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How much do you know about your digital audience? Probably more than you realise. And if you’re not capitalising on that through audience segmentation, you’re wasting some valuable intel.

Audience segmentation is the process of dividing your database into subgroups so that you can deliver more customised messaging. There are many different ways to do this: by customer behaviour, demographic, geographical location or attitudes and values.

Every click provides you with data on a user and the decisions that they make. Whether it’s handing over their email address to get a free eBook, making a purchase or abandoning their cart, you’re learning something about which stage they are at in their customer journey and what they’re looking for from your business.

For small business, audience segmentation is the way to even the playing field and compete on the same level as big businesses with their abundant marketing budgets.

Why is audience segmentation so effective? Because it allows for personalisation. A customer is more likely to feel a connection to your brand if they feel like you are speaking directly to them or hit on their specific pain points.

Let’s say, for example, that you are selling a product specifically for women. It’s pointless trying to sell this product to men. If you do so, you’re only going to, at best, tune them out to your attempts to connect and, at worst, annoy them enough to opt out entirely.

By understanding where your customer is in their lifecycle alone, and adjusting your messaging accordingly, you can increase the effectiveness of your marketing approach tenfold. Let’s explore this in detail as an audience segmentation approach you may like to try.

Contents

Ways to segment your audience

Before we get into the lifecycle approach, it’s worth knowing the main ways you can slice your audience. Most segmentation falls into four buckets, and you can mix and match them to get as specific as you like:

Type What it divides by Example
Demographic Age, gender, income, occupation, education. A product aimed at women rather than men.
Geographic Location, region, climate, city versus rural. Different offers for different states or cities.
Behavioural Actions, purchases, browsing and engagement. Cart abandoners versus repeat buyers.
Psychographic Values, attitudes, interests and lifestyle. Eco-conscious buyers versus bargain hunters.

The lifecycle approach below is really a form of behavioural segmentation, and it’s one of the most useful places for a small business to start, because it maps neatly onto how you’d actually talk to someone depending on where they are with you.

Prospective customers

AKA your leads. Prospects may be simply visitors on your website. They may also be those who have signed up to your newsletter. The common denominator is that they have not yet made a purchase or taken a key action. Your aim here is to keep the prospective party interested enough to convert them into a customer.

This is the nurturing stage, so resist the urge to hard-sell. People at this point are still deciding whether they trust you, so lead with value: helpful content, a useful lead magnet, gentle nudges that move them closer without pressure. The better you understand who these people are, the more relevant those nudges can be.

Customers

Those who have made a purchase or downloaded something that you’re offering. The common denominator isn’t necessarily the exchange of money but taking a decisive action. Your aim with the customer segment of your audience is, of course, to keep them as such. It’s valuable to note that hammering customers with constant sales-centred marketing is probably just going to annoy them. The intention is to keep them feeling good about their purchase or download by providing them with value-driven content which fosters a growing connection to your brand. Sending too many promotional emails will only result in your customers unsubscribing.

The window straight after a purchase is golden. A good onboarding sequence, a thank you, a quick tip on getting the most from what they bought, all of it reassures them they made the right call. Nail this stage and you don’t just keep customers, you set them up to become the next group on this list.

Advocates

AKA your raving fans. These are the customers who, if attended to correctly, will shout your praises from the rooftops and help to provide the social proof that will convince other people to consider your brand. Your aim with this group is to ensure they feel valued and to keep them engaged with your brand.

Advocates are the cheapest, most powerful growth you’ll ever get, because a recommendation from them is worth more than any ad you could buy. So make it easy for them to spread the word: ask for reviews, share their stories, give them something worth talking about. A little recognition goes a long way, and word of mouth like this is a huge part of why people choose you.

Lapsed customers

These are the customers who have made at least one purchase in the past but haven’t made another one within a reasonable timeframe. Obviously that timeframe will vary depending on the nature of your business. With this segment of your audience you will be trying to encourage them to make another purchase. This is similar to what you would be doing with your ‘customers’ but the lapsed time requires a slightly different angle.

