Segmentation is Critical for Small Business
Updated: Feb 25
And you can probably already do more than you realise
Segmentation will increase your chances of new and repeat customers. It will make your marketing spend go further and improve your conversion rate. It is quite simply an essential element of marketing for small businesses and it is so much easier than people realise.
A few weeks ago I wrote an article all about small business and why it’s the best friend of any small business. Based on the feedback I got, people loved the idea and understood it, but were worried about how they would have the time or data to really start.
This got me thinking, I bet most small businesses already have so much of this data and with a little guidance and a few tips, they could be flying with segmentation — so prepare yourself for a little guidance and a few tips!
You Already Have the Data
Let us start with data, the fuel for all segmentation. People worry they don’t have quantity or quality of data to perform segmentation, but let's have a look at what types of data are readily available and you might well be able to start straight away.
Gender — For most of the customers that have signed up to your newsletter, bought a product, watched a webinar or however you got their details, they will have told you if they are male or female; Mr/Mrs/Miss etc… However you have collected it, I’m confident you will have information to be able to segment male from female. Whilst some businesses (particularly B2B) will not segment this way, for a lot of B2C businesses this is a no brainer, as it allows you to segment the products you put into your marketing, a great opening form of targeting.
Age — Similar to gender, you can collect age information in a couple of ways (Date of Birth or asking for their age!) and it is again a simple but powerful first segment. Just consider how different your messaging might be if you know someone is an 18-year-old boy vs. a 50-year-old woman.
Content interests — If you know what content someone is interested in, then you can target them and ensure your marketing message is spot on. You can collect this data in multiple ways. Maybe via your CMS system, maybe your marketing automation tool or through a tagging solution. Maybe you even have a subscriber microsite where you ask what interests them.
Products bought — By knowing the products a user buys, you can predict what else they might be interested in. This doesn’t require complicated algorithms, we are not talking AI here. It’s your knowledge of your business. You know if someone buys a pair of running trainers, they might also buy running socks. The transaction engine on your website will have all this information.
Lifecycle stage — Someone signed up (Awareness), they have added something to a basket (Interested), they have bought something (Buyer), in fact, bought multiple times (VIP), they have even written some good reviews about you (Advocate) or maybe they haven’t been back in some time (Lapsed). These are all things you can easily measure through your CMS/Transactional engine. If you know that information, you can segment these people into the lifecycle stage they are at (the stuff in brackets), creating an incredibly powerful set of segments that can alter messaging and even drive a series of automated communications. Welcome programmes, Abandoned baskets, VIP campaigns, Lapsed programmes — these can all be created using this data.
Subscriber status — Really simple. Have they signed up for email? Have they liked your Facebook page? Are they following you on Twitter? Each of these pieces of information can help you segment someone into the channel they prefer you to talk to them on.
Engagement data — If you want to take the subscriber segments a step further, then look at how engaged they are on the channel. If someone never opens or clicks on an email, then stop sending them and focus on your other channels. This is a great way of allowing people to segment themselves OUT of communications, which is good for your brand long term.
Purchase history — You will have all the information about people’s purchase history, it’s in your transactional database. Person A buys once a month, in the first 7 days of the month, that’s a pretty good piece of information to help you target when to upsell them new products, right? I don’t think I need to say any more on this one.
Complaints — Not all data is about positive actions. Knowing people that are not happy can be really powerful. On a simple level, don’t try to upsell someone the day after they complained about a late delivery. On a more advanced level, categorise the complaint and maybe you can drip feed in value-added content to win them back around.
Reviews — The other side to complaints is happy customers (yay!) that tell other people they are happy customers. These are advocates, they need to be in a segment marked “VERY SPECIAL, TREAT WITH CARE”. Then ensure you give them great extra value and encourage them to keep telling the world.
Where you can segment
The list above should have given you ideas of segments you can already build. But you are now wondering, where do I start, where do I use these first segments.
Let’s start with three places where you can immediately create segments and start getting benefits from using segmentation.
