM systems, surveys, and website analytics. Vendasta's Business App can help centralize customer data, making it easier to analyze and segment. Specifically, AI-assisted web chat lead capture greets website visitors as soon as they land on your agency’s clients’ websites, collects their contact information, and sends it to the Inbox. 

2. Analyze and Identify Patterns

Use data analysis techniques and tools to identify patterns and insights within your data. Create customer personas based on these findings to guide your audience segmentation strategy.

Imagine that your niche is marketing for dermatology clinics that are based in a climate with distinct seasons. With the summer approaching, you could create ads about the importance of skin cancer screening that will be displayed to those of the clinic’s customers who perform searches with skin cancer-related keywords.

Another example is how machine learning algorithms can perform predictive analysis to forecast the evolution of the needs of a particular patient population over time.

3. Create Segments

Develop criteria for effective segments, ensuring they are of appropriate size, accessible, and actionable. Balance specificity with breadth to create segments that are both manageable and meaningful.

Continuing the example of audience segmentation for dermatology clinics, it might not be worth the effort to create an audience segment just for those patients interested in seborrheic keratosis. 

Instead, it could be more worthwhile to separate patients based on age, with information on seborrheic keratosis, hair loss, and varicose veins being conveyed to older patients, as these skin conditions are more likely to occur in older individuals. Marketing content on acne, for example, could be directed at younger individuals. 

4. Develop Targeted Strategies

Tailor your messaging, offers, and content to each audience segment. For example, Vendasta’s automated email marketing is perfect for personalized outreach, ensuring your communications are relevant and engaging.

5. Test and Refine

Implement A/B testing strategies for different segments to determine what works best. Continuously refine your segments based on performance metrics to optimize your marketing efforts.

Best Practices for Audience Segmentation

The plan for successful audience segmentation can be boiled down to the following tips:

• Ensure your audience segments are clearly defined and easy to manage.
• Continuously refine your audience segments to keep them relevant and effective.
• Ensure your segmentation strategy aligns with your broader marketing objectives.
• Adhere to data privacy regulations like GDPR and CCPA to protect customer data.

Let’s zoom in on the last point for a moment. Here’s an imaginary scenario of how a marketing agency could help a dermatology clinic in California implement effective audience segmentation while adhering to GDPR and CCPA. 

The marketing agency must ensure that data collection methods, such as intake forms, surveys, and feedback forms, inform patients about data collection and obtain explicit consent. The marketing agency must also give patients an option to opt-in to marketing communications and provide easy ways to manage their preferences.

Tools and Technologies for Audience Segmentation

Vendasta's platform offers a comprehensive suite of tools for effective audience segmentation and targeting, ensuring your marketing campaigns are data-driven and impactful.

Data about customers is collected through Vendasta’s white-labeled websites, Facebook and Google ad campaigns, and reputation management software. All important data is centralized on a single platform, which helps marketers identify trends in audience behaviors as well as common features among customers. Based on these insights, marketers can choose the types of audience segments that would work best for their clients.

Measuring the Success of Audience Segmentation

It is important to track key performance indicators (KPIs) to measure the success of your segmented campaigns.

Here are some KPIs you can use to measure segmentation success:

• Conversion Rate
• Customer Retention Rate
• Engagement Rate
• Customer Lifetime Value (CLV)
• Customer Acquisition Cost (CAC)
• Return on Investment (ROI)
• Net Promoter Score (NPS)

Observe the ROI of marketing campaigns targeting various audience segments and allocate funds to the best-performing ones. If no audience segments yield the ROI your clients were hoping to achieve, then consider opting for other types of audience segmentation.

Case Studies: Successful Audience Segmentation in Action

Let’s take a look at one of the audience segmentation examples.

Mayo Clinic effectively uses audience segmentation to connect with patients and potential customers in a personalized and impactful way.

Specifically, Mayo Clinic segments its audience based on specific health conditions, thus providing targeted information that meets the unique needs of each group. For instance, a patient diagnosed with polycystic kidney disease will receive information tailored specifically to that condition rather than general kidney health information. 

Audience segmentation helps Mayo Clinic build stronger relationships with its audience. By continuously meeting the specific needs of different patient groups, they foster trust and loyalty. This is particularly important in healthcare, where patients seek reliable and consistent information.

Future Trends in Audience Segmentation

Comprehensive marketing automation, with the help of AI and machine learning, is poised to make audience segmentation easier for marketers and more efficient for their clients, no matter their industry.

By mastering audience segmentation, digital marketing agencies can deliver more personalized and effective marketing campaigns, improving engagement, conversion rates, and overall business success.