We all interact with different people in different ways. The way we talk with our friends or partners is quite different to the way we engage with our parents, children, or our employers.

As with your own interpersonal relationships, it’s critical to ensure your business messaging is appropriate for the audience you are trying to reach. A GenZ customer will likely respond to vastly different marketing techniques and communications than one from the Baby Boomer generation – and what works for one will not necessarily work for the other.

This is why customer segmentation is so important in modern marketing. With so many demographics to get your messaging across to, you need to make sure your advertising is striking the right chord.

Customer Segmentation

Sometimes referred to as market segmentation, customer segmentation refers to the practice of grouping customers based on the personalized characteristics they possess with the overarching goal of crafting marketing and communications which are most likely to resonate with them.

Segmentation can involve a single variable or combine many into a complex customer profile. For example, a political ad campaign may only be interested in targeting people who hold a certain viewpoint on a single key issue and will segment its audience based on that one factor, whereas an insurance broker may wish to target people who fit into several categories – drivers, homeowners, parents, etc. – for their targeting efforts.

We know from experience and data that customers are significantly more likely to do business with a brand which personalizes its messaging. Customer segmentation is a key step on the road to creating more personalized and better targeted marketing campaigns and businesses in the digital insurance space would do well to engage in the practice now.

"Segmentation offers a simple way of organizing and managing your company’s relationships with your customers," writes HubSpot. "This process also makes it easy to tailor and personalize your marketing, service, and sales efforts to the needs of specific groups. This helps boost customer loyalty and conversions."

Models of Customer Segmentation

Once you have made the decision to get on board with customer segmentation, you need to understand the many different ways customers can be segmented. By getting a firm grip on the various segmentation models available to you, you can better determine which are most appropriate for the messaging you want to deliver and the audience you want to reach.

Demographic segmentation is the most basic of models and contains information such as age, gender, income, marital status, and education. An insurance brand could use age or marital status information if it wants to sell life or health insurance to married couples for example and can tune its messaging to include ideas of looking after one’s family.

Geographic segmentation, as the name suggests, revolves around where the customer lives – country, state, city, town, etc. – and can be leveraged to include local references or quote road accident statistics which are specific to that area, for example.

Psychographic segmentation goes a little deeper and seeks to identify the audience’s personality, attitudes, values, and interests. Which political parties a person supports, their opinions on hot button social issues, their hobbies and more can all help insurance companies market the right products with the most appropriate messaging. For example, someone who partakes in a lot of extreme supports may respond to health insurance marketing which focusses on their increased likelihood of breaks or head injuries.

Behavioral Segmentation looks for tendencies and frequent actions, habits, and feature/product use. Has a customer had a lot of car accidents? Do those accidents tend to be big crashes or small dings? If your insurance brand has an app, which parts do customers interact with most?

Technographic segmentation tells you to what extent a person interacts with digital technology. Where do they do most of their internet browsing? Do they spend more time on desktop computers or smartphones? When they use a smartphone do they tend to prefer the built-in browser or proprietary apps? All this information can be used to make sure you are investing in the right platforms.

Final Thoughts

There are of course many other models of segmentation which can help you better target your audience, and many will be specific to one industry or another. However, using the above should give you a good place to start and get you on the road to better segmentation.

"Customer segmentation helps you boost conversions, reach your audience through cross-team (marketing, sales, service, product, etc.) efforts, and communicate more effectively with customers to meet their specific needs," concludes HubSpot.

Better targeting through customer segmentation is sure to be part of the conversation at Digital Insurance Connect 2022, taking place in October at the Hyatt Regency Austin, TX.

Download the agenda today for more information and insights.