The pros and cons of audience segmentation

Audience segmentation is essential for every business because it allows you to create a personalized customer experience, which boosts conversion rates.

Below, we review the pros and cons of audience segmentation so you can understand if it’s worth your time and money.

What is audience segmentation?

Audience segmentation refers to breaking your primary audience into groups based on similar insights. This delivers a personalized customer experience.

Segmentation uses internal and external insights like demographics and psychographics. A few examples of demographics are:

• Gender 
• Language 
• Ethnicity
• Income
• Geographical location

Using demographic data is often the easiest and most common way businesses segment their audience, especially if they want to raise brand awareness.

You might also segment audiences based on psychographics like:

• Attitudes
• Beliefs
• Values 
• Personality type
• Activities

Segmenting your audience using psychographics is complex, but it provides you with a more detailed understanding of your audience.

What are the benefits of audience segmentation?

Here are a few compelling pros to audience segmentation:

It brings in customers

Because customers have a more engaging experience with your brand from day one, it increases the likelihood of purchases.

Customers don’t feel like they’re just another number. Personalization shows you care, and they feel appreciated.

For example, you could write articles that a certain demographic shows interest in and forward them via weekly newsletters. Or, when customers visit your store, consider suggesting products related to their interests.

It promotes customer loyalty

When you show customers you care, you’re taking the relationship to the next level. Customers can count on having a good experience every time they interact with your brand, boosting loyalty.

This loyalty could be recommending your products to family and friends or sticking to your brand even when cheaper competition shows up.

Your customers are happier

The best part about audience segmentation is that the personalized experience leads to happy customers. These customers might recommend your product or service to friends, so you bring in leads without running additional marketing campaigns.

Studies show that word of mouth is a significant reason consumers buy certain products. So by having word of mouth on your side, you optimize conversions.

It gives focus to your marketing campaigns

Your target audience likely has different pain points and dreams that your product or service can solve. So by marketing to a general audience, you aren’t maximizing your campaign since it isn’t specific to individual problems.

But when identifying demographics, you can build various campaigns to specifically target each one. This ensures your marketing efforts hit pain points and increases the odds of a purchase.

You reduce long-term costs

Since you aren’t targeting a single pain point anymore, your product relates to more people, increasing conversions and lowering long-term marketing costs.

This allows you to spend extra time and money on developing a better product, holding interviews and surveys with customers, and training employees.

What are the drawbacks of audience segmentation?

For all of its advantages, there are a few drawbacks to implementing audience segmentation:

Many demographics are unprofitable 

The first con you’ll notice when splitting up your audience is that some segments are too small to be profitable.

It takes a while to get an idea of whether a particular demographic is profitable or not. And if you’re just starting out, you’re more likely to pursue unprofitable audiences and lose money.

You’ll need to transport data within your company quickly

Another con to splitting up audiences is that you’ll need to transport data within your company quickly to leverage new trends and demographics.

If your data storage and sharing methods are outdated, audience segments will do more harm than good. 

Fortunately, tools like Lytics allow you to gather customer data under one roof. This 360-degree customer view makes segmenting and sharing information easy. Your team won’t have to work in silos because everyone can access essential knowledge.

Your marketing expenses will increase in the short term

Although audience segmentation saves money in the long run, your initial efforts cost more because:

• You’ll need to learn how to target different segments of your audience
• You’ll build more marketing campaigns

Getting used to marketing to different audience segments takes a while, and your marketing expenses will rise during this time. Since you’re running significantly more campaigns, costs will increase. This is challenging if your startup is struggling to break even or is going through a rough phase.

Conquer audience segmentation with Lytics

Even though audience segmentation does have its drawbacks, it’s a must for every business because you can tailor marketing campaigns to specific demographics. This optimizes conversion rates and betters the customer experience.

So if you want to take your marketing to the next level, sign up for a Lytics free trial. Lytics provides a 360-degree view of customers across all platforms so you can segment audiences effectively.