The Beginner’s Guide to Lead Segmentation for Small Business

Whenever I talk to clients about segmentation, I use the same analogy…

Imagine you’re at a gun range. You’re trying to hit a target 50 yards away.

Not segmenting your small business’ contacts and leads is like holding an uzi at your hip and holding the trigger down. You’re lucky if you don’t hit yourself, let alone the target.

Segmentation is like lying on the ground with a sniper rifle, breathing slowly in and out and gently compressing the trigger until a single bullet is expelled.

Segmentation allows you to aim. It allows you to focus and optimize the way you interact with your customers based on their interests, behavior and demographics. This enables you to hit the target far more frequently than aimlessly shooting from the hip.

Alright, enough with the analogy…

What is segmentation?

Segmentation is the process of subdividing your market or contacts into groups with similar characteristics, needs, or interests who are likely to exhibit similar purchase behavior.

And it’s extremely effective, increasing everything from email open and clickthrough rates to retention.

This article will deliver a few stats to justify segmentation, breakdown how you can segment, and then get into 7 segmentation strategies for small businesses.

A Few Stats to Justify Small Business Lead Segmentation:

Mailchimp did an assessment of their client’s email campaigns and determined the following:

When marketers segmented their email lists (based on interest, signup date, and a few other characteristics)…

  • Email open rates were 10.82% higherthan non-segmented campaigns
  • Email click through rates were 94.27% higher than non-segmented campaigns
  • Reports of abuse were 3.70% lower than non-segmented campaigns
  • Email unsubscribes were 9.36% lower than non-segmented campaigns

A few more segmentation statistics:

  • Segmented and targeted emails generate 58% of all email-driven revenue. (DMA)
  • 77% of email ROI comes from segmented, targeted, and triggered campaigns. (DMA)
  • Marketers noted a 760% increase in revenue from segmented campaigns vs non-segmented. (Campaign Monitor)
  • When the Open Golf Championship utilized segmentation and personalization within their email campaign to determine the recipient’s location, they were able to personalize a map to their location:

The campaign resulted in an online traffic increase of 250% and over 500 leads. (EmailonAcid).


How you Can Segment your Leads and Contacts

There’s a couple primary ways to segment, explicit and implied.

Explicit segmentation is segmentation based on characteristics provided by a contact to your business – this can be through a conversation, a lead form or purchase behavior.

Examples:

  • Segment people based on the fact that they bought a specific product
  • Segment people based on the fact that they selected “real estate” when filling in your lead generation form
  • Segment people based on the fact that they live in Canada (and your marketing automation software can see their location).
  • Segment people based on the fact that they haven’t purchased anything or opened a sent email in more than six months.

Implied segmentation is segmentation based on characteristics which are implied in their actions, behavior and purchase behavior.

Examples: * Customers who bought a pair of men’s shoes are likely men, or buying for men. * Customers who viewed your business’ pricing page twice in a single day but didn’t yet buy are likely interested in buying and shopping around. * Customers who downloaded your guide to filing property taxes likely own property.


The Danger of Explicit Segmentation:

Segmentation is, at its core, generalization.

The perfect example of this is that age-old embarrassment of asking a woman with a slightly rotund belly when she’s due.

Only to find out she’s just put on a little weight over the Christmas holiday.

You thought you were safe. You thought you could generalize, thinking that women of a certain age and a stomach which looks like that are likely pregnant.

Only they’re not all pregnant, and now you (deservedly) have to apologize profusely and stick your head in a bucket.

Segmentation requires us to generalize – making sweeping statements about our contact’s behavior and demographics meaning something. And, 9 times out of 10, this increases email open and clickthroughs, increases our ability to close, increases our ability to retain.

But before diving in, be aware of the dangers.

Here’s an example:

We could look at these women’s demographics and life stage and make a generalization which would allow us to deliver hyper-relevant content. We could send both women an email series of easy-to-prepare, healthy recipes for a month, interspersed with “25% off our organic fruits and veggie baskets delivered to your door!”

Except some 40-something mothers of two don’t like to cook.

I’m not saying to not send that email series. I’m just saying to be aware of the dangers of explicit segmentation, and recommending you dig as deeply as you can into who your contacts are before diving in.


Guidelines for a Strong Segment

1. Focused but significant:

There’s no point in segmenting so specifically that creating a tailored marketing program for that segment would yield a negative ROI. Your segment should be “the largest possible homogeneous group worth going after.”

2. Differentiable:

Segments must be easily distinguished from each other, as well as likely to respond differently to different marketing approaches and strategies.

3. Relevant:

Segments must be structured such that the knowledge aids your business’ marketing goals.
There’s no point in segmenting your SaaS customers by hair color, as the information is useless to you. Equally, there’s no point in segmenting your hair salons’s customers by the size of their business.

4. Actionable:

It must be possible for a marketing team to create strategies which will effectively attract and serve the segment.

5. Stable:

Stability of a segment is paramount in executing a long-term strategy for it. If your segment is likely to change in composition or purchase-inclination over time, the effort you put into marketing to that segment is less likely to succeed than if that segment is stable.

Source: (The Complete Guide to Lead Segmentation)

10 Examples of Small Business Lead Segmentation

Even if you don’t see your business here, be sure you give it a look over. There’s a lot of overlap between businesses of all kinds. It’s likely there’ll be something valuable to take away even if you’re not specifically represented.

