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What is audience segmentation?
The 4 key audience segments, examples, and strategies for success
Marketers who attempt to reach a broad audience often find themselves without a compelling connection to any specific group.
Effective marketing hinges on comprehending the audience; the best way to do so is to segment it based on definable criteria.
This allows marketers to identify the right channels to reach audience segments, tailor messaging to them, and understand the scale of various target audiences.
What is audience segmentation?
Audience segmentation involves dividing a target market into subsets of consumers or businesses with similar needs and priorities. It proves valuable for defining core business and marketing strategy, as well as determining campaign investment.
Business leaders can use it for strategy formation, and marketers can implement it within individual channels to enhance campaign efficacy. Moreover, it supports analytics and attribution, enhancing long-term decision-making by measuring segmented results.
Audience segmentation begins broadly by defining the target audience and then identifying significant subgroups within the broader audience.
Segmentation empowers marketers and business leaders to:
- Consciously and continually define their target audience
- Strategically allocate resources to reach one or more subgroups
- Craft tailored and effective messaging for distinct audience segments
- Align website content and experiences with audience group intentions
- Measure, optimize, and enhance campaign performance across audience segments.
There are several different ways marketing leaders can divide up their target audience into smaller segments.
Why is audience segmentation important?
By dividing a broad audience into smaller, more targeted groups, businesses can tailor their messaging based on the factors that best align with their goals and their customer’s wants.
This strategic focus yields measurable benefits across campaigns and long-term brand growth.
Key benefits of audience segmentation:
- Enhanced targeting accuracy
Segmentation allows marketers to pinpoint specific subsets of their audience, tailoring efforts to those most likely to engage or convert. This precision reduces waste in marketing spend and improves return on investment.
- Personalized messaging
A segmented audience provides the foundation for crafting messaging that feels relevant and personal. When customers see themselves in your message, engagement naturally increases.
- Efficient resource allocation
Knowing which segments have the highest potential value enables marketers to allocate time, budget, and resources more effectively. This ensures that campaigns focus on the segments most likely to drive results.
- Improved campaign performance
With segmentation, campaigns can be fine-tuned based on insights specific to each audience. Whether it’s testing creative, optimizing channels, or refining offers, segmented campaigns often outperform broad, one-size-fits-all approaches.
- Long-term business insights
Segmentation doesn’t just support immediate campaign goals—it builds a deeper understanding of your customer base. These insights can shape product development, pricing strategies, and overall business planning.
In essence, audience segmentation transforms marketing from a broad-reaching effort into a strategic conversation with the right people, making it a cornerstone of any successful business strategy.
Why is audience segmentation important?
Four primary types of audience segmentation exist based on diverse characteristics: geographic, demographic, psychographic, and behavioral.
Demographic segmentation
Demographic segmentation categorizes the audience by attributes like age, gender, income, education, and occupation.
For example, an athleisure brand may target specific product lines to men within certain age and income ranges. This approach is commonly used by retail businesses, manufacturers, and consumer-focused industries, as it offers a broad overview of potential customers.
Psychographic segmentation
Psychographic segmentation delves into personality traits, values, attitudes, interests, and lifestyles.
For instance, a travel agency could tailor adventure packages for thrill-seekers or luxury enthusiasts. This approach holds significant value to industries like tourism, entertainment, and luxury brands, fostering a deeper connection with personal preferences and emotions.
Behavioral segmentation
Behavioral segmentation focuses on understanding actions and behaviors of consumers, such as purchasing habits, product usage, and brand loyalty.
A tech company might offer personalized recommendations to repeat customers based on their past purchases.
This method is used by e-commerce businesses, technology firms, and companies with diverse product lines, as it provides insights into actual customer interactions with products and services. Behavioral segmentation is often readily available for users of marketing technology products like email marketing software or advertising platforms.
Geographic segmentation
Geographic segmentation categorizes the audience by location, including country, region, city, or even neighborhood.
A local restaurant chain might offer specific regional dishes that cater to local tastes. This strategy benefits brick-and-mortar stores, real estate firms, and local service providers, as it takes into account cultural and regional differences.
How to conduct audience segmentation
Conducting audience segmentation involves ideal state planning, and practical utilization of available data to improve targeting.
Step 1 - Develop clear target personas
When first segmenting an audience, business leaders should define their target persona.
The ideal customer profile or target audience should align with the core business strategy and product or services offered.
For example, a B2B marketing services provider could target retail brands above a specific revenue threshold.
They could then subdivide personas like:
- Directors of Fortune 1000 retail companies who recently changed companies or were promoted
- Owners of profitable bootstrapped businesses seeking digital transformation.
- Heads of growth in startups that raised over $20 million in recent funding.
These broad categories aid in establishing priorities and strategic decisions. Business leaders can refine segmentation using customer data as well and qualitative research.
Step 2 - Analyze existing data
Analyzing customer data reveals distinct features of audience segments.
For instance, identifying common traits among high-value customers offers insights for future campaigns.
This might include reverse engineering information like:
- What content did they read before making a purchase?
- What demographic or firmographic traits do they share?
- Which marketing channels yielded the highest percentage of high-value customers?
