Digital marketing spending is expected to explode in the next few years, with projected US digital marketing expenditure nearing $120 billion by 2021. However, despite the new and lucrative opportunities digital marketing presents, many companies struggle to connect their digital marketing campaigns to the right audience. In fact, 58% of audiences say the digital content they view isn’t relevant to them. That means, by 2021, more than $69 billion in digital marketing spending will go to waste – with just 42% of your digital content budget spent on campaigns that reach the right audience.
To ensure audience alignment, companies should be able to answer these questions about their target buyer:
- Who are they?
- What are their purchasing habits?
- When do they want to hear from you?
- Where are they consuming information?
- Why do they purchase your product?
- How do they want to hear from you?
These questions seem deceptively simple, yet the fact that nearly two-thirds of digital marketing campaigns miss the mark indicates that most companies are relying on incorrect data, or no data at all, to inform their understanding of their audience.
Buyer personas and customer segmentation analyses are two of the most effective tools companies can use to gain reliable customer insight; however, few companies take advantage of them. Nearly 70% of companies say they are confused about both what buyer personas are, and too few companies effectively use customer segmentation data to better sell to their customers.
Both buyer personas and customer segmentation analyses provide important insights on their own, but they are most strategically used together. Below, we detail each approach and provide tips on how your company can implement them to ensure digital marketing campaign success.
What they are: Buyer personas are the fictional, archetypal representations of a company’s ideal customers. Often presented in a biographical format, buyer personas represent each key customer group as a fleshed out individual. The buyer personas include information like key roles and responsibilities, the pain points, challenges, and goals specific to the role, and typical information watering holes and personal hobbies.
How to create them: Buyer personas, although fictional, are the product of real phone calls and in-depth interviews with customers and potential customers. Although you can complete them with as little as five interviews, ideally companies should conduct interviews with 10-15 individuals in each audience segment. To create an effective buyer persona, interviews should cover a variety of topics and questions should cover company and department structure, what a typical day on the job looks like, and vendor interaction preferences. After compiling the raw data from the customer interviews, you can begin to identify the patterns in the data and use them to organize your persona.
How to use them: Because buyer personas paint a vivid picture of an individual customer, they are an ideal reference point when creating campaign messaging. Companies can use the challenges, pain points, and purchase motivations uncovered in the buyer personas to create content that resonates with the target audience. Skytap, for example, a self-service provider of cloud automation solutions, used buyer personas to launch a tailored content marketing strategy that resulted in a 97% increase in online leads and a 55% increase in organic search traffic. Personas are also useful in campaign channel selection, since they surface details on where and how your audience group prefers to get their information.
Customer Segmentation Analyses
What they are: Whereas buyer personas extrapolate information from just a few customers to produce a generalized picture of a larger customer group, customer segmentation analyses narrow down the broader audience into smaller groups of customers that are meaningfully similar across multiple factors, including demographic, behavioral, geographic, and psychographic.
How to create them: Using surveys followed by advanced statistical techniques, these analyses can determine different segments of customers organically by identifying patterns in their survey responses. For example, Hanover recently performed a customer segmentation analysis for a large financial technology company to better understand the underlying patterns among the users of its prepaid debit card offering. The analysis identified six consumer segments, exploring the complexities far beyond income and expanding into reasons for use, financial literacy, financial services use patterns, age, debt, spending habits, and more. This analysis highlighted the commonalities among certain respondents in more complex ways that a demographic breakdown alone would not have been able to.
How to use them: Customer segmentation analyses are best used for digital marketing campaigns to improve audience targeting. Using the demographic and geographic data revealed by the segmentation analysis, companies can select the right targeting parameters for digital and social media ads, and they can better target campaigns to specific audience subgroups.
While both buyer personas and customer segmentation analyses can be conducted on their own, many companies choose to conduct them sequentially. If a company already has buyer personas created, customer segmentation analyses can be used to test the archetypal hypothesis developed through the persona. Alternatively, a company can conduct a customer segmentation analysis to identify smaller audience subgroups, and then conduct buyer personas for each of the groups identified.