7 Segmentation Errors That Will Cost Your Business

Most companies base their market segmentation on the fields available in their CRM, their customers’ purchase history, or other digital behaviors identified in their business. Those with automated marketing tools can also base their targeting on a specific system that takes other dimensions into account as well.

But are you making the most of market segmentation or are you leaving money on the table?

Here are seven common market segmentation mistakes to avoid.

1. You don’t have clean data

Decisions based on data that contains duplicate, obsolete, or non-normalized data will result in inaccurate segmentation. Nothing is more embarrassing than sending two different offers to the same person at the same time!

Make sure your data is clean, accurate, and simplified.

2. Instinctively define a market segment without backing it with data

While segmenting based on customer profiles or people based on guesswork is a good place to start, especially if you’re just starting, it’s not recommended to complete segmentation without doing the analysis first.

For example, if you define a segment with the lowest revenue as profitable, that’s an error that can only be seen in real numbers, it’s an error. Therefore, customer data must be analyzed when creating segments.

If you’re losing data because you’ve just started or run a small business, run some tests before completing your segments. Your testing might include sending marketing campaigns via email and analyzing the results, running limited digital marketing campaigns, and checking what kind of interest they generate, whether your sales team should have a different level of management from normal, and so on.

3. The analysis of your data is not based on the correct purpose

People in your different sectors must be defined and directed according to the different objectives of your company. Each of the different segments must be marketed according to its objectives.

For example, if you send a customer segment that you want to close, you must send them renewal information and marketing promotions related to your renewals. You will not send information about your latest products or updates if your goal is renewal. However, if you include them in the renewal, they will enter a new segment that can receive the information.

4. You have your ideal market segmentation profile based on the small amount of data you have and nothing else

Your ideal targeting might be based on variables and fields that you haven’t yet collected information about. For example, if you want to sell a stock of women’s shoes but don’t collect data on the gender of your customers, it’s impossible to send a single email campaign to the women on your list.

You should always assess your ideal customer profile and targeting needs and ensure your dataset receives valuable customer information.

5. During industry development, channels are sometimes ignored

Not all of your customers are interested in what you have to say about the different channels you use. Instead, you should use the channel associated with them based on their history.

For example, if you manage a travel agency, you may have customers who, despite receiving emails from your company, only open emails from the travel agency with which they make the reservation. So it doesn’t make sense to send a mass email to these people to book them online if you know they prefer to call the travel agency. However, it is recommended that your travel agent send you an email directly with your promotions.

6. Time is of the essence when contacting prospects and current customers

Regardless of the channel used to communicate with a customer or prospect, it is advisable to further segment an already defined segment based on engagement time. You can use purchase frequency, last purchase date, or renewal date, but having this additional segment can help you get the right information at the right time for the customer who is most likely to make the sale.

7. Do not track the performance of industry after launching a campaign for that segment

This failure can be costly. People will often compare segment A to segment B; however, a more convenient method is to compare the same segment across multiple campaigns over time to determine if campaigns fit within the segment.

This allows you to track the overall improvement of your marketing for the specific segment. If that segment’s performance improves, you can identify what you’re doing right and duplicate it. If it does, you can find out what the problem is and fix it in future campaigns.

Review your target practices to see if you can make a difference. If the goal is achieved correctly, it will increase your ROI and make your marketing efforts much more rewarding.

If you don’t have analytics skills, consider starting a consulting firm or other outside help to save your team the headache of analytics while benefiting from good segmentation in your business.