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Successful market segmentation blends several core components of efficient digital advertising.

The 10 Costliest Market Segmentation Pitfalls

David Bosley

Both new and established business operators know the importance of a well-established target market. If you want to build a solid consumer foundation, it’s crucial to identify who you’re selling to. ‘Who,’ however, is only one component of the equation.

You also need to know what your target market wants, and you’ll need to understand when it’s the right time to market to them. Once you’ve identified these market segmentation cornerstones, handling the where of marketing—both in physical and online realms—can make or break an established strategy.

Market Segmentation in 2020

In 2020, marketers will need to identify the core elements of consumer interest and platform preference alike.

As the new year arrives, plenty of marketers are refining their market segmentation strategies. Looking at targeting from all sides is important, as there are many more elements than data collection at play. About 40.5 percent of consumers prefer targeted online advertisements—and another 47 percent even opposed a law restricting how data is utilized for online advertisement.

Despite the apparent support for targeted advertisements, however, consumers are still wary about targeted digital marketing strategies they, themselves, don’t have a say in. A recent Digital Ad Alliance’s AdChoice study examined the importance of opt-in advertising—finding that as much as six percent of online shoppers never realize they can opt-out from targeted content.

Market segmentation is tough—especially when brands adopt today’s must-have online-offline approach to professional selling. How closely should a brand align its referred products and services with consumer interest? Where does one draw the line between useful product suggestions and invasive advertisements?

Regardless, plenty of marketers still struggle with the fundamentals of striking key tones with their most lucrative consumer segments. Considering two-thirds of today’s digital marketers spend as much as 25 percent of their media budget on multiscreen advertising, identifying one’s perfect market niche is a practice that needs to accommodate for e-commerce portals and brick-and-mortar locations alike. In general, one out of five marketers will have a dedicated budget for retargeting.

The Trouble with Targeting

It’s okay to feel behind the targeting curve. Website conversion rates don’t offer nearly enough information to glean undisputable insights into a market’s most valuable audience segments. That’s why a lot of brands rely on the art of retargeting—which focuses on getting previous website visitors to return for further study.

The Retargeting Problem Market segmentation isn’t easy, and neither is the application of retargeting tools.

Retargeting strategies take form in display ads, e-mail, organic search, and even social media. Fortunately, resources like Twitter’s retargeting tools have cut marketers some slack. On the other hand, Facebook’s once-useful FBX ad exchange tools have gone offline due to the mass adoption of mobile media. So it seems: Viable retargeting tools, or at least the accessible ones, come and go frequently.

One of the biggest hurdles of online market segmentation, interestingly, is the lack of retargeting resource usage. About 46 percent of search engine marketing pros believe as much, even when website visitors retargeted with display ads are roughly 70 percent more likely to convert to the website’s brand.

While retargeting tools should be incorporated into every digital marketer’s toolkit, the problem of core market segmentation still exists in the online world. Almost half of online campaigns never reach their target audiences—highlighting the modern struggle to target effectively. In several ways, digital simply hasn’t lived up to marketers’ expectations—and many brands aren’t utilizing digital in the ways it should be utilized.

The Demographic Problem

While digital was expected to be the ultimate market segmentation and measurement platform, a lot of business professionals have found it to be more based on cookies, devices and impressions—rather than reach. Many marketers assume they can apply traditional marketing tactics to the digital world, failing to examine digital media on its own terms.

Experts find that accurate targeting varies a lot based on demographics—reporting that campaigns targeting 25- to 44-year-olds meet the mark about 38 percent of the time. Campaigns targeting consumers between ages 35 and 64, meanwhile, reach their desired audiences about 58 percent of the time. Older audiences are better acquainted with traditional media—often not tech-savvy enough to clear out their cookies, as opposed to the younger group which has been conditioned to be a little more cautious.

The Granular Approach Problem

In an effort to overcome broad-stroke segmentation tactics, some marketers have over-prioritized accuracy and focus. These brands become too granular in their approach, sometimes alienating otherwise receptive audiences who might’ve had an interest in particular products or promotions.

Data used to target effectively must be accurate, of course, but it’s only applicable to the targeted audiences that are approached with creative marketing executions. By and large: Successful segmentation occurs when a brand provides helpful information at the perfect time.

