Benefit Segmentation Definition & Examples
Benefit segmentation can help reduce churn, increase retention, and improve conversion rates by splitting your target audience into separate categories. Learn how benefit segmentation works, its benefits, and examples of companies using benefit segmentation successfully.
Marketing is about appealing to the needs and desires of consumers, learning what they want, and showing them you can provide the goods or services they require. But, a customer’s individual needs and desires vary, meaning everyone buys products for different reasons.
This is where benefit segmentation comes into play. Benefit segmentation is the process of dividing a company’s audience into smaller groups based on individual needs and desires.
Benefit segmentation has many benefits, including reducing customer churn, increasing retention, and improving conversion rates. Overall, benefit segmentation makes your marketing campaigns more effective, especially when used alongside reverse positioning.
This guide covers all you need to know about benefit segmentation, including the definition of benefit segmentation, its importance, its benefits, and examples of it in practice.
What Is Benefit Segmentation?
Benefit segmentation is a marketing practice that involves splitting your audience into key groups or segments based on each customer’s different needs.
It’s a method of categorizing your audience and then prioritizing the customers who are most likely to benefit from what your business offers and more likely to make a purchase or invest in your services.
Why Does Benefit Segmentation Matter?
Customers have different reasons for purchasing a particular product or investing in a service. When looking for a new car, for example, some people might be drawn to speed and performance, while others might favor a vehicle with strong fuel economy.
If a car company can successfully market to each audience segment by highlighting the features that matter most to each group, the car company can convert leads more successfully and boost sales. We see a terrific example of benefit segmentation in marketing when looking at Dodge Ram’s creative ads.
The above ad shows a Dodge Ram in a rugged environment, with dusty trails and harsh conditions, coupled with tough-looking metallic font and a focus on the vehicle’s strength and capabilities.
The first ad is in a stark contrast to the ad below, which features a similar vehicle in a clean, city environment and a message focusing on its fuel economy. The second ad appeals to urban drivers who want the space and capabilities of a truck without having to spend too much money on gas.
Finally, we have the below ad, again featuring a similar vehicle, but this time with the focus on an award the truck won for “Driver Appeal.” This final ad helps give the Dodge Ram brand more value and credibility in the eyes of buyers.
Benefit segmentation allows companies across almost all industries to be less general in their marketing and shine the spotlight on the features, values, and aspects of their business, products, and services that customers really want.
Advantages of Benefit Segmentation
Benefit segmentation helps businesses stand out from the crowd and cater to the specific demands of their audiences. Here are 4 core advantages of benefit segmentation:
- Better conversion rates
- Greater customer engagement
- Decreased churn
- Strengthened brand identity
1. Better Conversion Rates
Much of marketing is about boosting your conversion rates – turning more leads into actual paying customers. Benefit segmentation helps with conversions because it allows your marketing team to make campaigns tailored to appeal to the people who are most likely to buy your products.
2. Greater Customer Engagement
Benefit segmentation helps raise customer engagement. By making your marketing campaigns more specific, relevant, and relatable to audience needs, you have a better chance of getting people interested in what you’re selling.
3. Decreased Churn
Churn is something that every company wants to avoid, which is why so many brands go to great lengths to build customer loyalty and boost retention rates. Benefit segmentation helps with this goal, as customers grow to feel your brand is ready to meet their precise needs, leaving them with no desire to shop anywhere else in the future.
4. Strengthened Brand Identity
Another advantage of benefit segmentation is how much it can do for your brand’s identity. If you start marketing in ways that highlight the most appealing features of your products for interested audiences, your company can develop a reputation for excelling in those key areas.
Examples of Benefit Segmentation
Now that you’ve seen what benefit segmentation is and the advantages of this marketing strategy, let’s take a look at some real-world examples to demonstrate just how effective benefit segmentation can be.
The toothpaste industry is replete with examples of benefit segmentation, and Colgate is one of the most successful brands to focus on. Looking at Colgate’s marketing, advertisements, and even packaging, we can see benefit segmentation in action.
Many of the brand’s toothpastes have specific features highlighted, with some that are great for freshening breath and others that are well-suited to sensitive teeth. This allows Colgate to appeal to individual segments of its audience with ease.
Ford is just one of many car companies that understands the benefit segmentation definition and uses this advanced marketing strategy to great effect over the years. When marketing vehicle models, Ford applies different approaches to appeal to its target audiences.
Models like the Ford Fusion sedan, for example, are marketed with vibrant colors and fun styles to appeal to a youthful demographic. Meanwhile, trucks like the F-150 tend to be marketed with rugged terrain and associations to work, emphasizing the vehicle’s power and strength.
Streaming app Spotify also invests in benefit segmentation to draw new subscribers from all walks of life to its platform.
Spotify launched billboard ads on major highways, focusing on how entertaining and enjoyable Spotify can be while in the car. Spotify’s ads appeal directly to drivers.
Spotify also ran separate campaigns in magazines and newspapers targeting couples and offering discount “Premium Duo” memberships.
Benefit Segmentation Is an Effective Marketing Strategy
Benefit segmentation is an effective marketing strategy that can make a difference for your brand – aiding everything from boosting engagement to building brand identity. If you need any assistance learning more about benefit segmentation and building your strategy, take a look through our list of trusted marketing companies.