The present and future of segmentation

Segmentation in the past

Traditionally, segmentation has centred around geographical and demographic characteristics such as age, gender, race, location, etc. Subsequently, marketers felt the need to include psychographic and behavioural aspects of customers. For example, a car manufacturer selling a luxury car would target an audience with characteristics such as age over 35, higher income, residency in Delhi or Dallas. In terms of psychographic and behavioural aspects, a luxury car manufacturer targets consumers who value quality, status and a certain lifestyle.

Segmentation today

Today, brands are looking for increasingly effective ways to segment customers to get the most out of their marketing campaigns. As customers and their sensibilities evolve, marketers are combining different attributes and using this to reach target customers through personalised campaigns. Here are some methods for better segmentation.

Transaction + survey data

Surveys are an excellent tool for getting quick feedback on specific interactions between a customer and a brand. These interactions can be evaluated at different touchpoints. However, companies are nowadays enhancing the insights from surveys by combining them with transactional data. Understanding customers' purchase history along with their preferences or feedback helps brands make better decisions.

Behavioural data

Technological innovation has led to data flows - big data at high speed. Marketers and brands are looking at how they can leverage this data stream to better understand their customers. For example, brands can now understand their customers' commuting habits, segment them by commuting mode and travel time, and explore different touchpoints to target them with relevant messages. This data is effectively analysed using analytics tools to target services and offers more effectively.

Segmentation in the future

The future of segmentation will first focus on the kaleido-identity trend, where newer attributes will become critical.

Second, it will use technology to acquire new types of data. For example: companies are likely to focus on the untapped potential of Urchin Tracking Module (UTM) parameters - tags added to URLs that enable effective tracking. These can be used not only to understand where a lead came from, but can also be incorporated into customer profiles.

Third, it combines different attributes to improve customer understanding. Brands are already experimenting with this, as detailed earlier. But the future will see even more ingenuity and analytical sophistication.

Segmentation based on a richer portrait of potential customers based on data and overall consumer behaviour will pay dividends. The key is to understand and blend existing and evolving characteristics to gain a deeper understanding of your customers. Understanding and embracing the evolving concepts of identity and newer, more meaningful attributes will help marketers stay relevant, enhance the customer experience and build a unified brand identity.