What is Data Segmentation? Why brands should be using it

data segmentation

Data Segmentation involves dividing up and grouping data into relevant segments, allowing an organisation to make better marketing decisions based on customer personalisation and prospect insights. 

For instance, customer data can be segmented by lifestyle choices, location, personal identifiers, and other parameters that help a brand identify and market to its best customers. 

The benefit of Data Segmentation is that it gives organisations more personalised datasets. With a strong understanding of who customers are, and the experiences they value comes a stronger understanding of how to best communicate and connect with them. 

This article covers everything you need to know about Data Segmentation, and how to get started. 

The importance of data segmentation

Data Segmentation, also known plainly as Segmentation, is important for several reasons. By segmenting customer data into relevant subgroups, organisations can identify opportunities more effectively, as well as deliver more targeted communications and improve revenue streams.

Data Segmentation can help businesses achieve the following: 

 

1. Identifying opportunities

When it comes to customer data, there is often a lot of information to take in. Data segmentation helps break up the data in meaningful ways, providing a more detailed insight into the types of customers in the database.

Once segmented, organisations can identify opportunities and patterns amongst subgroups of customers. For instance, older demographics might be more responsive to one form of communication than younger demographics.

2. Targeting communications 

With segmented data, organisations are able to tailor communications to relevant audiences more effectively. This can help deliver marketing messages in ways that each individual customer or prospect is more likely to resonate with.

By understanding what customers are interested in, and more about who they are, your communications team can engage with customers in ways that they are more receptive to. 

Data segmentation can also be applied to qualify prospective customers in your pipeline.

3. Improve revenue

The main benefit of data segmentation from a business perspective is the potential to increase revenue. 

By understanding customers in more detail and targeting communications in a way that they are more receptive to, businesses can in turn increase revenue opportunities. 

This can also save your sales team a lot of time since they’ll have access to more detailed overviews of customers through segmentation.

How does data segmentation help businesses?

Data segmentation can be used to divide customers into almost any category that provides value to your business and marketing efforts. Segmentation is a powerful data strategy for businesses in any sector.

Customers can be segmented based on a number of parameters, including:

This information can be used to make better business decisions, by giving you a stronger understanding of who your customers are. Segmented data can also help businesses build trust with customers, which in turn helps improve revenue. 

For example, this Harvard study found that top customers spent an average of 40% more following the segmentation of data. Data was segmented based on key criteria to identify opportunities that would provide value to the customer.

Challenges in data segmentation

Data segmentation is one of the most valuable data management tools for any business holding customer or prospect data. Though, many businesses find it difficult to segment data effectively.

Some of the most common challenges businesses face with data segmentation include:

  • Not having enough data
  • Having too much data
  • Inaccurate data
  • Lack of internal resources

However, many of these challenges are often easier to overcome than people think. 

Size of a dataset.

In most cases, it is unlikely that there is not enough data to segment. Even with smaller datasets, data segmentation can provide hyper-personalised insights into customer groups. 

Smaller businesses that don’t hold much customer data can also ensure that sales communications are highly personalised by segmenting B2B or B2C prospect lists.

Equally, having too much data does not hinder the ability to segment data. If you have a dataset of any size, it is likely that there are key insights to uncover with data segmentation. 

As an experienced data insight agency, our experts help businesses of all sizes maximise their data with segmentation. 

Inaccurate data

Another challenge businesses face in data segmentation is inaccurate data. Where there are inaccuracies in the dataset, it becomes more difficult to make reliable business decisions based on the segmentation. 

Though, this issue can easily be overcome by validating and cleaning the data beforehand. For instance, at REaD Group, our data experts can ensure data is validated and cleansed before segmenting data. 

This way, businesses can rest assured that the insights offered from segmented data are accurate and reliable. 

Lack of internal resources

Many businesses also struggle due to a lack of internal resources. This is especially true for businesses with larger datasets, or smaller teams.

This can make it difficult to manage the data effectively, particularly when datasets contain inaccuracies that need addressing before segmenting the data.

Creating well-defined segments provides benefits across every area of the business, which is why our data experts help organisations with professional data segmentation services

Why we help businesses with data segmentation

At REaD Group, our data segmentation services help brands connect with customers and make better decisions with tailored customer analytics solutions. Our team help uncover new customer insights to optimise customer acquisition and retention strategies.

Our data segmentation services provide targeted customer segments, helping brands identify relevant customer groups based on specific variables.

Target customers in the right way with segmented communications and more meaningful marketing. With the help of our data experts, transform your data into knowledge, and knowledge into profitable action.

Get in touch

To get started, explore our data segmentation services, or get in touch with our team.

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