1. Dentistry

Segmentation Strategy: As dentists rarely have much of an online marketing or lead nurturing strategy, I’d recommend you, instead, add a segmentation question to your “new client” form.

  • What are you here for?
    • General dental care
    • Elective dental care
    • Family dental care

When adding clients to your email database, segment them based on their responses and send emails or phone calls tailored to them as individuals.

  • Have a teeth-whitening promotion? Mail it to your “elective” segment.
  • Looking for new clients? Send an email to the general and family segments prompting them to reach out to their friends.

Are you a dentist? You’re in the wrong guide! Check out our “Beginner’s Guide to Online Marketing for Dentists.”


2. Chiropractor

Segmentation Strategy:

Similarly to dentists, I’d add a segmentation-based question to your new client form.

If you do have people coming through your website to make an appointment, add the same question in the booking process.

Here’s a popup example which would make this easy:


3. Accounting

Segmentation Strategy:

Many accounting small businesses are responsible for a few services. Keeping track of which of your clients wants what is important, and it’s likely you’re doing something along those lines already.

  • Corporate tax returns
  • Personal tax returns
  • Bookkeeping
  • Year End
  • Financing & Financial Statements
  • Payroll
  • Remittance
  • Accounts Payable

But this kind of organization can quickly become a marketing tool as well. Think about it. Let’s say it’s February or early March, and you’re going to be running a promotion for tax season (“This tax season, play it safe with a professional accountant. Now until April 1st, get 25%-off AcmeAccounting!”)

There’s no point in targeting your corporate clients with a personal tax promotion. Equally, there’s no point in targeting individuals with information about payroll.

Call it organization, if you will. But it will save you energy and increase your small business’ success nonetheless.

4. Consultant

Segmentation Strategy:

Consultants, whether financial, marketing or anything else, are big creators of content.

The challenge whenever you create educational content is that not everybody reading it is within your target market.

Anybody in marketing (myself included) doesn’t always become a lead with the best interests at heart. More often than not I’m downloading your guide, ebook or attending your webinar for my own selfish reasons.

That’s why it’s essential you determine who your leads are. After all, what’s the point in trying to nurture a fellow marketing consultant who’s just there to get a source for their own article?

  • Note: This is also essential for anyone in the real estate industry. If you’re creating resources, it’s likely that some of your competitors will be downloading them. Don’t waste your time, energy or resources to nurture people who have no interest in buying.

5. Appliances/Hardware

Segmentation Strategy:

Create blog content which reviews product lines…

  • “Looking to Purchase a Stove? Which One is Best for your Budget?”
  • “Ceiling Fans: What You Need to Know About the Top Brands”
  • “Heating your Home Without Breaking the Bank: 3 Top Brands”
  • “The Longest-Lasting Refrigerators you Won’t Regret Investing In”

Check out the YaleAppliance blog for some great examples.

Then, segment visitors to your blog based on pageview. This will give you a semi-reliable idea of their interests:

  • Note: Be sure you remove people from this segment when they convert. In Wishpond, just click the checkbox next to “Remove leads from this workflow if they no longer meet the conditions.”

How to use this segmentation strategy:

  • Deliver interest-focused popups and promotions the next time they arrive on the site.
  • If they’re subscribers, deliver interest-focused emails if you have a sale running.
  • Create a coupon (via email or popup) which is specific to the product line they’re interested in.

6. Photography

Segmentation Strategy:

Your photography business is unlikely to just do weddings. Or just do anniversary photoshoots, baby and family shoots, grad photos, or birthdays.

Depending on the season, you probably do them all.

There’s a few options for photographer’s segmentation:

  • Segment your website visitors based on pageview. If someone comes to your site and visits /weddings-gallery, you know pretty confidently what they’re interested in.
  • Segment your website visitors based on lead information. Add a timed popup to your website (30 seconds should do the trick) prompting them to “Subscribe to receive limited-time and subscriber-exclusive discounts! What are you interested in?”
  • Segment your clients manually. Did you just do a wedding photo shoot where the bride was pregnant? Add her to your “Family” segment. Just do a family shoot and the son was 17? Add them to your “Grad” segment.


7. Ecommerce

Segmentation Strategy:

Add an entry popup to your site asking visitors to provide their email address in exchange for a discount or free shipping. Add a dropdown or checkbox asking for a simple piece of information: Their gender.

Something like this (real world) entry popup example from Revolve:

How to Use This Segmentation in your Small Business Marketing Strategy:

  • All new leads can be sent gender-based product offers
  • If they select “both,” be sure you send them a “shopping for someone?” email with popular products for both genders.

Another extremely important segment of your prospective customers are those who have shown interest in your products but not yet bought.

Add a workflow within your automation system which automatically adds visitors to a “Hot” list if they’ve added something to a shopping cart but not completed the sale. You can even use merge tags to take the product they’ve added and remind them it’s there, or give them 10% off.

Wrapping it Up

Hopefully this beginner’s guide to lead segmentation for small business has given you a better idea of the importance of organizing your contacts and leads, as well as a few idea for how your business can do it.

**Related Reading:

The Complete Guide to Lead Segmentation
The Complete Guide to Gated Content
5 Behavioral Lead Nurturing Ideas & Examples
4 Strategies to Optimize Your Email Segmentation Campaigns

The Complete Guide to Small Business Marketing

Back to Table of Contents