Why Your Segmentation Strategy is Costing You Money

Consumers crave a genuine connection with the companies they shop with. In fact, 91% of consumers report they are more likely to shop with brands that provide relevant offers, which is why marketers provide them. But there’s a problem: using traditional segmentation strategies to deliver personalized marketing is failing. 

Consumers don’t like the insidious approaches brands are using to reach them. Research shows that only 6% of consumers want brands to use their social media activity to determine their interest in a personalized offer. And when brands send their messages, consumers resist: StopAd says 70% of their users block an average of 200 ads a day on Windows devices alone. 

Brands looking to rebuild digital trust are turning to a new, highly effective form of personalization that lets customers choose when and how to engage. This approach has many rewards, including one of the hardest to create: offers that go viral.

How Current Segmentation Strategies Fall Short

Today’s most common segmentation strategies have one fatal flaw: members of a segment don’t know who else is in their group, so when they receive personalized marketing, it ends at their doorstep. 

For example, most customers of AT&T don’t know everyone else who uses the carrier. When these customers receive a personalized offer, they can’t spread the word in a way that would help the brand. This severely limits the offer’s potential reach.

Each specific segmentation strategy also has its own limitations:

Customer Data Platform (CDPs)

This first-party data collection method resolves shoppers’ worries over data privacy. A brand can confidently send personalized offers, such as discounts to customers who haven’t made a purchase within the past 90 days. However, CDPs offer little to no information on prospects.

Also, setting up and maintaining CDPs and related systems is expensive, which is one reason customer acquisition costs have risen nearly 50% in the past five years.

Access to Large and Lucrative Audiences

Marketers can target high-value consumers like students, teachers, and the military who are likely to be repeat purchasers. These customer tribes have tremendous purchasing power:

• The US military has 37 million members and $1 trillion to spend.
• The US has nearly four million teachers who spend $1.7 billion of their own money on school supplies alone.
• Globally, there are 235 million college students. US students have more than $574 billion in spending power.
• In the US, 109 million seniors have $3.2 trillion.
• The nearly four million nurses in the US are well-paid: The average salary for an RN is $74,000, and in some states nears, or is above, six figures.