Trends That Will Shape Market Segmentation in 2024

The top market segmentation trends

1. New ways to collect and process data

Data is the oil of our time, and that’s even truer of data on consumers and client preferences, which is considered critical or important by 94 percent of companies, according to PwC’s Global CEO Survey. New capabilities, such as chatbots, forms, messengers and website actions bring more inputs and, thus, more data altogether. As companies race to extract as much valuable information as they can, the ways to go about it changes radically.

By utilizing social media, business owners can collect different sets of data, such as demographics and geographical information. Companies can then use this data to influence important business decisions relating to certain groups of customers or locations. Additionally, they can make frequent posts, contests or even events for followers to enter and acquire more consumer data.

In the future, companies are likely to focus on the untapped potential of Urchin Tracking Module (UTM) parameters, the simple tags added to a URL that allows powerful customer tracking. Not only can these be leveraged to understand where a lead is directed from, but they can also be built into the customer profile. With a simple script on your website, you can identify the visitor. Once they fill out a form, they can be associated with their UTM parameters, allowing salespeople to see how exactly this person landed and provide a more personalized experience.

Over the next year, we will also see companies reaping the benefits of cookies well beyond first-party data. Companies will continue sealing partnerships to share anonymized second-party data, but we are likely to see a flourishing of third-party inputs. When visiting an unrelated website, you can connect the customer’s activity there to your offer. For example, by using platforms like Salesforce Audience Studio, you can track a person that showed interest in traveling and use this information to offer them travel insurance.

Privacy regulations, such as General Data Protection Regulation, will maintain their importance. The right to erasure — aka the “right to be forgotten” — applied in European Union countries is one of the rules worthy of particular attention. It claims that customer data can’t be stored if there’s no legitimate reason for it. This means that, while companies may be sitting on a gold mine of data if they aren’t using it to run campaigns, they might need to delete it after some time to comply with the law. Making sure to navigate such regulations without suffering hits into their valuable databases will be a priority.

Such complexities will bring additional focus on data processing and management strategies. Automation will play a key role in maintaining databases, but as forward-looking companies realize the importance of data, we will see new monitoring systems in place, including those complementing automation with human checkups. For example, when triggering the deletion of certain customer data given certain conditions are met, the automation can be set up to deliver reports that can be checked before the action is carried out.

2. Refined segments bringing customer behavior to the forefront

With the boom of powerful platforms, marketers can track customer data across different channels and better understand the behavior of their audience. For example, by tracking mentions of your company on social media, you can enhance customer records and use the information to create very specific campaigns for high engagers.

Smart insights from different inputs will be leveraged further for event-driven marketing: real-time, one-on-one campaigns that deliver content relevant to the lead in the moment of their buying journey. Behavioral data will also present a greater opportunity for lead scoring. With each triggered action, you can not only send emails but also set up a system of internal notifications based on the customer profile that guides you toward treating them with different degrees of priority.

Meanwhile, something we are likely to be seeing less is the “preference center” feature in newsletters. Letting people manage their opt-ins didn’t prove to be very effective and received little engagement overall. Considering how complex this setup can be — both for the technical side of the process and deciding what the opt-ins should be — we will see preference centers further fading away.

Part of the new wave of marketing strategies is to gauge who the target audience is for your company. Curating specialized products for a segmented group of people can improve the efficiency and focus of your company and its goals. 

3. Hyper-personalization on the rise

Personalization has been a trending topic in marketing for a long time — and yet, it’s largely misunderstood. You may feel like you’re doing personalization when using Dear <First Name>, but that’s not the case. Smart marketers know that this doesn’t matter much — it’s all about giving content relevant to customers’ interests.

Companies are paying top dollar for their customers’ digital footprints. This includes online searches, content downloads and the websites they frequent. This data is real time, meaning companies can acquire consumer data almost immediately. However, it’s up to the business to understand the data trends and adapt accordingly to ensure success. 

That said, personalization can mean different things. Let’s look at the example of one of the best promotional tools, email marketing. One of the approaches companies take is a behavioral-driven one, with specific messaging based on a lead’s past activity. These can be brief newsletters with the primary aim of staying on top of leads’ minds over time.

In this respect, companies will be abandoning the idea of excessive marketing pressure. While you shouldn’t be sending out spam messages, if the messages give enough value to the lead, it will succeed. According to a Statista study, 49 percent of respondents wanted to receive weekly promotional emails from their favorite brands. But as there’s no magic number that tells you how many emails you should be sending, you should test it out to find your sweet spot.