The Costliest Segmentation Pitfalls

Understandably, acquiring actionable data gets expensive. Between mass data collection, analytics, refinement and targeting tests, new marketers might find themselves blowing through their digital budget before making any industry headway.

By researching your customers with care, however, it’s possible to avoid expensive targeting, and retargeting, problems before they arise. Take note of today’s top 10 market segmentation pitfalls—and imbue your next campaign with strategies built to avoid them.

Pitfall One: Relying Too Much on Buyer Personas

This pitfall tends to trap beginning digital marketers, but make no mistake: Even the most experienced brand professionals aren’t immune to it. It makes sense to segment your market based upon customer profiles, often called buyer personas, to get good e-commerce footing.

Even so, your segments should never be set in stone—even if your first big data insights support it. What might look like a profitable segment might not reap significant revenue, which is something you might not catch unless you’ve extrapolated meaningful data insights for several years.

This said you might actually get good results by catering to a specific buyer persona. It’s okay to define this segment as a high-value one, but you should pay close attention to conversion rates tied to it. If you lack data because you’re a new, small business, don’t let initial buyer personas be your downfall.

Instead, conduct some tests before finalizing your segments. Try creating an email marketing campaign that targets this segment. Analyze the results. Does it bring in more visitors? Are these visitors becoming registered website followers? How many of these followers are converting to paying customers?

If the results don’t meet your expectations, it’s best to try targeting a different segment—or at least take a second look at your segment data—before going further. You might be missing important data that can back up this profitable segment down the line.

Pitfall Two: Using ‘Dirty’ Data

You’ll probably have a lot of data to deal with if you’re just starting out. Between email campaign click-through rates, Facebook Ad CPC, e-commerce checkouts and unique content page views, there are plenty of numbers to consider.

Be careful, though, because quantity doesn’t equate to quality. A massive stream of data can be ‘dirty,’ in that it can be bogged down by irrelevancies. To segment your audience effectively, you’ll need to dive into this data headfirst, grouping together different types of customers based upon their buying behavior.

If you’re using erroneous or duplicate data, you’ll get inaccurate segmentations as a result. This might seem like an easy pitfall to avoid, but 61 percent of today’s digital marketers struggle to integrate effective data when handling data in bulk.

By identifying and avoiding costly targeting mistakes, you can create a cost-efficient, effective strategy.Pitfall Three: Not Considering Engagement Times

You should segment your market based upon consumer engagement times. Every segment responds differently depending on the day they’re approached. Moreover, the time of day can even make a considerable impact.

You might find that your brand’s targeted working professionals might respond to your branded emails more during weeknights. Stay-at-home parents, meanwhile, might be more privy to branded outreach efforts during weekday afternoons. If you send content when the time isn’t opportune, your message will fall upon deaf ears. In the best-case scenario, you’ll receive a skewed outlook of your data’s big picture.

Pitfall Four: Not Tracking Performance Over Time

Speaking of time, conducting A/B testing at regular monthly intervals is also a good idea. By analyzing what’s working—and what isn’t—you’ll be more equipped to replicate successful strategies in the future.

Unfortunately, a lot of businesses forget to compare one segment’s performance with that of another. They’ll evaluate their marketing strategy based upon each segment’s highlights and downfalls—but they won’t cross-reference each segment to find deeper truths.

By tracking each segment’s performance over time, and in relation to other segments, you’ll be able to measure the improvements your strategy needs. If a segment’s performance is going up, try replicating its unique quality across other segments. If other segments don’t respond to the same tactic—what could be the cause?

Likewise, if a segment’s performance is decreasing you should work quickly to figure out why. Does the lacking segment adhere to strategic principles shared by other segments? If so, what factors could contribute to major performance differences?

Pitfall Five: Targeting Segments That Don’t Reflect Brand Goals

In any digital marketing campaign, your brand’s core goals should be prioritized. Whether you’re focused on boosting customer lifetime value, customer counts or conversion rates, each of your segments should serve as a means to an end.

For example: If you have a customer segment that subscribes to your brand’s newsletter on an annual renewal basis, which type of content should you send them? Maybe renewal-related information, or even promotional offers, should be used. Or, maybe insights into your brand’s newest upgrades and products is a suitable choice. Which should you choose?

Here’s the answer: The first option, or the content featuring renewal-related information. This segment has a specific slice of brand followers—those who might, or might not, renew their current newsletter subscription. It’s all too easy to send sweeping brand emails across the board, never targeting this group specifically.