Start by splitting up your newsletter based on those that are customers vs those that are subscribers only. Or test out a male / female split. The key is whichever initial segment you use, you need to monitor the results and keep trying new segments.
You should also look at setting up some simple automation. Maybe a welcome email. An email to anyone that adds an item to the basket but doesn’t purchase within 24 hours.
This route is ideal because it doesn’t even need you to have collected any data to start using it — Facebook does all the work for you! Over time you can evolve this and use lookalike audiences, but initially let's focus on the basics that you can do in creating a custom audience in Facebook.
In Facebook, when you create an Ad, you are given the option to create an audience who you Ad is targeted at, meaning it’s not sent to all Facebook users. In that section, you will see the following options.
Location — Put in the parts of the world you want to reach, from countries through to individual towns and cities if you are wanting to appeal just locally.
Age — Put in the range, allowing you to exclude ages if they are not your target market. If you are selling a Saga style holiday, maybe avoid the 18–50 age bracket!
Languages — Linked to the countries, but you might also use this within a country if aiming at a subsection of the country.
Detailed Targeting — This is the most powerful part of Facebook audiences but is genuinely simple to use. Think of it like using google search. You are looking for people’s interests and behaviours. You can use what you know about your audience and target them. For example, I might look for business owners, but if I want to niche that down, I look for small business owners. However, if I really wanted to, I could look for small business owners of beauty businesses. Most of the keywords you would use on your site, you can search for on Facebook and find a term that you can segment on.
Taking segmentation down to it’s most simplistic level, it is a group of people that you know would buy your product or service. When you look at advertising, then the simplest way of segmenting is talking to publications (online or offline) that fit your niche. If you are a knitting business don’t advertise with a generic crafting site, yes you will find some people interested in knitting, but a lot more that are not interested. But if you advertise in Let’s Knit, you know everyone seeing your Ad is your audience.
If you decide to run google ads, then segmentation is another form of the ‘long tail’. You will get people to see you if you buy the keyword “knitting” but if you segment to who your core audience is, then you’ll spend less, be seen by less, but get a higher conversion, so try “knitting as a practical mental health tool” if you specialise and have good content about the side benefits that knitting can bring you.
No Excuses, Get Going
We don’t have a CRM to pull that together? I’m really busy launching a new product? It’s a busy period for us right now, I’ll start on it next month.
We can all list a load of excuses for not getting started. How about we destroy those excuses and get you going? Sound good? Challenge accepted
No CRM / Database
So you don’t have an expensive CRM platform. I could cheat and just point out there are amazing free and very cheap platforms you could use. But let’s use a different example.
You’ll have an email provider. If you don’t, stop reading this, go get one and we’ll talk in a bit… Ok, everyone back in the room, I’ll continue.
Append these segments to your email database. Don't panic about trying to add loads of data, just add a new tag against people saying they fit a segment. An example? Rather than listing that person A bought shoes, that person B bought socks and shoes, create a list of shoe people and a list of sock people. Then against that person put a tag to say they were in the sock segment or the shoe segment. It’s no different to the tags you already have that say Person A has subscribed.
And I don’t want to hear that your system doesn’t allow that, I’ve used some of the free and cheapest platforms on the market place and they will all allow you to do this, simply adding a tag or flag against an individual. And a helpful hint — most of the bigger CMS and Email providers will have an integration so you can automatically pass a lot of this information.
I'm Too Busy
Too busy to target your customers and increase your sales? What else are you doing that’s more important than generating sales? Busy doing new campaigns to find new customers? Did you know that it costs 8 times as much to get a sale from a new customer than it does an existing one? Of course you did. So stop kidding yourself that a Facebook post or wondering if the new logo is the right shade of green is more important and allocate some time to increasing your sales.
If you are still struggling to find the time, then head over to our webinar series and for free, learn loads of secrets about how to do your marketing in 30 minutes a day, then you’ll soon have enough time to do some segmentation and kick start your sales growth.