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3 Reasons Why Targeting & Segmentation Increases ROI

3 Reasons Why Targeting & Segmentation Increases ROI

Gone are the days of blanket email blasts and irrelevant ads. Now it’s all about serving personalized, timely content to the right audience: When, who and what – that is the new mantra of marketers.

As opposed to a trial-and-error approach, targeting and segmentation can save you some valuable advertising dollars. Dividing your audiences into segments, based on factors such as demographics, market behaviour or interests, and tailoring your marketing strategy accordingly is the key to success.

For example, in emails, 77% of marketing return-on-investment (ROI) comes from segmented, targeted, and triggered campaigns. Such success begs the question: Why exactly do these methods increase ROI so radically?

 

Higher Revenue 

One of the reasons is that targeting and segmentation bring higher revenues. Investing in these strategies ensures that marketers aren’t blind to their customers’ preferences, guiding them towards offering more suitable products and services. Being more receptive to what your audience needs, combined with strategic and data-driven decision-making translates into increases in campaign performance. What’s more: Relevant messages boost engagement, loyalty, and profits – they are simply more effective.

We can let the numbers speak for themselves…

According to MailChimp, segmented campaigns in emails receive 14.31% higher open rates and a 100.95% higher rate of clicks.

For example, Mercedes Benz saw greater revenues by launching a campaign outside its usual audience; despite normally seeing interests by older buyers, the brand specifically wanted to engage with Gen X and Gen Y buyers. Based on the incomes of these demographics, it offered them a different product – a more affordable model – and advertised it during the Super Bowl and in other prime-time ad slots. This has brought the company great results, including younger buyers (an 11-year drop), a record number of visits to its site, 300,000 models of the car built in the online portal, and an 82% conquest rate, convincing new niche buyers to go for the advertised model.

 

Saving Advertising Dollars

We’ve observed marketing campaigns trending towards a smaller scale format, but with an additional degree of efficiency. This has one main benefit – cost savings. We all know that marketing into the wrong segments is expensive and unsustainable. 

Whether advertising to the improper audience or selling a product that has already been purchased, you are likely wasting both time and money and chances are your churn is out of control. But marketers can take a deep breath: By implementing targeting and segmentation strategies, they can make sure that no strategy goes to waste. 

And apart from the lower risks of unsuccessful campaigns, there’s another advantage. Greater savings can be achieved by optimization and retargeting of each campaign. Marketers can spend less time on less promising opportunities and observe what’s working and what isn’t to get insights on which path to take in future campaigns. 

4 Types of Marketing Segmentation

Greater Customer Satisfaction

Lastly, segmentation and targeting have the potential to bring long-term value to your business. While the results can seem difficult to measure, this impact of segmentation is perhaps the most important of them all – it leads to loyalty, decreased churn, and increased retention. There are ways to gauge this through customer satisfaction surveys but also indirectly through engagement metrics, such as open rates, time spent creating a communication, forwarding/sharing, and so on.

So while it may not seem as flashy or pressing, underestimating it would be a grave mistake. Dividing your audience into segments can bring greater customer satisfaction and lead to a healthy cultivation of a stable customer base. Targeting ensures that your audience isn’t annoyed by irrelevant content, and you convey the message that you know each individual very well, a factor particularly important to millennials and generation Z. After all, up to 75% of them are willing to give up personal data to receive personalized experiences.

 

How Does DESelect Fit Into This?  

Targeting and segmentation bring great results to marketers. But if you choose to divide audiences manually, it can be a cumbersome process. 

At DESelect, we make it simple. We work with marketers to help them achieve more without unnecessary IT-dependence. We know all about segmentation and how to make it effortless and faster (even by 50%!), using marketing software such as Salesforce Marketing Cloud. 

 

If you want to learn more about the value we bring, go ahead and read this case study.

You can also take a look at our product or contact us directly.  

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