A simple “we miss you” message, a tailored offer, or just checking in to see what changed can work wonders here. It’s almost always cheaper to win back a lapsed customer than to find a brand new one, which is exactly why understanding your customer lifetime value matters so much when deciding how hard to chase them.

Lost customers

When there’s been a significant amount of time since a customer has made a purchase, it may be reasonable to assume that they are not going to make another. While it takes a lot to class a customer as ‘lost’, it’s an important stage to remember. If you continue to pester these people it will only serve to hurt your business since they are the ones who will likely mark your emails as junk or complain about you online.

Knowing when to step back is a skill in itself. Quietly suppressing this group, rather than continuing to email them, actually protects your sender reputation and keeps your marketing landing well with everyone else. Sometimes the most valuable segmentation decision is who to stop talking to.

The customer lifecycle at a glance

Here’s the whole lifecycle in one quick reference:

Segment Who they are Your aim
Prospective Leads, visitors and sign-ups who haven’t bought yet. Keep them interested and gently convert them.
Customers Have made a purchase or taken a decisive action. Keep them happy with value, not constant selling.
Advocates Raving fans who spread the word for you. Make them feel valued and easy to share you.
Lapsed Bought before, but not for a while. Win them back with a tailored nudge.
Lost Long gone and unlikely to return. Step back. Don’t pester, or you’ll do harm.

As you can see, by segmenting your audience by lifecycle, you have ample opportunity to tailor your content and take a far more personalised approach. Give it a go and see for yourself how effective it is.

Segmentation works best when it sits on top of a clear brand that knows exactly who it’s for. If you’d like a hand getting that clarity, a free brand audit is a good place to start, or explore our brand strategy work.

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FAQs

What is audience segmentation?

Audience segmentation is the process of dividing your audience or database into smaller subgroups so you can send each one more relevant, customised messaging. Instead of blasting everyone with the same generic message, you tailor what you say based on who people are and where they are in their journey with you. It’s one of the simplest ways to make your marketing feel personal, which makes it far more effective.

Why is audience segmentation important for small business?

Because it lets you compete with much bigger players without a big budget. Large companies win partly through sheer spend; segmentation lets a small business win through relevance instead. When your message speaks directly to someone’s situation and pain points, they’re far more likely to feel a connection and act, so every marketing dollar works harder. It’s the great equaliser.

What are the main types of audience segmentation?

There are four main types. Demographic divides by traits like age, gender and income. Geographic divides by location. Behavioural divides by what people actually do, such as their purchases and browsing. And psychographic divides by values, attitudes and lifestyle. Most businesses combine a few of these, and the customer lifecycle approach (prospect, customer, advocate, lapsed, lost) is a particularly practical form of behavioural segmentation.

What is customer lifecycle segmentation?

Customer lifecycle segmentation groups people by their stage of relationship with you: prospective customers who haven’t bought yet, active customers, advocates who recommend you, lapsed customers who’ve drifted, and lost customers who’ve moved on. Each stage calls for a different message and goal, from nurturing prospects to winning back lapsed buyers. It’s powerful because it mirrors how you’d naturally talk to someone depending on where they are with you.

How do I segment my email list?

Start simple. Use the data you already have (sign-up source, purchase history, engagement) to split your list into a few meaningful groups, like prospects, customers and lapsed buyers, then tailor your messaging to each. Most email platforms let you create these segments easily. The key is to send each group content that fits where they are, rather than the same message to everyone.

Can you over-segment or over-email your audience?

Yes on both counts. Over-segmenting can leave you with tiny groups that aren’t worth the effort, so start broad and get more granular only where it pays off. And over-emailing is a real risk, especially with customers and lost contacts. Hammer people with too much, or keep pestering those who’ve clearly moved on, and you’ll trigger unsubscribes, spam complaints and damage to your reputation. Sometimes the smartest move is knowing who to stop emailing.