The most important elements of customer segmentation in 2021

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For some people, flexibility comes naturally. For others, it requires hours of stretching just to touch their toes. When it comes to customer segmentation in our new normal, marketers have some serious training to do.

Segmentations are massive undertakings that lost a lot of luster during the pandemic. Even before COVID-19, they took months to complete and analyze, could cost into the six figures to conduct, and depreciated rapidly. They represent a sliver in time, and as soon as they are completed, they go stale quickly.

But the pandemic’s dramatic impact on customer behavior took what would have been a months-long depreciation process and condensed it into only a few days. A lot of the segmentations conducted just before the pandemic lost usefulness in the face of totally new purchasing behavior. So what is the most important thing about segmentation moving forward?

Flexibility.

Despite its challenges, segmentation remains an important element of the marketer’s toolbox to help group and communicate with customers. However, rather than double down on the frequency of traditional, rigid segmentation, marketers now have massive data sets available in near, real-time to make their segmentations more flexible. Here’s why and how:

Riding out disruptions

Because of the complications of segmentations, many businesses today may choose to avoid them altogether and rely on instinct to identify customer profiles or target opportunities. Yet, data (loyalty, past-purchase, contextual, behavioral) can give marketers visibility on customer behavior during and after massive social shifts. What segments change during these disruptions and what segments stay the same? Is money a defining trait or is the lifestyle the defining trait?

Flexible segmentation allows marketers to capture audience interests and desires across geographic boundaries without millions of dollars, hundreds of surveyors, and months of research. More importantly, flexible segmentation isn’t easily derailed by unexpected disruptions because it relies more on real-time data.

Customer data platforms (CDP)

CDPs have become a popular way for marketers to ingest and make data actionable. They configure data from a variety of different sources and allow marketers to build their own segments. A CDP enables a brand to adjust its marketing efforts to the current context of its customers through customer segmentation and real-time decisioning. This has made CDPs very popular in the time of COVID-19. According to Gartner’s Marketing Technology Survey 2020, 87% of respondents say they have a fully deployed customer data platform (CDP) or are currently deploying one. This is up from 74% in 2019.

Despite this, 23% of Gartner’s 2020 respondents cite a “lack of a strong customer data foundation” as a top impediment to martech utilization. Segments remain a key element of CDPs, but, without a strong customer data foundation, marketers must look for other forms of data to get an idea of customer behavior and make their segments actionable.

The power of social media

With social media, marketers can gather more information and then customize messages to customers based on their social media engagement. However, it is nearly impossible to scale and personalize marketing based on individual social media engagement. This is where market segmentation based on social media behavior becomes valuable. According to Hootsuite’s Social Trends 2021 Report, “social media segmentation can offer richer, more relevant, and more emotional foundations for defining audiences beyond simple demographics.” Social media profiling goes beyond individuals and single data points. It takes thousands or even millions of data points to show a trend significant enough for targeted advertising. Because a customer’s online behavior closely mimics their offlines likes and interests, social media allows marketers to segment behavior lifestyles between different audiences in real-time.

Social media is great for identifying affinities between customers and celebrities. For example, marketers can sponsor a triathlete that audiences have expressed an interest in based on social media engagement. This allows them to target a particular segment or utilize the identified lifestyle interests to target keywords for each segment. This can be updated in real-time, giving them much more flexibility to evolve these segments over time.

Flexibility and personalized experiences

If flexibility comes with practice, then 2021 will be a year for marketers to reimagine and retool how they segment customers based on better data. Despite their faults, segmentations are still valuable tools if used correctly. CDPs and social media insights are allowing marketers to more easily gain insight into customer behavior without having to wait for months on survey data. At the end of the day, customers want personalized experiences, meaning that marketers need to react to changing behavior quickly. Today’s flexible segmentation is making this possible.

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