Everything You Need to Know about Different Types of Lead Segmentation

Lead segmentation has produced tremendous results by some of the largest brands. Should you be implementing it? Are you using it effectively? What are the different types of Lead Segmentation? We will take a look at all of these in this comprehensive overview.

Lead segmentation indicates the process in which you can determine how your company can segment its prospects and customers or cluster them into groups of leads based on various parameters and insights. These parameters may include demographic details, behavioral details, geographic details, psychological details, and many others. Lead segmentation lays the cornerstone of your efforts to deliver personalized customer experience and solutions to different customer types. You will find that there are many reasons why a solid implementation of lead segmentation may be necessary as part of your business marketing strategy. 

Why do you need lead segmentation?

There are many reasons why you need to consider lead segmentation. Find them below – 

• By practicing lead segmentation, you can improve your product targeting in your marketing campaigns and sales strategies.
• Create personalized marketing communications for ad messaging on diverse digital marketing channels such as Google Ads, social media ads leveraging your segmented leads that result in better response rates and lower customer acquisition costs.
• Lead segments can also equip your product development efforts by enabling you to create personalized offerings for diverse lead segments based on income, regions, or other criteria.
• Businesses who segment their leads benefit from greater advantages, according to research findings by Bain & Company. Bain & Company has also shown that about 81% of executives have found that lead segmentation has been critical to achieving revenue generation.
• The company also concluded that businesses with excellent segmentation practices in place had yielded a 10% greater revenue than companies whose segmentation has not been useful for a 5-year course of planning.

Types of lead segmentation

Brands like Mercedes Benz, American Express, and Best Buy; implement lead segmentation to improve products, engagement, and boost their sales. Lead segmentation and improved targeting help you understand how your customers respond in arriving at a purchasing decision. Many marketers have also implemented a predictive model wherein individuals can be segmented based on specific answers to survey questions.

Demographic Segmentation

Demographic segmentation classifies the audience by various demographic parameters such as age, family size, race, gender, education, occupation, income, and nationality, to name a few. Demographic segmentation refers to the simplest and most used types of lead segmentation that may explain products and/or services your audiences want to purchase, how to use, and indicate how much they might spend on products and/or services based on these specific demographic factors. Thus, demographic lead segmentation can sort your potential customers by their particular traits that determine the type of people they are based on their age, gender, occupation, income, family status, and education for B2C. In the case of B2B, it segregates people based on these fundamental demographic insights as well as the following; industry, company size, job title, function within the company, and many other business-related factors.

Demographic segmentation is one of the most common types of lead segmentation that can identify potential audience patterns easily.

Geographic Segmentation

This type of lead segmentation refers to a subcategory of demographic segmentation. Geographic segmentation is the most accessible type that creates different target groups of prospects and customers based on their geographical locations. Customers have unique needs, interests, and expectations that vary from one region to another. Understand the differences in regions, climates, demography, behavior to know what they want, how to promote and sell, and where to expand your business. 

Geographic segmentation will let you segregate your targeted audience based on their location, such as their continent, country, region, city, or district. Segmenting your potential customers in this way is ideal when their location can impact their buying decisions. 

Behavioral Segmentation

Behavioral segmentation can segment your audiences by their behaviors and patterns of purchase decisions such as their past purchases, lifestyle, product consumption, and usage. For example, younger people may spend in body wash, while older audience groups may prefer soap bars. 

Segmenting people based on purchase behaviors can allow you to take a more targeted approach and divide your customers by their previous purchase behaviors related to your products and services. Based on behavioral segmentation, you can determine people’s;

• Product Awareness
• Product knowledge
• Past Purchases
• Patterns of Purchase
• Usage Level
• Product and Service Rating(s)

Psychographic Segmentation

The psychographic segmentation segregates people based on their psychological aspects of behavior and divides people based on their personality traits, lifestyles, opinions, values, and special interests. For example, the fitness market can use psychographic segmentation to divide customers into groups of people who prefer healthy living and fitness based on their traits such as attitudes, interests, values, and lifestyle choices.

Psychographic segmentation is especially useful for products or services which impact people based on specific views, beliefs, or ideas. Take for example a bookstore. In their B2C retail setting, they can draw conclusions about the types of customers buying patterns based on their selection of books. Someone who values fitness as mentioned in the above example may be less inclined to purchase pastries at the cafe within the bookstore. For this reason, bookstores may decide not to place the health and fitness section near the cafe. Rather, the cooking section or parenting selection of books may be a better placement to increase sales of coffee and pastries. 

Firmographic Segmentation

Firmographic segmentation focuses on people’s firmographic data such as company size, team strength, industry, and functions. This data can be used when marketing a particular product or service that requires a direct impact on a company’s size. For example, heavy industrial manufacturing may choose not to target a small fabrication shop with only 5-10 employees. Rather, they would target large-scale production facilities with 50 or more employees.

Transactional Segmentation

Transactional segmentation groups people based on their purchase patterns and identifies the most valuable customers by their –

• Frequency of purchase
• Recency of purchase
• How much they spend
• Contents of purchase

You may see this in practice when a company has a rewards system in place. In this real-world example; a company may use customer information in correlation with purchase patterns to determine which segmentation to place a customer.

Needs-based Segmentation

Needs-based lead segmentation can help you, group people, by their similar needs and type of benefits people want. The need-based segments vary in type, they include;

Functional needs include practical needs that lead people to look for more efficient features and less risky features.

Emotional needs refer to when a group of people shares their emotional reactions such as frustration or desires such as wrinkles, acne, or problems that beauty products target and address.

Problem-solving needs can assist you in solving problems for a particular group of people and potential customers.

In many cases, a needs-based lead segmentation has multiple categories of needs and how it might apply to specific segments.

Conclusion

Did you find these lead segmentation tips and strategies useful for your business’ marketing needs? Are you looking for more specific segmentation types that will work directly for your business? No matter your lead segmentation requirements, you can discuss your challenges with our certified marketing operations experts. It is simple – all you have to do is use our chatbox below or drop us a “Hello” at experts@marrinadecisions.com. If you want to reach us via social media, then you can simply DM us on Facebook, LinkedIn, and Twitter.