For many businesses, this customer data exists within a CRM. When marketers can couple CRM data with campaign, web, or advertising data (as is possible with LinkedIn Ads), the insights can unveil common traits in an individual segment.
Step 3 - Leverage surveys and qualitative research
Qualitative audience data points are often absent in existing platforms or databases. Qualitative research can add dimension to demographic and psychographic data, and fill gaps to create a better understanding of audience desires, needs, pain points, and challenges.
Customer interviews play a pivotal role in collecting this data. In service of building audience segments, it’s important to identify prototypical customers within the audience segment resembling the collecting subgroup. Identify several of these personas, and conduct face-to-face (or virtual) interviews to learn more about business choices, alternative considerations, and their decision making process.
Surveys are a way to conduct qualitative audience research at scale. Marketers can leverage email marketing technology, which usually has audience segmentation features, to send short surveys to members of a specific segment.
Insights from qualitative data can be used to collect voice-of-customer data for website copy and marketing campaigns. It’s also valuable for sales teams to strategize approaches for qualified leads.
How to leverage audience segmentation
Audience segmentation is useful in many ways, primarily:
- Targeting specific audiences in campaigns
- Creating personalized content
- Enabling marketing automation
To start, targeting specific audiences requires businesses to identify and reach them based on knowable dimensions – like the aforementioned behavioral, demographic, geographic, and psychographic traits.
Consider an advertising campaign for the team plan of an enterprise software. Despite diverse products and price points, the team plan only suits a specific subset of the overall audience. By using LinkedIn Ads, the company could focus on specific job titles in companies identified as fitting the right audience profile.
Segmenting an audience enables custom content creation. Modern marketing technology allows personalization across touchpoints; from the ad to website content, to the blog and email campaigns that nurture leads into becoming customers.
For instance, let’s consider a business that creates three core content offers – an interactive demo, a gated whitepaper, and an email newsletter subscription. Depending on which offer someone signs up for, the business could craft custom email automation campaigns addressing the specific pain points of that segment.
Finally, audience segmentation is the foundation for marketing automation. Marketing automation includes automated triggers and actions based on audience data points. Establishing these data points and incorporating them into marketing automation tools allows for more effective automation campaigns.
4 Examples of audience segmentation in action
Most audience segmentation is invisible to the end user, as they are unaware of the targeting parameters set by the business.
However, most ads seen on social media include robust audience targeting.
Here are a few examples of audience segmentation in action:
Gorgias uses data-driven personalisation to drive 7x marketing ROI
Segmentation Type: Behavioral
By tracking 20+ buying intent signals and integrating LinkedIn Ads with their data activation and revenue attribution platforms, Gorgias delivered LinkedIn Conversion Ads to highly qualified prospects. This contributed to open rates that peaked at close to 80% and Lead Gen Form submission rates that reached 60%.
TransparentBusiness raises $50M with Unicorn Hunters and LinkedIn ads
Segmentation Type: Demographic, Psychographic
TransparentBusiness used LinkedIn to generate awareness for their reality TV series Unicorn Hunters, which connects startups with global investors. By live-streaming episodes on LinkedIn and targeting high-net-worth individuals using LinkedIn’s custom audience segments, they drove significant brand visibility and investor engagement.
Their efforts included video ads, sponsored messages, and split-tested campaigns optimized for performance. LinkedIn emerged as the top platform for driving investment capital, helping TransparentBusiness raise $50M and reach 14M views across six episodes.
Salesforce penetrates India’s mid-market with highly targeted ads
Segmentation Type: Demographic, Geographic
Salesforce collaborated with respected Indian personalities and amplified their posts endorsing the product by using LinkedIn’s Thought Leadership Ads, strengthening their resonance and driving clickthrough rates 2x higher than platform benchmarks.
Through A/B testing, Salesforce also discovered that engagement rate doubled when it strengthened personalization by adding the line “Indian retail companies like yours are growing with Salesforce” to its ad copy, compared to ads that did not carry that line.
SDA Bocconi drives 40% lower cost-per-lead with LinkedIn ads
Segmentation Type: Behavioral, Demographic
SDA Bocconi School of Management piloted LinkedIn campaigns to reach niche audiences, including government officials, for its International MBA and Masters Programs. By testing and refining its approach, including switching to Lead Gen Forms, the school achieved high-quality leads at a cost-per-lead 40% below its target.
LinkedIn’s precise targeting capabilities and ongoing optimizations helped the campaign outperform benchmarks, delivering valuable results validated by the sales team and securing LinkedIn as a key channel for future marketing efforts.
The future of audience segmentation
Audience segmentation will continue to be a vital component of modern marketing.
Technological advancements like artificial intelligence and machine learning are anticipated to enable marketers to dive deeper into audience segmentation and personalize messaging further.
The key lies in aligning segmentation criteria with the business’s overall marketing objectives, fostering economically viable marketing and advertising campaigns.
Curious about targeting campaigns using audience segments?
With LinkedIn Ads, businesses can pinpoint ideal customers based on attributes like job title, company name, industry, and professional or personal interests. Moreover, LinkedIn Ads can leverage existing data to reach people who already have interacted with a business, leveraging website behavior, contact databases, and account targeting.
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