Product intelligence done right: Why is audience segmentation important?
When it comes to product intelligence solutions, it’s essential to explore the numerous benefits of customer segmentation. You might be asking yourself, “Why is audience segmentation important?” This advanced process provides valuable insights about your target market to enhance the success of your business.
Continue reading to find out more about audience segmentation and our tips on using it to improve your marketing and product development strategies.
What is audience segmentation?
Audience segmentation is a useful marketing and product intelligence tool that helps businesses categorise consumers into set segments. This categorisation is based on shared characteristics between members of each user segment. Depending on the business environment, these characteristics can range from general information like gender to more niche factors like spending habits.
The purpose of audience segmentation is to help improve product and market intelligence. This insight allows businesses to engage in more personalised marketing efforts that appeal to their target audience. It also helps product teams refine their processes and develop products that align with the needs and preferences of key consumers.
Types of customer segmentation models
There are various customer segmentation techniques available to help you target niche audiences. Below are four of the most common customer segmentation types.
- Demographic segmentation: As one of the most widely used methods of customer segmentation, this straightforward model focuses on easily identifiable consumer characteristics. These include categories such as age, gender, nationality, religion and more. A demographic model is ideal for basic segmentation and can be paired with other models for a more granular view.
- Behavioural segmentation: This method provides key user behaviour insights, specifically relating to how consumers relate to a certain product, service or brand. Examples of this include shopping preferences, spending habits and social media usage. Access to this information allows you to better understand the needs and wants of your target consumers and tailor your offerings accordingly.
- Psychographic segmentation: This customer segmentation model helps you gain better insight into how members of your target group think. It explores more complex psychological factors such as lifestyle, values, interests, perceptions and beliefs. These provide you with an understanding of your target group as people rather than simply consumers.
- Geographic segmentation: Not only does this model segment consumers based on where they live and work, it also expands this approach to analyse the locations themselves. This includes gathering information about regional weather conditions, population, and cultural attitudes and norms. All these factors influence consumers’ needs and buying preferences.
Why is audience segmentation important for product development?
Audience segmentation provides you with a deeper understanding of who your target audience is and what they need and want. This enables you to develop relevant, tailored products.
1. Better consumer research
Audience segmentation is an essential part of consumer research. Effective segmentation allows you to better understand your target group with the help of high-quality customer data collection.
Actionable insights facilitate data-driven decision-making to help you better resonate and connect with consumers. By understanding what makes your targeted audience unique, you can adapt your product development processes and marketing resources to target them more effectively.
2. Targeted marketing campaigns
Particular audiences respond better to certain marketing efforts than others. One of the most useful advantages of customer segmentation is the ability to develop a targeted advertising and marketing strategy based on customer insight.
Improving your marketing with audience segmentation involves understanding and offering solutions for your customers’ unique needs or pain points. The use of such customised messages and personalised promotions will increase the relevance of your marketing campaigns.
Relevant marketing will build a strong relationship between you and your customers — a key aspect of any successful business. Providing the right products that resonate with your target audience at the right time helps encourage sales and results in improved customer satisfaction.
3. Efficient product development
Segmenting your target audience will provide valuable insights into your customers’ wants, needs and preferences. Having access to this information enables everyone from product designers to product managers to tailor their processes for more efficient product development.
By relying on data-based decisions and avoiding assumptions, you can create product solutions that you know will resonate with your consumers. This helps to improve your product performance and enhance both customer experience and satisfaction for an overall increase in business growth.
4. Better ROI
When it comes to product development and marketing, segmentation tools help optimise spending and boost profits for an overall increase in your business ROI.
Targeted campaigns and data-driven product development naturally translate into heightened customer engagement, higher conversion rates and increased customer lifetime value. They also reduce the likelihood of you having to make expensive changes during the later stages of your product development life cycle.
5. Customer attraction and retention
Customer profiling and segmentation are incredibly useful when it comes to growing your customer base. The comprehensive insights you gain from audience segmentation enable you to deliver targeted products and promote them with tailored messaging.
By consistently catering to target audiences, you will inevitably attract new customers from these groups. However, you do not need to rely solely on new customers for business success. Audience segmentation tools also help to boost user experience and satisfaction, resulting in improved customer retention.
6. Competitive advantage
Target audience segmentation provides valuable insight about your customers. By effectively using this information to enhance your product development and marketing messaging, you can frame your business as the most attractive choice for consumers. This will help increase conversion rates and provide you with a distinct advantage over your competitors.
7. New opportunities
The intense level of research involved in audience segmentation enables you to discover new product and marketing opportunities that will appeal to and resonate with your target group. By investing in these opportunities, you can reinforce your authority within a specific audience and increase brand awareness for overall business and customer success.
Challenges of audience segmentation
You now know the answer to “What is customer segmentation, and why is it important?” However, customer segmentation benefits go hand-in-hand with several potential challenges, including the following.
