Trends That Will Shape Market Segmentation in 2020

By Anthony Lamot,
business.com writer
|
Dec 31, 2019
Image Credit: RossHelen / Getty Images

Learn how these five market segmentation trends will help your business compete in 2020.

Segmentation has been around since the early days of marketing. "One size doesn't fit all" has become the mantra of brand communication. Marketers have been racking their brains to identify the best way to categorize their audiences – and while more options bring more complexity, going the extra mile certainly pays off. 

Companies across industries increasingly rely on highly personalized communication and ultra-specific targeting. And they have good reason to, as email marketers have found a 760% revenue increase in campaigns that were segmented. So, it's only right to ask yourself, "Have I reached my segmentation potential yet?"

Even those who are true innovators at heart need to see how dynamically market segmentation changes. As we venture further into the future, there are constantly new factors at play, be it disruptive technologies, big data or the ever-growing consumer demands. Learning how to build your segmentation strategy around these factors is what defines the leaders of tomorrow – while the others are left behind. 

Here are the top five market segmentation trends for 2020 that will help your business stay ahead of the curve.

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% of companies. 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 change radically.

In the future, companies are likely to focus on the untapped potential of UTM parameters, the simple tags added to a URL that allow powerful 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, and 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 GDPR, will maintain its importance. The right to erasure – aka the "right to be forgotten" – applied in EU 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 check-ups. 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, just 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 coming from different inputs will be further leveraged for event-driven marketing: real-time, one-on-one campaigns that deliver content relevant for the lead in the exact 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 towards treating them with different degrees of priority.

On the other hand, 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.

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 actually matter much – it's all about giving content relevant to customers' interests. 

That said, personalization can mean different things. Let's take a look at the example of email marketing, the crowned king of online 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 short and sweet 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 MarketingSherpa survey, 91% of Americans want to receive promotional emails. But as there's no magic number that tells you how many emails you should be sending, you might need to 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 that are specific to their vehicle. By leveraging machine learning to optimize the content over time, the recommendations become highly accurate.

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 IT landscape. In such cases, there's a need to integrate various stand-alone databases, which is both a challenge and an opportunity.

Some organizations aim for CDP (customer data platforms). While various providers offer a 360-degree view with unified customer profiles, there's still a lot of IT effort needed 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 an 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 actually 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 CRM 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 (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 in the hands of marketers.

Over the next year, we will see new exciting concepts shaking up the ways marketers approach segmentation but don't just 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.

Anthony is the CEO and Co-Founder of DESelect (www.deselect.io), offering easy segmentation for marketers using Salesforce Marketing Cloud (SFMC).
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