How segmentation can bring brands closer to their customers

In today’s ultra-connected world, each person is potentially exposed to numerous points of contact with a brand. To create a meaningful interaction with consumers over time, it is imperative for brands to weave together the various connections with their consumers, and offer a user experience that is always relevant based on the device used. It is, therefore, crucial to identify where a user is in the customer lifecycle, so brands can deliver the right message at the right time.

Segmentation is the first step toward efficient and durable marketing. A visitor segment is a group of consumers sharing similar characteristics or similar needs, or who react to similar brand interactions. The point of segmentation is to hone in on market segments to offer consumers the product or service best adapted to their needs, whether those needs are known or supposed. It’s a vital ally when creating the most relevant targets for a brand.

Segmentation is not a new concept: it is used daily by marketing departments to understand better their brands’ customers, and fine-tune the relationship with them. The rise of digital analytics tools has given marketers an edge, enabling them to zoom in on a specific particularity, attribute, or behaviour, and deduce which segment of the population it relates to. As in most fields, the objective will determine the quality and precision required from tools, based on both nature of the targeted objective and the required granularity, as well as the methodology and the approach.

Why do enterprises need segmentation?

In Southeast Asia in particular, consumers are increasingly active in the digital space, with users in the Philippines, Thailand, Vietnam, Indonesia, and Malaysia spending an average of over five hours each day using the Internet, according to a 2015 report by We Are Social. Southeast Asia is poised to be the next ‘hot spot’ for e-commerce in Asia, with China’s and India’s markets reaching saturation – mobile commerce is also proving to be a huge growth area, with a number of markets in Southeast Asia being mobile-first.

Let’s take the growing laptop market in Southeast Asia for instance, which has totalled over USD 2.2 billion in the first six months of 2014 according to GfK. Customers purchasing laptops can be divided into two main visitor segments - businesses sourcing for laptops for their employees may be more interested in functionality and cost as compared to customers sourcing for laptops for personal use, where colour and innovative features may affect their buying decision.

Once a brand can identify the decisive criteria in a customer’s purchase decision, they can then create targets and take direct action. If price and functionality are the main factors that business buyers consider when purchasing laptops, sending them personalised marketing emailers that promote laptops bundled with office software could yield significant results.

How can enterprises segment visitors effectively?

Digital analytics tools today are capable of providing enterprises with precise data from their customers. Instead of just looking at the most basic customer characteristics such as age, wage and gender, digital analytics tools can zoom in on specific customer behavioural data. Some examples include the time of day when users interact with an app, the products viewed after searching with certain keywords, as well as whether these interactions convert into purchase decisions. Breaking up customers into different visitor segments based on this data allows enterprises to fine-tune their customer relationships efficiently and develop unique personalised communications.

Another method to segment visitors is based on a specific event at a specific time, which aids enterprises to discover strong correlations in customer behaviour over a period. Here's an example: A common problem that marketers tend to face – shopping cart abandonment – can be alleviated using such a method. Enterprises can study the current month’s visitors based on the segment of visitors who abandoned their shopping carts over past month's data. Such a study can answer key questions such as: Have these visitors come back to make their purchase? How much time did they spend researching products during their subsequent visits? What is the portion of users who did not come back? What emailers can we send to those registered users who did not come back to ignite their interest again?

Creating a persona takes it one step further from visitor segmentation by looking at acquisition or risk prevention. Going back to our example of visitors who abandon their carts, enterprises can analyse these visitors and collect other main characteristics observed to form a profile. An example of such a profile could be visitors from the Philippines or Indonesia, who use Chrome as their browser, have checked delivery charges or left a comment. This is a persona for which enterprises can develop an action plan with targeted communications to acquire similar targets and reduce the risk of cart abandonment in the future.

While this process may sound complex, enterprises need not be concerned about it taking too much time to implement. With the right digital analytics tools, this can be achieved easily by selecting simply the profile attributes and periods they wish to investigate.

How can enterprises create unique user experiences and customer loyalty through segmentation?

Through segmentation, enterprises can effectively identify the top 20% of their customers that contribute to 80% of the revenue. To retain them and win their loyalty, the right kind of messaging can be tailored and delivered at the right time. Take the mobile phone industry for instance – according to a report by Dentsu, mobile phone penetration in Southeast Asia may have well exceeded 100% but the market will have a customer churn rate of almost 24% in the near future.

Digital analytics tools give brands a powerful competitive advantage by identifying customers who tend to consider other options and retain them through personalise perks and advantages. Some examples that make profitable customers feel valued and encourage loyalty to the brand includes special support, extended return policy or free gifts.

The key to using segmentation well is to get customers to return frequently without letting them feel bombarded with too many brand messages. With the right tools, enterprises can detect customer behaviour that suggests detachment from a brand as quickly as possible and intervene by suggesting relevant actions. For instance, if a regular customer who enjoys purchasing personal IT gadgets seems to have ceased making purchases for over a few months, digital analytics tools can shed light on him and the enterprise can design special promotions that appeal according to his liking to encourage his next buy. Surely, an exclusive emailer with 25% discount off the latest IT gadget will woo his return.

For brands to stand out from competitors within the same space, digital analytics is the answer to delivering meaningful customer experiences every time. The future of marketing is in the brand’s ability to constantly evolve and develop content that not only predicts the needs of their users but exceeds their customers’ expectations.

The writer is Lionel Barnabas Low – Digital Analytics and Insights Consultant, AT Internet.