Do you feel like no matter how much you’ve invested, your marketing efforts are still falling flat, and you’re not seeing the results you want? Well, you’re not alone.

According to HubSpot, only 22% of businesses are happy with their conversion rates. That means 78% of companies are struggling to convert leads into customers—wasting time and money.

But what’s the solution to this problem? Market segmentation.

Market segmentation helps businesses become more profitable, regardless of industry, by helping them understand their target audiences deeper and curate content that’s relevant to them.

This article will help you make the most out of market segmentation as we explain it and why it works. We’ll also discuss how to implement market segmentation in your business operations to get the most lead conversions.

What Is Market Segmentation?

Market segmentation divides a target audience into small groups based on members’ similar characteristics. Businesses segment to understand their customers better and create relevant and targeted messages that catch the attention of their prospects.

Let’s take a company that sells cereal as an example. The company could segment its market into different groups based on their age—kids, adults, and seniors. Or the company could segment its audience based on interests, like health-conscious people, people who want to save money, and people who like sweet cereals.

What’s the significance of this segmentation? It allows the cereal company to create targeted messages and highlight relevant keywords that attract the audience’s attention. For example, their messaging for people who are health conscious focus on how nutrients are integral to diet, while their messaging for those who want to save money focuses on how much they can save when they choose their cereal.

Types of Market Segmentation

Market segmentation can also be divided into five different types:

  • Demographic Segmentation: Dividing your target audience based on characteristics like age, gender, income, education level, and race to create different groups of potential customers.
  • Geographic Segmentation: Grouping people based on their geographic location. This type of segmentation assumes that people living in the same area can have similar interests and requirements.
  • Behavioral Segmentation: Creating groups based on consumers’ behavior patterns and actions. This involves analyzing their buying habits, usage rates, brand loyalty, and other factors influencing their decision-making process.
  • Psychographic Segmentation: Relying on consumers’ personality traits, personal values, political opinions, attitudes, interests, and lifestyles. Although data for this segmentation can be challenging to obtain and identify, it produces excellent results.
  • Firmographic Segmentation: Grouping firms or companies based on shared company attributes. It considers factors like company size, status, industry, and number of employees.


Why Implement Market Segmentation?

Market segmentation helps businesses focus on their target audiences and remain relevant and relatable. Leveraging market segmentation allows you to tailor your services, products, and marketing efforts to the specific needs of different target groups—and developing one strategy for all your target markets will only lead to wasted money and marketing efforts.

Companies can get more from segmenting their audience than just relevance and relatability. Here are three key benefits for businesses to help increase conversion rates:

1. Personalized Marketing Messages

When you segment your audience, you can create personalized marketing messages that speak directly to each group’s needs and preferences. According to a survey by SmarterHQ, 72% of customers only engage with personalized messages tailored to their interests. So, sending personalized messages is a surefire way to increase your engagement rate and boost your conversions.

2. Better Targeting

Market segmentation beats annoying, generic emails by effectively allocating resources to engage and build relationships with the prospects most interested in your products or services. As a result, you use your time and money productively.

For example, a company that sells snowboards could segment its market into groups based on location, then focus marketing efforts on areas where snowboarding is popular and more likely to attract customers.

3. Increased Revenue

According to a study by HubSpot, businesses that implemented market segmentation into their business strategy saw a 760% increase in revenue. That’s a whopping boost in profit and shows just how effective market segmentation can be in boosting conversions.

Plus, the strategy offers audience insights to help you tailor your products or services to your customer’s unique needs. This way, you’re more likely to increase customer loyalty and repeat business—ultimately, more money!

How to Do Market Segmentation

Market segmentation can be beneficial for businesses to increase conversions and customer loyalty, but it can also be daunting to undertake. For most email marketers, starting market segmentation can feel overwhelming because of the sheer amount of data available, and they may struggle to know where to begin.

To get started, think through these steps and plan out a flow that’ll work for your email campaigns:

Step 1: Define Your Data Points

You can’t build segments without data, so defining your data points helps you identify the key factors for segmenting appropriately. To do that, you can start by answering these three questions:

  • What data do we currently have? These are available data that you can immediately use to help you start segmenting your market.
  • What data should we collect? You can track these data points but haven’t used actionable information.
  • What data do we need to ask for? You can only obtain this information by directly asking your customers.


Obtaining every data point isn’t always possible, and data-gathering frameworks can present limitations in supporting every test you want to run. But the good news is, development resources and third-party data-gathering tools can help to fill in the gaps.

Step 2: Collect and Analyze Your Data

Rich resources for collecting and analyzing data include platforms and analytics where audiences congregate—for example, social media and your website.

  • Conduct surveys: Surveys are a great way to get information about customers’ preferences, behaviors, and demographics. Email surveys get a higher response rate compared to social media.
  • Use website analytics: You can track which pages on your website they’ve visited, how long they spend on each page, and what actions they take. This data lets you get insights into your customer preferences and tailor your cold email campaigns accordingly.
  • Use social media insights: Social media platforms like Facebook, Instagram, and LinkedIn are gold mines of information for your followers’ demographics, interests, and purchasing behaviors.

Step 3: Group Your Customers

After collecting and analyzing your data, you can start grouping your customers into different email lists, based on age, location, purchase history, or website activity.

You can refer back to the five different types of market segmentations and use whichever is most appropriate to your products or services and necessary to your segmented campaigns.

Step 4: A/B Test Email Lists

In this stage, you can start experimenting with some email list segments. Give yourself the freedom to be creative with your groups and strategies based on the unique information you have about your customers—the ideas are limitless.

You can also start leveraging cold email marketing software to help you automate the segmentation and email delivery process. How can it benefit you? It helps you divide your groups faster and more accurately and create multiple email templates of the same message.

Once you’ve created email lists, you can send messages with minor differences to different groups and see which marketing emails each subset engages more.

Step 5: Measure and Adjust Your Strategy

Once you’ve sent out your emails, it’s time to measure your email campaign to see what works and what doesn’t. Here are some tips for measuring your email campaign:

  • Track key metrics: Keep track of significant email marketing metrics like open rates, click-through rates, conversion rates, and revenue generated from your cold emails. Through these metrics, you can gauge the effectiveness of your cold email lists and messages and identify areas for improvement.
  • Analyze results: Dive deep into your data and determine which segments respond positively to your campaign. Use this information to adjust your messaging, offers, and targeting.
  • Experiment with new segments: If you notice that only a few of your segments are generating better results, try creating different segments.

Measuring and adjusting your segmentation strategy helps you continuously improve the effectiveness of your email marketing campaigns and drive better results for your business.

Find the Right Partner to Improve Your Campaign Results

There’s no need to go through this process alone. Market segmentation is necessary for your success, but it can be overwhelming and time-consuming if you’re gonna do it from scratch. You might have read multiple articles guiding you through the process, but nothing beats a one-on-one conversation with cold emailing experts.

In articles like this, we try to clarify things to help you better understand how to create effective email campaigns. However, every business has different needs, so we have to generalize our content.

If you want to understand how you can leverage market segmentation to improve your conversion rates, let’s chat. With ScaleUpSales, you’ll have access to a pool of email marketing experts who can create personalized strategies appropriate for your business.

Let’s discuss how you can maximize your email marketing efforts through market segmentation. Contact us today!