Another increasingly popular approach to email personalization is the content-driven focus. Companies design email templates with columns and fields that are populated with personalized content based on a unique customer profile, such as product launches, seasonal offers, updates and recommendations. For example, car owners can get maintenance reminders and discounts on accessories specific to their vehicles. By leveraging machine learning to optimize the content over time, the recommendations become highly accurate.

Finally, do not go overboard when marketing to your audience. Every member of your target audience may not fully consent to data harvesting and tracking. Respecting user privacy is a concern for many people, including employees and customers. As market behavior changes, companies must adapt to those changes.

4. Expanding platforms vs. new lines of thinking

The sheer volume of data is increasing constantly. Companies use dozens of apps for data collection, which often results in a very fragmented information technology (IT) landscape. In such cases, there’s a need to integrate various stand-alone databases, which is both a challenge and an opportunity.

Companies often are unable to scour through every single data point they collect as the process can be long and monotonous. It helps to break down your audience into groups, then addresses the data of these groups to solve business decisions efficiently.

Some organizations aim for customer data platforms (CDP). While various providers offer a 360-degree view with unified customer profiles, there’s still a lot of IT effort necessary to carry out the segmentation. You might need to integrate data using rules which you need to define. Such expensive, time-consuming, laborious tasks mean that while CDP is considered the Valhalla of data, it still requires data-savvy people to do the heavy lifting.

Another challenge of CDP platforms is customer mapping. For example, if you already have a robust consumer profile and a form gets filled out with the email address of that person, there’s no certain way to verify it’s really them. It could easily be someone who is also using their email or someone who just misspelled their own address, so getting one flawed piece of information could completely discredit the entire profile that you have been building.

That’s why an alternative has emerged. Some companies are realizing that the idea of creating a “unique customer record” is simply unattainable. Instead, they focus on the things they can do. CDP certainly has a lot of potential, but it may not be the golden bullet — and it was this precise idea that prompted a new line of thinking that we are likely to see more in the future.

After all, you may not always be able to match customer data to a specific individual. Relations between customers and brands become more ephemeral: temporary, short and loose. Marketers that realize that they don’t need the full picture to do effective marketing may be able to carry out more flexible campaigns without the complexities of a CDP.

5. Segmentation in the hands of marketers

In the future, marketers will also be looking at how to utilize the data they have in the most effective ways. It’s common that companies have valuable information in their customer relationship management and separately from other important inputs, such as purchase histories. Learning how to connect these to get the full picture will continue to present a major advantage.

In spite of the advanced business intelligence (BI) tools on the market, making insights actionable for marketers remains a challenge. The tools are often extremely complex and require solid knowledge — marketers need to create manual exports and transfer the data while matching data files together. Added to that, writing sequels, or structured query language (SQL), in itself is painstaking because of the need to constantly double-check and de-bug when necessary. But that’s only if you know how to write SQL in the first place — if not, you will create a lot of communication overhead with someone who does.

Simplifying these processes will be the key to future success. There are already a few solutions emerging, including powerful add-ons or internal data warehouses. The latter work with “marketing partitions” that allow BI specialists to analyze the data and pass the relevant datasets on to marketing automation to be consumed for campaigns. Despite the hard IT work, this empowers marketers to make smarter choices. Various solutions on the market show that companies can access intuitive segmentation features that bring segmentation back into the hands of marketers.

Market segmentation has become a mainstream method of selecting a market audience. By splitting up the broad market into smaller, more focused pieces, companies can concentrate on their audience and more effectively cater to them. Whether the segmentation breaks down an audience by age, geographic location or behavior, companies can specialize products to adhere to their audience’s wants and needs. 

Over the next year, we will see new, exciting concepts shaking up the ways marketers approach segmentation but don’t stick to passive observation. By looking at how to incorporate these trends into your own operations, you can ensure that your marketers are well-equipped to deliver strategies worthy of the upcoming decade.

The importance of market segmentation

Market segmentation helps companies plan campaigns and execute advertisements by breaking down larger groups into smaller segments, allowing the company to focus on certain customer groups rather than targeting everyone in the market. Segmenting the market also allows companies to create products that better suit their audiences’ needs. While analyzing a specific group within the marketing scene, segmentation may reveal other areas or groups of people your company has not yet targeted, potentially boosting business. 

If a company attempts to broaden its horizons and try to sell anything to everyone, more likely than not, the broad generalizations won’t make an impact in any market. Companies miss out on opportunities if they do not have a specialized, customizable product or service. Market segmentation can help guide the business toward making important decisions regarding the path of the product to the customer, whether it is price, design or distribution. For example, if a company’s target audience prefers to shop online, a company can choose to offer its products in an online store, appeasing market customers. Income levels, demographics and geographical data are other important factors that may influence business decisions. 

Additional reporting by Anthony Lamot.