Improve Customer Targeting With Micro Segmentation Marketing

What is micro segmentation?

Micro segmentation is when you split your customer base into smaller, highly targeted groups so you can market to them more efficiently. You may divide your entire customer base into several micro-segmented groups or just focus on 1 or 2 micro segments.

While you may have a large number of people interested in your product or service, they will all have different characteristics. Some may be in specific job roles, have certain hobbies or interests, or interact with your business in a particular way.

Dividing your prospective or existing customers into micro segments means you can craft more targeted marketing campaigns that are likely to see higher levels of engagement.

You can use micro segmentation in any marketing campaign where you need to drill down and target specific groups of people, such as in email marketing, content marketing, and search advertising. You can also use micro segmentation to create targeted ads on social media and display advertising platforms.

How small should a micro segment be?

There isn’t a defined range. A segment should be small enough to be focused and still provide relevant insights for your business, but not so small that it’s not viable.

With that being said, there may be some circumstances under which your micro segment will consist of just 1 or 2 people!

What’s the difference between micro and macro segmentation?

Macro segmentation divides your email marketing mailing list into broader, more general groups, while micro segmentation divides customers into smaller, more specific groups.

Let’s say you sell accounting software to businesses. You may use macro segmentation to divide your customer base into general industry groups, like construction companies, educational institutions, or marketing agencies. Each segment will contain many different businesses, which may react differently to one specific message.

Alternatively, you may use micro segmentation to split these groups up even further. For example, you may focus on marketing agencies with fewer than 10 employees that specialize in social media marketing. They may all respond favorably to the same message.

Macro segmentation does have some advantages over micro segmentation. For example, it’s easier to implement and helps you gather data if you’re entering a new market.

You can even use both to gain knowledge of the marketplace. Start with macro segmentation to understand who buys from your business, then move to micro segmentation to target those who are most likely to convert.

The main benefits of micro segmentation

The micro segmentation process can help you create marketing that resonates with the needs and wants of your target audience.

Here’s what you have to gain by using micro segmentation in your marketing efforts.

Increased conversion rates

When you use micro segmentation, you use your existing data to personalize your marketing and make it more appealing to your customers.

As a result, they’re more likely to respond positively to your key message and convert. According to a study conducted by Edelman DXI on behalf of Mailchimp, 71% of customers are more likely to purchase from a company that sends them a personalized email.

When you know precisely who you are targeting, you can adapt every aspect of your marketing campaign to deliver personalized experiences.

For example, if you’re sending an email, you can personalize the subject line, the imagery, the email copy, and the call to action to appeal to your specific micro segment.

Improved customer loyalty

Micro segmentation doesn’t just help win new customers—it can also help nurture existing ones.

You can use micro segmentation to target frequent customers and make them feel special. For example, you can send email campaigns to these customers with exclusive product launches, behind-the-scenes news, and special discount codes.

This means increased customer lifetime value and reduced customer churn. Loyal customers are also more likely to recommend your business to others.

A better understanding of your customers

Having micro segments provides you with valuable customer data you can use to achieve your long-term marketing objectives.

If you’re focusing on a large macro segment of customers, it can be hard to uncover niche needs and preferences. By using micro segmentation, you can identify more relevant and targeted information that will help you make data-driven decisions.

You can also use micro segmentation to discover new opportunities and changes in behavior.

Let’s go back to the accounting software example we mentioned earlier in the article. If you create a micro segment that focuses on small e-commerce businesses, and you notice a visitor increase to page articles related to multicurrency transactions, it could indicate that this segment is looking to sell internationally, which you can then address in your marketing.

The different types of customer micro segmentation

Micro segmentation relies on using the right variables to divide different customers into groups.

Following are 5 ways to segment your customer base, and you can use as many variables as you need to create the optimal micro segment.

Demographic segmentation

Demographic segmentation is when you divide your customer data based on common characteristics like age, gender, occupation, or education level.

If you sell to business-to-business (B2B) organizations, you may also use variables like industry and company size.

For example, rather than just targeting small businesses, you may focus on 1-person businesses run by women under 40, with an annual turnover of under $100,000.

Geographic segmentation

Geographic segmentation is when you divide your customer data based on their location.

Location is the key variable, and you can drill down as far as individual zip codes. You can also split your audience by language, time zone, and even whether they live in a cold or tropical place!

For example, if you own a brick-and-mortar coffee shop, you could send lunchtime vouchers to people who work within a 1-mile radius of your shop.

Psychographic segmentation

Psychographic segmentation is when you divide your customer data based on psychological traits, like personality, interests, opinions, and values.