Oversimplification and stereotyping
When engaging in customer analysis and segmentation, it is important to remain aware of the possibility of oversimplifying and generalising data. Segmenting customers based on stereotypes is an unethical practice that will negatively impact your customer loyalty and trust. This oversimplification also runs the risk of isolating certain customers and preventing them from having a valuable interaction with your business.
Ethical data collection and use
Using customer segmentation strategies is great for enhancing your business intelligence. However, it must be done carefully to ensure customer privacy and data protection. This process involves securely storing personal information and upholding global privacy standards like those set by the Global Data Protection Regulation.
Changes in consumer trends
The frequent shifting of consumer trends means that segmented data can easily become outdated. In particular, demographic data such as income is likely to evolve fairly regularly. Rather than helping streamline business operations, this inaccurate data can result in product development and marketing setbacks.
To maintain data reliability, businesses should implement agile user segmentation methods. This involves continually monitoring, testing and, when necessary, updating consumer data to accurately reflect the behaviour and needs of your target customer segment. You can simplify this process by ensuring your business intelligence is carefully organised and stored.
Ineffective segmentation
While all customer data segmentation is useful, it is important to create audience segments that will benefit your business as much as possible. You can achieve this by identifying the best ways to categorise your specific audience and prioritising the segments which are most in line with your business offerings. For example, if you sell clothing that is designed for cold climates, the geographical segmentation of your audience is going to be extremely important.
Vypr’s product intelligence platform
You may already use product intelligence to measure the success of and inform your product development and marketing strategies. However, you can enhance this process with Vypr’s innovative product intelligence platform.
Our product analytics platform boasts built-in customer segmentation and analysis features. These allow you to target specific audiences and collect useful insights with ease.
Proprietary panel
The Vypr platform makes it easy to connect with your target market through the Vypr Community. Our vast proprietary panel consists of over 75,000 vetted members. Each member undergoes rigorous consumer profiling and validation checks to ensure the reliability of our data.
You can use the Vypr Community to test and receive meaningful feedback on any aspect of your product development process. Our customer segmentation features enable you to receive the most relevant data possible. You can precisely segment community members to create sample groups that accurately represent your unique target audiences.
Demographics features
You can efficiently conduct audience segmentation with Vypr’s Public and Private Demographics features. Below is an overview of what you can expect from each of these customer segmentation methods.
Public Demographics
- Included with a basic Vypr licence
- Enables effective customer profile segmentation based on generic attributes like age and gender
- Features over 50 free public demographic filters for you to choose from
Private Demographics
- Facilitates more specific segmentation so you can engage with the most relevant audience possible
- Focuses on user attributes, opinions and behaviour
- Enables you to target category or brand purchasers
- Used by over 90% of Vypr clients
Audience segmentation strategies
To further enhance your targeted data collection, Vypr offers set segmentation strategies and a dedicated customer growth partner to guide you through them. Depending on your business needs, you can choose from the following three strategies.
- Basic Segmentation. This strategy enables you to target customer segments according to your choice of three demographic and behavioural segmentation attributes. You can integrate these in various ways to create up to 125 different combinations.
- Advanced Segmentation. Allowing you to combine more than three attributes at a time, this advanced plan helps you create an accurate representation of your targeted audience.
- Retailer Segmentation. This customer segmentation strategy enables you to focus your research on a specific retailer. It is a useful way to test and demonstrate the appeal of your products to customers who frequent particular stores.
FAQs
Do you want to know more about how audience segmentation works? We’ve answered some frequently asked questions to provide you with extra insight.
Is it easy to use a customer segment platform?
Depending on which audience segment platform you choose, it can be very easy to gather valuable and relevant insights about your targeted audience. When signing up with Vypr, you will be assigned a designated partner from our Customer Growth Team. This team of experts has over 150 combined experience in the product industry and can provide comprehensive assistance and advice.
Your growth partner is dedicated to ensuring you get the most out of our product intelligence platform. In addition to this support, we also provide unlimited training and access to a helpdesk.
How do I get responses from my segmented audience?
There are various ways to receive customer insights from your segmented audience. At Vypr, we help you engage with your target group in the easiest and most efficient way possible.
Simply use our desktop app to upload your steers (our name for questions), and we will deliver them straight to the relevant members of our Vypr Community. Once all the responses are in, you can access the results and use them to guide your product development processes.
Enhance your audience segmentation with Vypr’s product intelligence platform
Vypr is the world’s leading product intelligence platform that enables businesses to rapidly understand changing consumer behaviour through fast, cost-effective consumer insight.
With built-in audience segmentation methods, the Vypr platform enables you to easily gather valuable insights to refine your marketing and product development strategies.
With Vypr, you can experience the benefits of customer segmentation in an efficient, cost-effective way. Book a demo now.