Have you ever wondered why some ads feel like they were made just for you? That’s the power of customer segmentation. It allows businesses to divide their customers into smaller groups and target them better. One of the most common types of segmentation used by brands is demographic segmentation, mostly because the data needed for it is easily accessible and usually non-confidential.
In this guide, we’ll discuss more about demographic segmentation, its variables, and how it helps businesses target the right audience.
What is demographic segmentation?
Demographic segmentation is a technique where you group your customers or target audience into smaller segments based on shared demographic traits such as age, gender, income, education, occupation, marital status, and ethnicity.
By doing this, you can create and run tailored marketing campaigns to promote your products and services that resonate with specific segments, improving engagement and conversions.
Why is demographic segmentation important?
Demographic segmentation helps marketers improve the effectiveness of their marketing campaigns and achieve better business results. Here’s how it helps.
1. Improves targeting and personalization
Businesses can focus their marketing efforts on those most likely to respond by identifying specific customer segments based on demographic characteristics. This targeted approach improves customer engagement and allows marketers to create personalized marketing messages and offers that resonate with their preferences.
2. Optimizes marketing spend
Targeting specific segments allows businesses to allocate resources more efficiently and optimize their marketing budgets without wasting time and effort. For example, you can focus on high-priority groups and retain them, such as those at risk of churning.
3. Boosts ROI
When combined, improved targeting and personalization help businesses reach the right audience with messages and products that resonate with their audience. By fulfilling their needs and preferences, businesses can build strong relationships, increase customer loyalty, and drive higher conversions, leading to better ROI.
Variables of demographic segmentation
Customer engagement variables are the factors you use to segment your potential customers or audience. These variables can vary depending on your business model, helping you tailor your strategies to meet different needs. Here are some common customer engagement variables you might consider.
B2C demographic segmentation variables
B2C companies target individual consumers, so the variables will be more specific to individuals. Here are some demographic segmentation variables, along with an example of segmentation based on each variable.
| Demographic Variable | Example |
|---|---|
| Age | A fashion retailer targeting Gen Z (18-24) with trendy, affordable clothing. |
| Gender | A campaign related to men’s shaving products targeting men. |
| Income | Targeting high-income individuals with premium travel packages. |
| Education | Targeting college graduates with tailored financial products like loan refinancing. |
| Occupation | Targeting remote employees with ergonomic furniture. |
| Marital status | Targeting married couples during Valentine's Day sales. |
| Location | Targeting customers in colder regions with snow gear. |
B2B demographic segmentation variables
B2B companies focus on targeting other businesses, so their segmentation variables are tailored to specific company attributes. Some common variables include:
| Demographic variable | Example |
|---|---|
| Industry | A software provider targeting the healthcare industry with electronic medical record solutions. |
| Company size | A SaaS provider offering affordable, scalable solutions designed for small businesses with under 50 employees. |
| Company stage | An investment firm focusing on startups in their early funding rounds. |
| Annual revenue | A travel agency targeting companies with annual revenues over $10 million, offering business trip, team outing, and corporate retreat packages. |
Challenges with demographic segmentation
Though demographic segmentation offers multiple benefits, it also brings a few challenges. We’ve also talked about how you can overcome them.
Demographics change over time and might get outdated fast. For instance, someone could get married, which might not get updated in your record. So, you must regularly review and adjust their segments and segmentation strategies.
Businesses must prioritize customer privacy while collecting and using demographic data. Adopting ethical practices builds trust and ensures confidentiality, addressing customer concerns about how their details are handled.
There's a high scope for gender stereotypes. For example, assuming all women are interested in beauty products is completely wrong. So, you must take past purchase and behavioral data into consideration as well.
Categories don't always fully reflect a customer's behavior, preferences, or needs. For instance, two people with similar incomes might spend their money in completely different ways or have different priorities.
How to collect demographic data
Before you start with demographic segmentation, you must collect the relevant data required to do so. Marketers can collect demographic data from different sources to understand their target audience and create segments. Some of the common methods include:
1. Surveys and questionnaires: You can conduct surveys that ask specific questions about age, income, education, and other demographic factors. These surveys can be conducted through emails and other online platforms such as Typeform, SurveySparrow, and Zonka Feedback. You can also conduct live interviews or phone surveys to do the same.
2. Website analytics: You can use website analytics tools such as Google Analytics that provide demographic information such as location, age, gender, and traffic source. This data helps you understand who engages with your business, where they come from and how you can cater to them with your product offerings.
3. Social media insights: Tools such as Facebook Insights and Instagram Analytics also give demographic data, like age, gender, city, and country of your audience. Analyzing this data helps marketers identify which demographics engage the most with their content and improve marketing strategies accordingly.
While there are multiple ways to collect demographic segmentation and each has its own set of benefits, we highly recommend using email marketing as it doesn’t rely on driving traffic to a specific platform where the audience can submit responses but gets delivered to them. Interactive emails take this a step further and allow your recipients to respond to your questions and fill out the forms within the email itself.
You can use Mailmodo as your go-to tool to create and send these interactive emails within minutes. It also allows for dynamic segmentation that updates your segments real-time depending on who meets or doesn’t meet the criteria for each segment.
Send interactive survey forms in email in minutes
Real-world examples of demographic segmentation
Here are some examples of brands that use demographic segmentation to target customers.
1. AARP
AARP, formerly the American Association of Retired Persons, is a nonprofit organization in the United States that focuses on the well-being of people aged 50 and older. It empowers them to make choices about how they live as they age. AARP segments its users based on age and targets senior people (age 50+) to offer healthcare advocacy, financial planning, and lifestyle. For example, they provide retirement planning resources for adults approaching retirement age.
2. Old Spice
Old Spice is a well-known American company that offers men's grooming products, such as aftershaves, deodorants, shampoos, body washes, and shaving creams. With “The Man Your Man Could Smell Like” campaign, the company positioned Old Spice as a desirable product for men. The campaign targets women, though the intended market is male, by encouraging women to buy Old Spice for their partners.
3. Target
Target is an American retail company that sells multiple kinds of products. It effectively targets a large demographic based on income. It targets budget-conscious people who want quality products at affordable rates. Its messaging, “ Expect More. Pay Less” resonates with shoppers seeking great quality without overspending.
4. Pampers
Pampers is a leading brand of baby and toddler products, such as disposable diapers and wipes. Its target market is new and expecting parents by offering resources that cater to their immediate needs. The company aims to reach a broad audience and offers valuable tools and content such as online birthing classes, pregnancy due date calculator, pregnancy milestones tracker, baby birthday facts, and baby name generator to enhance the parenting experience while promoting the healthy development of children.
Conclusion
By collecting demographic data with tools like Mailmodo and getting a better understanding of your customers, you can create personalized strategies that resonate with them. While demographics provide valuable insights, combining them with other segmentation types helps you create a more impactful marketing approach. You can take inspiration from the examples and create targeted campaigns to grow better and faster and increase customer engagement.
