The Sweater Experiment: Testing the Limits of Segmentation

limits of segmentation

Every marketer is constantly on the lookout for new ways of understanding their audience. The better you understand what your customers want next, the more precisely you can deliver offers relevant to those desires and goals — creating magical moments in which each purchase leads to even more wonderful new discoveries.

Audience segmentation is the basic technique most marketers use to personalize their offers. By sorting their subscriber base into discrete groups, marketing teams can design offers, creatives, and language ideally suited for each segment.  Which increases the likelihood not only of a single sale, but of long-term loyalty to the brand.

But is audience segmentation truly the “ultimate” technique for matching the right messages to the right subscribers? Most marketers recognize the effectiveness of segmented campaigns — and rightly so, since segmented campaigns get more than 100 percent more clicks than non-segmented ones.

Segmentation alone, however, can only take you so far. There are still challenges, which may sound familiar. What about customers who’ve only made one single purchase — or who tend to purchase certain combinations of items together?

Segmentation leaves you flying blind when it comes to these customers because their behaviors don’t fall into clear segments. Without additional sources of information on your customers’ desires, goals and purchase patterns — and more sophisticated ways of analyzing that information — you simply don’t have enough data to predict what they’ll want next.

Some brands, however, refuse to be limited by segmentation’s shortcomings. Although every brand uses audience segmentation as a fundamental technique, they still need sophisticated tools to organize all that data, and discover connections within it — and with other datasets.

In his latest post on Oracle’s Modern Marketing Blog, Coherent Path founder James Glover explains it this way:

The core limitation of segmentation is that its improvements are often just smoke and mirrors. A metric like a “50 percent lift in clicks” sounds concrete and comforting – but it doesn’t tell you anything about missed opportunities for even more lucrative cross-sells and upsells, or about which products your customers might want to buy next.

To step beyond segmentation, you’ve got to recognize that each customer is on their own personal path, and needs to be met where they are with unique content personalized around their aspirations and wishes — no matter what touchpoint you meet them on, or where that touchpoint happens to fall in their own process of discovery.

The more clearly you understand where each of your customers is on their own individual journey, the more precisely you can predict what they’ll want next, before they even guess it for themselves. When it’s done right, this can feel like magic — and drive significant lifts in loyalty and revenue along the way.


Also published on Medium.

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