This information can be hard to gather and highly subjective. However, when done right, it can be a fantastic way to micro segment your data, as it can explain why people undertake specific actions.

For example, if you’re a travel agency, you may promote your new holiday offerings to people who identify as “thrill seekers” and enjoy immersing themselves in new cultures.

Behavioral segmentation

Behavioral segmentation is when you divide your data based on how customers interact with your business, for example, how often they buy from your website, how often they engage with your emails, or where they are in the customer journey.

Let’s say you operate an e-commerce store and want to invite customers to join your brand ambassador program. You can use purchase history data to identify customers who always leave a 5-star review after buying a product and are signed up to your loyalty scheme.

Situational factors

While all the other types of segmentation are typically stable, situational factors are temporary or influence a customer’s needs at a certain point in time. This makes it ideal for time-sensitive marketing or encouraging a sense of urgency.

Examples of situational factors include a customer who has ordered a specific product, requested an urgent delivery, or placed a particular order size.

Let’s say you sell dog food. If you launch a new flavor of dog food, you can target customers who bought the previously launched flavor, as they’re more likely than a completely new customer to want to try it.

Five steps to creating a customer micro segmentation strategy

Micro segmentation takes a lot of preparation and planning to execute, but the results are well worth the effort. Here are 5 steps to ensure accurate segmentation that leads to conversions for your business.

Step #1: Know your customers

Before you start identifying the micro segments to target, you need to understand your customers as a whole. What problems do they have, what are their ultimate goals, and how can you help them achieve their desires?

If you already have customer personas in place, this is a fantastic starting point. If not, creating personas will help you not only with your micro segmentation strategy, but your approach to sales and marketing in general.

When you understand your target market through customer personas, you can drill down and determine which specific customer attributes you want to appeal to with your micro segmentation strategy.

Step #2: Gather data to identify your segments

The more tangible data you have to support your micro segmentation strategy, the better. It’s never a good idea to rely on hunches—if you are wrong, your micro segmentation campaign will fail to boost sales.

Here are some excellent sources of information to get you started:

• Your customer relationship management (CRM) system: This shows how customers interact with you and your Sales team and where they are in the sales funnel.
• Your social media accounts: These show what customers are saying about you and what questions they have about your business.
• Your transaction data: This is a rich source of behavioral data, showing which products and services customers are buying, which items are bought together, and the average order value.
• Surveys and feedback forms: These allow you to engage with customers directly and ask the questions you want answers to.
• Website analytics tools: This shows which pages people visit most frequently, which pages drive the most conversions, and which search terms lead people to your site.

Step #3: Determine your segments

Once you have your data, it’s time to identify meaningful micro segments you can use in your marketing and build your customer segments in your marketing platform of choice.

You can use as many or as few variables as you need to build your micro segment, as long as they help provide relevant and helpful insights.

Step #4: Create highly personalized content

Building high-quality customer segments is only part of the puzzle. You also need to create effective, persuasive content that resonates with the needs and interests of your audience.

When creating content for your micro segmentation campaign, whether emails, articles, infographics, or search ads, focus on your target audience and how to resolve their pain points.

You can personalize your marketing messages even further through dynamic content. For example, you can show customers who have already visited your site products they have viewed or articles that are aligned with their unique browsing history.

Step #5: Review your marketing campaign

Once you’ve carried out your micro segmentation campaign, it’s essential to analyze the results.

This helps you see that your segment is viable and whether your campaign was successful. You can also gather data to help steer your marketing campaigns moving forward.

If you’re experiencing low engagement rates, it may be a sign that your micro segment is too large and needs refining. If you’re seeing low reach and a high cost per acquisition (CPA), your micro segmentation efforts may need expanding.

Key takeaways

• What is micro segmentation? Micro segmentation is the process of dividing your customer base into small, targeted groups so you can create effective marketing messages.
• Macro segmentation is different to micro segmentation: Macro segmentation focuses on larger, more general groups of customers, while micro segmentation focuses on smaller groups of customers. It’s important to use both types of segmentation in your marketing strategy.
• There are lots of benefits of micro segmentation: You can create highly personalized customer experiences that increase conversions and nurture customers. You can also gather valuable data to help steer your future marketing strategies.
• There are 5 ways you can apply micro segmentation: Demographically, behaviorally, geographically, psychographically, and you can also use temporary situational factors like order size and delivery requirements.
• It’s vital to take a methodical approach toward your micro segmentation strategy: Understand your customers, build your market segments, create personalized content, and analyze your campaigns to determine success.