Single-serve pods or whole beans? Light roast or dark? Late-night study session or early morning school drop-off? Millions of people around the world drink coffee, but they don’t all do it the same way.
That’s why Propeller Coffee Co. used customer segmentation to customize its messages. By presenting different product mixes, subscription frequencies, and shipping rates to different audiences, it was able to achieve a remarkable increase in email marketing conversions and sales.
If you want to drive similar results, you can use a few different types of audience segmentation to inform your marketing strategy and grow your business.
What is audience segmentation?
Audience segmentation is the practice of categorizing your audience into groups based on their characteristics or behavior. Organizations use these groups to create personalized marketing campaigns.
Traditional marketing campaigns rely on mass messaging. These campaigns work best for products with a singular appeal to a broad audience, like toothbrushes. If, however, you wanted to market toothbrushes designed for different needs (people with sensitive gums, parents of small children, etc.), customer segmentation would allow you to tailor your messaging so it resonates with different customers.
Ultimately, creating audience segments enables you to deliver more personally tailored content to your target audience, driving stronger results.
Types of audience segmentation
There are four main types of audience segmentation. You can use these as isolated segments or layer them to create more niche audiences:
Demographic segmentation
Demographics are the most basic segmentation criteria. Demographic data includes qualities like age, gender, ethnicity, income, and educational background.
Demographics provide an excellent foundation for analysis but are more powerful when combined with other segmentation criteria. For example, think about your high school classmates from your hometown. Although you’re the same age, have the same starting education, and grew up in the same area, would you say your values, lifestyles, and reasons for purchasing are identical? Unlikely. That’s why it’s often important to layer other segments on top of demographic segmentation.
Geographic segmentation
Geographic segmentation is an important subset of demographic segmentation, grouping audiences based on location. It allows you to separate marketing efforts by region with localized language, regional shipping rates, and local holiday promotions. You can identify audience segments that get as granular as a ZIP code or as expansive as a continent.
You might use a geographic audience segmentation strategy to advertise promotions based on local holidays or climate. For example, in the winter, an outerwear brand might target audiences around Vancouver with raincoats while showing parkas to people in Chicago.
Behavioral segmentation
Behavioral segmentation groups people based on their online actions. Part of this involves tracking what they do on your website, but it extends further than that.
Behavioral data encompasses purchase history, social media usage, Google searches, ad views, and more. Use this information with your content and customer journey maps to match your message to their needs.
For example, knowing purchase history, such as how long ago customers purchased a consumable product, can help you email them at precisely the right moment they need to replace it.
Psychographic segmentation
Psychographic segmentation gives you clues into the “why” behind your customer’s actions. Marketers typically gather this data through consumer research, like surveys, to get insights into customer personality types, lifestyle choices, guiding values, and beliefs. Then, they use interest-based targeting and tailored messaging to align with each group’s motivations.
You may know that your audience likes particular brands on social media, but do you know why? Are they family-oriented or individualistic? Are they adventure-seekers or homebodies? The messaging you use will depend on the reasons behind their purchase decisions.
How to use audience segmentation
- Define audience segments
- Personalize content
- Align segments with marketing channels
- Segment your online advertising
- Optimize your website for your target customers
Define audience segments
Use online and offline tools to identify concrete audience groups. Web analytics tools give you insight into your customers’ online activity and demographics, while traditional research methods like focus groups and surveys help uncover deeper motivations.
You can also let customers segment themselves by incorporating preferences and interests into your email signup forms. Then, group customers according to categories like average order value, new subscribers, or interests.
Personalize content
Once you’ve segmented your target audiences, make your marketing efforts count by personalizing content that speaks to each group. You typically only have a brief moment of attention, so ensure your message hits home.
For example, in an episode of the Shopify Masters podcast, Aaron Zack, former vice president at Propeller Coffee Co., discusses the benefits of customer segmentation. “We look at customer segmentation analysis in terms of product mix, purchase rate, AOV, LTV, and abandoned cart rate to get an understanding of how people are marking purchases or not,” he says.
The company used that information to personalize its product offerings and promotions depending on where a customer lived. “After several months, we were seeing a consistent 175% increase in email marketing conversions,” Aaron says.
Align segments with marketing channels
Choose the right channel for each particular segment. For example, the social media posts or channels you use to reach each generation will likely differ. You can reach Gen Z audiences on TikTok, but baby boomers are more likely to spend their time on Facebook. Understand your audience’s preferences and meet them where they are.
If you sell office supplies to office managers, you might want to reach them when they search on Google, and focus on SEO/SEM tactics. However, if you sell unique supplies like bullet journals to students, you may have better success on Pinterest, TikTok, and Instagram.
Segment your online advertising
Online advertising platforms like Meta Ads can create audiences that include or exclude users based on information from their social media profiles. Ecommerce tools like Shopify Audiences can also generate custom audience segments for advertising platforms, based on their algorithm’s selection of customers who are most likely to buy from your store.
Create or upload audience groups in your ad platform based on your chosen criteria. You can also set ad budgets by audience to ensure you spend appropriately for each group. For example, if you know that one segment tends to make higher-value purchases than another, you can spend more on them, assuming their ad conversion value will likely be higher.
Optimize your website for your target customers
Create custom landing pages to target specific audience segments. Use these pages to showcase various product offerings and messaging that resonates with them. For example, if you sell home décor, you could create one landing page that appeals to families and another to young couples.
Audience segmentation FAQ
What is an example of audience segmentation?
A fitness apparel brand could segment its audience based on fitness goals and lifestyle, such as yoga enthusiasts and weight lifters. It could also segment audiences by demographic data, such as older customers versus younger customers.
How do I segment my audience?
Organize your audience into groups based on shared characteristics like demographics, psychographic profiles, or online behavior. Collect data using web analytics tools, social media platforms, surveys, and focus groups to gather information, then use it to tailor your messaging to a specific audience segment.
How does audience segmentation help with targeting?
Organizing your audience into groups based on shared characteristics helps with targeting by allowing you to tailor your messaging, imagery, and marketing campaigns to appeal to specific audiences.
