3 Steps to Strategic Audience Segmentation

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Understanding your customers’ needs is essential to any strategic communication campaign. That’s why you need a targeted approach, which allows you to proactively address their concerns, engage them in more meaningful conversations and earn their loyalty to your brand. So where do you start? Learning about audiences’ perceptions, needs, expectations and motivations begins by asking yourself, “Who are we trying to educate about our company’s programs or initiatives?”

This question is important, because messages should be tailored to be relevant and interesting for different audiences to engage them in ongoing dialogue. You can reach different audiences through various tactics and communication tools, so knowing how your audience wants to be reached and what they want to hear can make a huge impact on ensuring your company’s communication strategy is effective.

By categorizing your customers into well-defined and actionable segments, you’ll be able to:

  • Anticipate different customer needs and challenges and create segment-targeted communication strategies that can enhance their experience and engagement.
  • Maximize ROI and budget efficiently by only using marketing tactics and channels that reach the intended audience, based on what they want to hear.
  • Promote brand loyalty by positioning your company as one that cares for an audience’s specific needs.

The process of segmenting your target audience can sound daunting. While there are various methods for the segmentation process, here is one potential three-step approach.

Step 1: Refine objectives

The initial phase focuses on defining your market segmentation objectives. What do you want to get out of this process? At a high level, the objective should be to categorize customers into well-defined segments to help the organization:

  • Understand the range of customer perceptions, needs and expectations.
  • Create segment-targeted strategies that can enhance customer experience and engagement.
  • Enable employees to address customer needs based on a clearer understanding of who the customers are.

Once objectives have been determined, holding a strategy meeting with all internal stakeholders is crucial to defining your goals and developing the research plan for your target audience.

Step 2: Develop segments and balance objectives

Next, you will begin developing segments by conducting qualitative research through phone or email surveys. Survey questions can be developed based on four basic categories: geographic, demographic, psychographic and behavioral. When we conducted our study in 2014, the most important of these categories was the psychographic segmentation, which helped us categorize customers’ behavioral patterns such as brand loyalty and communication preferences. Ultimately, the goal is to gather a large enough sample size from your target audience so that you can identify commonalities within segments.

Once surveys are complete, you will begin segmenting the data collected. Segments should:

  • Be large enough to be worth acting on (e.g. more than 10 percent of the overall market).
  • Be applicable to your customer database, so your company can identify which segment each customer is in. Ideally, each individual customer should be able to fit into one of the designated segments.
  • Be distinct from each other, especially on attributes of strategic importance to your organization, for example: customer satisfaction, trust and communications preferences.
  • Recognize differences within racial or ethnic groups to ensure no group falls solely within a single segment – these demographics should not define your customer segments.

Step Three: Develop profiles

Who are your customers and what do they care about? The final stage of market segmentation involves characterization of the final customer profiles through analysis of your survey results. Your customer profiles should be defined by key characteristics that are specific to each segment and are backed up by your data before being cross-referenced against distinguishable characteristics from your customer database. For example, age, education level, number of children in your household, geography, etc.

At the end of this process, share the findings with your employees. Include the results of the research and how it ties back to the goals and objectives identified in the first step. Explaining how the information will help with the company’s overall strategies will ensure buy-in across departments.

When my company, Oncor, conducted customer segmentation back in 2013, we knew we wanted to measure specific factors, including customers’ trust in our organization, their satisfaction with our service, their energy efficiency knowledge and behaviors, and their social media participation. The research ultimately culminated in the development of four customer profiles:

  1. Connected Urbanites: The largest and youngest segment with the highest level of satisfaction with and trust in our company.
  2. Suburban Challengers: The most educated segment with the highest household income; this group had the lowest level of satisfaction with and trust in our company, and also the lowest interest in energy efficiency.
  3. Higher-Use Conventionalists: Our smallest segment, these customers are more rural and more likely to be homeowners. They are somewhat tech-averse and strongly prefer interactions with client service representatives.
  4. Interested Traditionalists: Our oldest segment included customers who are more urban and have the lowest household income. The study showed that this group is most interested in conserving energy, and therefore had the highest knowledge of energy efficiency.
A targeted campaign advertising Oncor’s “text an outage” program was most successful with the Connected Urbanite demographic.

The resulting advertising campaign was the reason we began this journey. It included a strategic mix of digital media and radio ads, and led to direct sign-ups and use of our technology tools by customers. Specifically, one of our targeted campaigns drove traffic to our text outage program, which allows consumers to report outages and receive outage information through their mobile phones. The text outage campaign resulted in 31 percent growth over five months, while a separate campaign directly resulted in a 39 percent growth in new Facebook and Twitter followers. Ads targeting the Connected Urbanites segment had the most favorable response, which accounted for higher click-through rates than other segments and 40 percent of new social media followers.

Understanding target audience segments provides your organization with data that gives you a lens to look through when making strategic marketing and communication decisions. Armed with the data, you’re able to review your campaigns against each customer segment and make adjustments that will continue to enhance the campaign’s overall effectiveness.

Jeamy Molina

Jeamy Molina is a communications manager for Oncor, the largest electric transmission and distribution company in Texas, serving 10 million residents. Since joining the organization eight years ago, Molina has served as Oncor’s spokesperson during every major power outage event.

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