At Shop.org’s annual summit in Anaheim, CA, last week, customer segmentation was probably discussed more than any other topic.
Brad Anderson, vice chairman and CEO of Best Buy, delivered the keynote in which he discussed segmentation and customer centricity. He described how Best Buy analyzes both its most and least profitable customers. Not all profitable customers fit the same mold. In fact, they often differ dramatically.
The shopping and buying habits of highly profitable, high-revenue customers are different. So is the mix of products they purchase. Analysis of customer behavior and attitudes indicates buyer segments have unique needs and preferences.
Once segments are identified, common attributes (psychographic and demographic) help marketers name them. They then target profitable customers at as many touch points as possible, including the media they buy.
Psychographics and demographics are great in traditional marketing. TV, radio, print, even outdoor are all sold based on demographic data supplemented with psychographics.
In online media buying, some larger media properties also have user demographic data. This makes it easier for media buyers to decide which media are likely to perform. But online often neglects psychographics and demographics, relying instead only on observed conversion behavior.
For Best Buy, important customer segments are “Barrys,” high-end customers who spend to get the best; “Jills,” busy moms who want a kid-friendly store environment and often purchase based on staff recommendations; and “Buzzs,” tech-savvy early adopters who enjoy the latest in gadgets, often buying after carefully reviewing specifications. Your highly profitable customer segments or subsegments (usually, the 20 percent who deliver 80 percent of revenue) are likely very different from Best Buy’s segments.
How does this apply to SEM and search engine optimization (SEO)? If different highly profitable customer segments use different search phrases or keywords, it only makes sense to message to each one differently.
“Buzz” types in “6 megapixel SLR camera.” He may respond best to a keyword text ad that highlights the ability to compare several cameras by features. “Jill” is more likely to type in “canon digital camera” after seeing a friend’s model. Jill may respond to an ad with more emotion, a benefit statement such as, “Snap and share pictures instantly and easily with a Canon digital camera.”
If profitable customer segments can be mapped to keywords, you can message to each in the most appropriate way. You’ll meet both their needs and your own. Examine the keywords they use to search to gain insight into the searcher’s state of mind, and the demo- or psychographics. You’ll create a better user experience and improve campaign efficiency.
Landing pages are also critical to the user experience, as well as to the conversion rate. If you map keywords to different market segments, you’ll have a pretty good idea which landing pages to test on that keyword (instead of testing all possible pages).
Buzz may respond well to a landing page that offers specifications and allows him to sort and compare cameras based on different product details. Jill may want to see the top seller for her search and respond well to a landing page that discusses it.
Without understanding customer segments, you could arrive at the best landing pages through a structured testing protocol. But wouldn’t it be nice to get there faster though segmentation? A full analysis to determine the profitable segments might take time. The sales and account teams may already have a good idea of the segments and their definitions. Tap the knowledge and use it to enhance all your marketing, including SEM.
Customer segments are searching. They want your attention. They want to spend, if you speak their language. Provide the right products and services, and recognize and meet their needs in a way that makes sense to them.
Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.
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