If you don’t continue to align your segment’s strategy with your current segment goals, you might have a problem. You can still send fanbase-wide emails, of course, but you should still keep up with goal-specific promotions that cater to your individual segments.

Pitfall Six: Ignoring Channels for Segment Development

It’s possible to utilize multiple communication channels—like a blog and social media—and still fall short in reaching your customers. Remember: Not all of your customers want to engage your brand across every channel, and you might be wasting valuable campaign dollars thinking they do.

If you run a local restaurant coupon service, for example, you might not readily realize that Segment A is ignoring your branded emails—even though Segment B is highly responsive to them. The difference between Segment A and Segment B needn’t be significant, either. Maybe Segment A targets college students who commute, and Segment B targets office workers.

The result is all the same: Different segments respond to different channels—and you shouldn’t prioritize each segment’s development while overlooking each channel’s impact. In the past year, social media and paid search have experienced the most significant visit share growth rates among all major channels. Email and branded websites are close follow-ups.

Pitfall Seven: Targeting Small Markets

If you’re a fledgling brand, it makes sense to craft a segmentation strategy that reflects your business’s specialty. Targeting a specific market is important, but getting too specific can drain your pockets before you gain any ground.

In most cases, targeting highly specific markets means targeting small markets. Small markets have small lead populations, which means any data procured from them will hold less weight. Plus, consider that other brands might be competing in the same, small market. This segment can, and will, get saturated quickly—restricting your sales opportunities.

To avoid this pitfall, try to avoid making narrow assumptions based upon your growing brand’s initial, broad-stroke audience goals. If you don’t have the tools needed to collect adequate data, it’s better to play it safe by creating similar, broad-stroke segments. This might be a slow process, in terms of lead generation, but it’ll keep your brand grounded until it can utilize legitimate, actionable data.

Pitfall Eight: Neglecting Personalization

A survey conducted by the Boston Consulting Group suggests that companies invested in personalization over accurate segmentation can outsell their competitors by as much as 30 percent.

The power of psychographic segmentation can’t be understated—but it’s important to move along once you have the information you need. Step further, and refocus your targeting strategy for personalization. This includes not only optimizing the consumer experience but also crafting custom-tailored messages which target individuals—not the individual groups they belong to.

This isn’t too difficult to do, either. Once you’re able to pull in an abundance of data, you can start narrowing down your customers based upon buying habits. Once you have, you can split up each segment by demographic, psychographic and personal features. The best targeted campaigns are consistent, reliable and flexible at a moment’s notice.

Pitfall Nine: Targeting Non-Buyers

You’d be surprised how easy it is to make this mistake. Many modern marketers accidentally toss in non-buyers with active buyers, diluting otherwise insightful segments with irrelevant bulk. Non-buyers are consumers who’re either unable or unwilling to purchase your products and services.

Even if your target market is highly specific, its customers might not have the money needed to invest in your brand. A good example, here, are children and teenagers. These segments might provide valuable insights into your brand’s most attractive features, but their buying power relies on an entirely different segment: Adults with money.

As such, it’s a good idea to direct your marketing and promotions, cross-segment, to get as much actionable data as possible—lest you sink heavy sums into nonprofitable, yet seemingly responsive, target markets.

Pitfall Ten: Sticking to One Segment

Understandably, new brands only have so many resources. Without data to rely upon, you’ll likely need to identify target markets based upon your brand’s initial propositions. As your brand grows, however, it’s important to break free of one-segment-syndrome as soon as possible.

The moment you have an opportunity to reach a new target market—do so. You need the insights that only cross-segment analysis can provide. If you attempt to develop a single segment, you’ll have much more to lose than new, potential markets. You’ll risk overdevelopment, relying on a single segment that can become top-heavy from years of analysis weighed down by data susceptible to irrelevancy as your industry changes.

Successful Targeting in 2020

To craft reliable segments grounded in effective data, the modern digital marketer needs to be incredibly adaptable. As the new year kicks off, remember to be receptive of emergent strategies—even if these strategies are revealed by your own data.

It’s possible to craft a powerful, segment-based strategy without spending tons of money. To do so, however, you’ll need to identify your platform’s weak points before they become critical impairments. Trust in the data obtained over time, but never forget the importance of scrutiny. In doing so, you’ll hit the ground running as this year’s newest digital campaigns unfold.