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Feb 07, 2022

Lead Segmentation: Why, What, When, Where...

No matter which global brand you take into consideration, one thing you’d find them all swear by is lead segmentation. An effective strategy that has stayed the course of time and circumstances, this is without question the method to fine-tune your sales and marketing.

Lead Segmentation-01 - Header

What is Lead Segmentation?

Lead segmentation refers to the process of segmenting or dividing all your leads into separate segments based on where they stand with your brand currently. This can include segmenting them based on different demographic details or their behavioral pattern. 

For instance, separating them based on certain geographical or psychological parameters. You could also create a separate group of people who are completely unaware of your brand, a different group of people who have visited your webpage, and a separate group for people who are specifically interested in a particular page of your website.

Irrespective of what line of business you are in, your target audience is always going to comprise a diverse mix of people all of whom fall under different stages of the sales funnel. So, you need to address them specifically with tailored communication, for which you need lead segmentation.

Importance of Lead Segmentation

Lead Segmentation-01 - Importance of Lead Segmentation

Your business needs lead segmentation because it:

Helps in Targeting Better

People are different from one another. Their needs, demands, aspirations, tastes, experiences, and requirements are different. So, it makes no sense that to think that sending the same generic message would have effective results.

Take the skincare industry for example. Do you think the same face cream is suited for both men and women? Does the same face cream suit both the acne-prone skin of teenagers and the wrinkle-prone skin of the elderly? Would people of varied sources of income afford the same line of products?

No, right? This is the logic you need to apply when dealing with your leads. Customizing your marketing and sales content would require you to segment your target audience first. Then, based on their specific needs, you need to provide them with the solution through your products and services.

Improves Revenue Generation

Brands that have mastered the right way to segment their audiences put themselves ahead of their competitors. Research shows that 81% of executives have found that segmentation has significantly helped them in better revenue generation.

Furthermore, companies that implement lead segmentation in their marketing strategies experience 10% more revenue than those whose segmentation hasn’t been effective over a 5-year period.

Creates Product Awareness and Demand

Sometimes, your target audience isn’t even aware of the existence of your product or they may not even know that they have a need. In a way, some brands can create the demand for their product through creative persuasion. 

For instance, people might not be aware of the fact that an automated air purifier exists in the market unless they are told so. 

By making people aware of their needs and targeting specific people who are in need of that air purifier, you create demand for this brand new product. And lead segmentation aids you in catering to this specific segment of the audience by highlighting them to you. 

Pushes Your Lead to the Final Purchase Stage 

A sales or a marketing funnel would show your target audience in distinct stages of where they stand with your brand. Lead segmentation helps you in formulating specific messages for each different segment in a way that can push them to the next segment, making your campaign more successful. 

This tried and tested method helps in uplifting sales and also increase your average order value by significantly encouraging your leads to make the most important action - purchase. 

Types of Segmentation

You can segment your leads in various types of ways based on demographic, geographical, psychographic, behavioral, transactional, or firmographic distinctions, but the following two types of lead segmentation usually covers them all. 

Lead Segmentation-01 - Types Of Segmentation

Explicit Lead Segmentation

In explicit lead segmentation, the information about your leads is already there with you. Whether through past purchase patterns, lead generation, or simply through conversation, you are well-informed about the characteristics of your lead. 

It can be what your leads are buying for the past three months or where they live, or anything in between. Based on the available information, segmentation is made. 

Implicit Lead Segmentation

Implicit lead segmentation is done wherein the characteristics of the leads of your brands are not directly known to you. Based on their actions and demographics, you have to make assumptions about them and segment them accordingly.

For instance, if a lead has purchased trousers from your brand, maybe the person is interested in clothing only and must be directed towards that category only. If someone has checked out the pricing of a particular product a few times without buying, maybe they need a bit of push through remarketing. They both need to be dealt with differently.

When to Opt for Lead Segmentation?

A strategy is only useful when it is used at the right time with precise execution. The same is true of lead segmentation. Your business needs lead segmentation the most at the following events. 

New Product Launch / Brand Extension

Whenever there is a launch of a new product or you are extending our brand, you need to market your product to both your existing customers as well as those who may not be aware of your brand. This is where you need to rely on lead segmentation. 

Venturing into New Geography

When you are introducing your brand to a new set of audiences who are from a different geographical location, you may have to address them differently. What worked for you in the city may not work for you in the suburb, and may not work in a different city. Lead segmentation will help you assess and tackle your audiences better.

New Targeting Strategy

If your existing marketing and sales strategy is failing and you need to revamp the structural component of handling your business, then lead segmentation is the way to go. It will help you refocus and readjust and you will be better equipped to address your audience. 

How to Segment?

Lead segmentation is a systematic process that delivers powerful results when executed methodically. To help you out with the same, here is a guide to all the steps involved in lead segmentation.

Lead Segmentation-01 - How to segment

Step 1 – Market Research

To start with, you need extensive market research to find what motivates your audience and who you are selling to. The idea is to go for a relevant and specific audience and not just every possible generic audience you can think of. 

Here, you are trying to secure your leads so that you can aim your sales message clearly so that they go all the way to make that final purchase from you. 

Step 2 – Sales Funnel

After your research, you need to divide your attention to different groups of your leads. Not all of your leads will have the same experience with and expectations from your brand. Based on their most recent set of actions, you need to put them in your sales funnel.

Your message to someone who has just visited your webpage for the first time would be different from the one who has already subscribed to your brand. With the use of a metric tool like CloudFiles, you can understand each segment’s requirements better and act accordingly. 

Step 3 – Deciding the Segmenting Parameter 

Here, you need to decide how you want to segment your leads. As we mentioned earlier, it can be based on demographic, geographical, psychographic, behavioral, transactional, or firmographic distinctions or a combination of more than one of these. 

You want your sales messages to be relevant and for that to take place, you need to decide what parameters work best for your brands. Please note that sometimes, simple classification can be not only manageable but effective as well. 

Step 4 – Implementing Your Segmentation Strategy 

In this step, your goal is to persuade first-time buyers to repeat their actions so that they become your regular customers. The idea of continuous engagement with your leads has to be championed here. 

Implement your segmentation strategy through both your website and your CRM (Customer Relationship Management) system. Please ensure that you are mapping out the customer's journey through continuous engagement.

Step 5 – Automate Segmentation 

Managing your lead segmentation strategy manually is almost impossible and is not recommended. In order to reap the most benefits out of your implemented strategy, you need to automate it.

This would enable you to send relevant messages automatically to different segments of your leads based on their current action. You can easily persuade first-time users to revisit your webpage, people on the verge of purchase to make the final purchase, and regular customers to make the next purchase.

Final Thoughts

At any given point in time, your target audiences would always be standing at separate stages of the sales journey. So, the way you interact with a group who are completely unaware of your products and services would definitely be different than the ones who are near the buying stage or who are already your loyal customers.

Applying lead segmentation is crucial for penetrating the market and reaching your audience. Tactful implication of this strategy will accelerate your sales and improve your brand image, giving your brand more relevance and longevity. 

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