In old direct marketing parlance, marketers asked, “East or West of the Mississippi?” This was how they segmented their customers and prospects: by which side of the Mississippi they lived. Segmentation by demographics is important, but in today’s landscape, marketers have to do much more in terms of understanding their audience than simple geographic segmentation. They need to be sure they’re delivering the right message to the right people at the right time.

Going Beyond the Mississippi — How sophisticated is your customer segmentation?

Let’s begin with the most straightforward type of segmentation: demographic. Demographic information is probably the most common type of information gathered from your customers, consisting of basic information such as name, address, phone, and MSA. Their address and their MSA of course tell you something about where they live. In other words, do they live in a big city—a very urban and cosmopolitan environment? Or do they live in a small town? Do they live in a house or an apartment? What part of the country do they reside? Are they from the South, the Plains, New England? Knowing just this much about your customers allows you to do some basic segmentation.

As your interactions with your customers progress, you might have an opportunity to learn more about them: their age, educational level, profession, what their hobbies are, do they have pets, what kind of car do they drive, etc.  Using this information, many more segments can be parsed, depending on what’s relevant to your business, and depending as well on things like your sales cycle or other factors, both internal and external. With these more sophisticated segments, your messages become more relevant to your audience. Your goal is to develop trust, and the best way to do this is by providing your customers with the information they’re looking for.

Let’s take an example. Company X, an online retailer, acquires a new customer. The customer makes a purchase and some basic information about her is entered into the database. Company X adds the customer to their mailing list and sends her emails about other products in the catalog. Whenever this customer makes an additional purchase, this information is then added to the database. With each new purchase, Company X learns more and more about this customer: who she is and what she buys.

This is one key to segmentation: the ongoing capture of information. People’s tastes and habits change. You can’t simply assume that what you knew of your customers when they first came to you is going to be true forever. As each bit of new information is captured, you learn more and more about that customer. What they buy, the lists they opt in to—these things tell you about their taste and perhaps their lifestyle.

This process should be self-propelling: customer information continually captured and then analyzed drives further segmentation and analysis, leading to an ever-more refined marketing program. For the most effective marketers, this is a way of life. But only if you gather enough data on your customers.

Some marketers do this. Many do not. Those that do, often stop there. They have some basic data on their customers and have created some segments based on this information. They add information to the database, but they don’t use this information to revise their segments. Maybe they create a few different versions of their email campaigns based on some basic audience segments, and this is good— but it’s only scratching the surface of what can be done.

In terms of truly serving your customers and addressing their needs, you need to capture and analyze behavior. Behavioral marketing, not surprisingly, is based on each of your customer’s very specific behaviors, in your inbox or on your website. Perhaps they’ve expressed an interest in a certain product—they’ve viewed it on your website numerous times, for example. Maybe they’ve even put it into their shopping cart, intending to purchase it, but they don’t.

Knowing this about a customer’s behavior means that you can market to them very specifically. They’re coming close to a purchase, but need something to tip the scales. It could be that a coupon or a discount off the product’s price could sway them. Or a different pricing structure. Maybe they’d like free shipping. You can obviously entice them in any number of ways. Whatever you offer them, knowing that this segment exists because you’ve captured and analyzed this behavioral information, has given you this opportunity.

Another type of behavioral segmentation is called historical segmentation, which is based on what the customer has done in the past. For example, a customer signs up for the mailing list of an online clothing retailer. This customer happens to be a single man. He starts to buy a lot of his clothing from this retailer, year in and year out, and opts in to their mailing list. The retailer starts sending him emails about their products, sale items, new seasonal items, etc.

What the retailer however fails to notice is that this customer never buys anything but men’s clothing! Because the retailer has failed to capture this information, they continue to send this customer dozens of emails on sales of women’s shoes, the new fall ready-to-wear line, the latest French cosmetics. The result: after a while, the customer stops reading the retailer’s emails because their marketing has ceased to be relevant to him. Even if they send him an email about a sale on men’s clothes, he won’t see it because he stopped opening their emails. He might even have become a bit irritated that the simplest bit of information—his historical purchasing behavior—is continually disregarded in the company’s email marketing.

Capturing customer behavior and using segmentation fully, you can do so many things with your marketing. Split-testing, for example, is another very effective marketing practice based on segmentation. Take a segment and send to that list certain content based on what you know about that segment’s preferences. Send another segment different content, and then see which gets better results. If you segment your customers and then provide them with the dynamic content that is most meaningful to them, you are better fulfilling their needs, and at the same time, further developing your email marketing.

Because when we talk about segmentation, what we’re really talking about is relationship-building based on providing the right message to the right people at the right time. This is the true value of knowing your customers: being able to market to them individually and effectively. And the better you know your customers and your clients, the more targeted and compelling your messages will be, and the more successful you will be at providing them with what they need.  And isn’t that really your goal?