Reasons Why You Must Segment Your Audience

I recently wrote a post on Open-Source Marketing that argued we should target prospects more carefully — aim for the bullseye, not the whole target.

In this post, I’d like to get more quantitative, and show you exactly why accurate targeting, which may include paying more for clicks, and deliberately reaching fewer people, is sensible marketing.

We’ll look at the impact of broad versus narrow targeting on three areas: SEO, PPC, and conversion optimization.

Let’s take two hypothetical marketers working in a random sector.

Colin and Barbara are both florists who specialize in wedding flowers. As small businesses, they can each handle about eight customers per month.

They take different strategic approaches to their marketing. Colin wants to reach the biggest possible market, whereas Barbara has decided to focus on specific niches.

We’ll follow Colin and Barbara as they drive PPC and SEO traffic to their sites, and try to optimize those sites for conversions.

1. AdWords

Colin doesn’t have time to waste on research, so he invests in the popular overall term “wedding flowers”, targeting the 18,100 monthly searches in his UK market. He can expect to pay 48 pence per click.

kwr-brian

Barbara takes a different approach, preferring to target multiple specific terms, and point each one to its own landing page. This method means she spent several more hours doing her research in AdWords, and a couple more hours each month creating new landing pages.

The image below shows some of the keywords that Barbara might target. Together, just this selection of target phrases accesses a search market of over 2000 monthly searches. However, notice that most of the competition is Low or Medium, and the suggested bid is around one quarter of what Colin is going to have to budget for.

KWR Barb

Let’s say that both Barbara and Colin get 800 clicks per month from AdWords, assuming a 1% conversion rate from click to customer, which would give them the 8 jobs per month they need.

  • At 48p per click, Colin will probably have paid around £384.
  • At around 13p per click, Barbara will only have paid around £104 — less than a third of Colin’s spend.

Put another way, Barbara can afford to buy three times as many clicks as Colin, and that also means she can optimize her AdWords ads much faster.

But what if PPC isn’t the only traffic source for our intrepid business owners?

2. SEO

Our two florists are also interested in getting organic search traffic, so they both engage in some SEO activity.

Colin wants to focus on his site’s home page, so he’s lazily targeting the phrase “wedding flowers” again, whereas Barbara is pointing traffic at the spread of focused landing pages that she invested in building.

Moz’s Keyword Difficulty tool is a premium app that helps you quickly see your organic SEO competition. Here’s the top three for “wedding flowers”. (I’m concentrating on top-3 placement, because they typically get two thirds of all the clicks, so there is little point targeting any term with SEO unless you are going to make a serious effort to break into the top three.)

kwd-wedding-flowers

Those are all fairly significant pages, all with links from over a dozen other websites, on well-established domains. Colin is going to have his work cut out trying to break into this kind of company.

Remember that all the links on the second page of search results tend to get only 5% of clicks combined, and a placement outside of the top twenty will only be seen by a tiny percentage of searchers.

Let’s say Colin puts a lot of effort into his SEO, and does quite well. Realistically, he might manage to get his site onto page 2, maybe around #12, on Google UK. At that position, he can expect to receive typically under 1% of the clicks that get clicked.  So that might get him another 200 visitors.

Let’s compare Barbara’s approach. She has multiple landing pages, such as her page for “blue wedding flowers”. Here’s the top 10 on Google UK for that term.

kwd-barb

This is not a very competitive term. The first six results include the phrase “blue wedding flowers” in their title tags, but 7-10 do not. That means 7-10 are very easy targets, so Barbara should easily be able to get above those.

Also notice that the best-linked of the results in the top ten only has inbound links from four other sites. Out of the top six that we’re targeting, none has links from more than two other sites. From this, I think a top-3 placement may be realistic for Barbara.

Even a #4 spot for a term like this would get Barbara around 7.5% of clicks. The Google AdWords research above told us that about 590 people per month search for the exact phrase “blue wedding flowers” on Google UK, which means Barbara might expect about 44 clicks per month from this term alone.

But here’s where it gets interesting. If Barbara had 20 specialized pages like this, she would be looking at maybe 900 direct clicks from search results, way more than Colin’s estimated 200. In fact, just five such pages would get her more traffic than Colin can expect from ranking on page 2 for his more generic term.

3. CRO

A lot of people will tell you that it’s important to test your websites’ conversions, often using split-testing.

What a lot of people don’t tell you is, if your website is crap, you’re wasting your time split-testing!

In order to get meaningful results, you really need a high degree of probability (97% or more). And to get that means you need quite a few conversions.

But the baseline conversion rate also has a massive impact on the number of visits you’ll need in order to reach “statistical relevance”.

Look at it this way.

Scenario 1: Starting From Low Conversions

Let’s say a landing page gets 1000 visits per month, and 10 conversions. That’s a 1% conversion rate, which is low.

We run a split test against an alternative page, which increases the conversion rate by 25 percentage points: a significant improvement. That effectively means the new page is converting at 1.25%.

How long do you think it would take to achieve a reliable result?

Fortunately, some smart people have done the hard work for us and built CRO calculators like this one.

That tells us that this test, running on the low-converting page, will take 698 days to complete. That’s nearly two years! So it is simply not worth doing.

The CRO calculator shows how long it will take for a test to complete starting with a low-performing control.

The CRO calculator shows how long it will take for a test to complete starting with a low-performing control.

Why is this? Simply, the extra 0.25% conversion rate (in real terms) only means 2.5 more actual conversions per month. So it’s going to take a lot of months to establish a meaningful trend.

Scenario 2: Starting From Better Conversions

Compare a page that starts with a more reasonable conversion rate of 5%. Assuming we get the same 25% relative improvement, the test would now take only 133 days to complete.

The reason is that, starting with 50 conversions per month instead of 10, the real difference in conversions is far more significant: 12.5 more instead of just 2.5 more. And that’s what slashes the time it would take to get meaningful results.

With a 5% starting conversion rate, testing delivers results far quicker

With a 5% starting conversion rate, testing delivers results far quicker

(With a 50% conversion rate, the test would be complete in only six days, even with only 35 visitors per day on average!)

Let’s apply that to our two florists.

Colin is targeting the general “wedding flowers” market, and he is sending his visitors to a generic “wedding flowers” page. He doesn’t know if they want cheap wedding flowers, artificial wedding flowers, themed, blue, autumn, last-minute, exotic, goth, or any of the other myriad possibilities.

When those people do arrive, they’re looking, as we all are, for signs that they’re in they’re in the right place, that they are likely to get what they find here. If they’re confident, they’ll stay on the page and maybe proceed. If they’re not confident, they will go back to where they came from.

Now, Colin doesn’t know exactly what they’re looking for. So he’s offering a generic service to a fuzzy market. That means he either has to…

  1. Present his full range of services on one page, which runs the risk of overwhelming the visitor with too much information, and making it harder to see the thing they do want.
  2. Or present a fuzzy, generic offering, such as, “Wedding flowers for all occasions,” which is a pretty impotent message, unlikely to persuade a visitor that they’re going to get exactly what they want. (After all, no one’s really looking for “wedding flowers for all occasions” are they?)

Compare Barbara’s site. She’s fishing for a range specific prospects in multiple smaller pools with less competition.

If Barbara targets “blue wedding flowers”, for example, and presents a page with examples of blue-themed bouquets she has created, someone who arrives on that page is instantly going to see exactly what they came to find: blue wedding flowers.

They won’t see all the other options, so the content they really want will jump out clearly. If they had arrived on Colin’s home page, it’s likely they wouldn’t have seen a blue-themed presentation at all.

Which page is likely to convert higher, to generate more enquiries? I would bet on Barbara’s.

The same would apply if she went by genre, theme, price point, location (county, town, or wedding venue), timeframe (e.g. urgent, last-minute, or even for July 2017). In every instance, visitors are going to find their expectations instantly met. They won’t have to scan around, the uncluttered page they find will simply say, “Yes, I offer that. Why don’t we talk about exactly what you want?”

Barbara’s visitors will feel rewarded and understood. They will probably instantly trust Barbara more. And that’s why she’ll get more enquiries and orders.

So, not only will she get more business with less work, but any split-testing that Barbara does across her site will also deliver positive results in less time.

And if these guys are paying for their traffic, conversion rate becomes even more important. In fact, a modest improvement in conversion rate can make the difference between a loss-making campaign and a profit-making one.

If Barbara is paying less than a third for her PPC traffic than Colin pays, and gets 3x higher conversions, that means each of her leads costs only a tenth of what they cost Colin! Plus, she can improve that conversion rate faster over time, further stretching her competitive advantage.

Summary

Simply by segmenting her real target audience, we’ve seen how Barbara can enjoy:

  1. Cheaper, better-targeted PPC traffic.
  2. More SEO traffic.
  3. Higher conversions.
  4. And quicker results from split-testing.

The Next Level: Niche Targeting

Let’s say Barbara is particularly good at “vintage wedding flowers”. A quick search on AdWords reveals a healthy level of searches (720 exact-match per month) and a suggested cost per click (CPC) of 51 pence.

kwr vintage wedding flowers

Is it worth Barbara actively targeting this niche, even though the CPC is higher than the ? Absolutely! AdWords competition is low, and the SEO competition is not too competitive either.

KWD vintage flowers

Here, the first five results are image results (which she should also target), but there are certainly opportunities in the top ten here. The phrase does not feature prominently in domain names or title tags, and there are several pages with very few links.

Barbara should seriously consider not only having a dedicated landing page for this niche, but maybe even a dedicated domain! She might then use her regular shop domain for local floristry business, and a keyword-rich domain for her specialist vintage designs.

If she has a good portfolio of photos, and a compelling story and proposition, she might even be able to charge higher prices for the specialist service.

Either way, it would more than compensate for the more expensive click cost, because she would also expect a significantly increased conversion rate. The more finely you target your message, the more weight it is likely to have with people looking for exactly that service/product.

In fact, given Colin’s and Barbara’s limit on throughput (8 projects per month), I would definitely recommend them moving into niche markets, even within the wedding flowers sector, which would enable them to raise their prices.

About the author

Ben Hunt

Ben has over 20 years' experience in web design and marketing, and is one of the most influential figures on the subject of effective web design. He has written a bunch of books and spoken at multiple conferences internationally. In 2015, Ben created Open-Source Marketing, which promises to turn the practice of marketing upside down.. Find out more at http://opensourcemarketingproject.org

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