Why You Need To Segment Your Customers

A worthy re-post. I originally posted this in July 2010, if you missed it, now's your chance!

Often businesses and organizations skip a critical step in formation of their marketing strategy - target audience segmentation, or essentially defining who, along the spectrum of potential customers, to attempt to serve.  Segmentation shapes every piece of the marketing strategy since the customer, not the product or service, determine the game plan and rules by which the game is played.

So why do smart people (like you perhaps) skip it?  Common response:

In reality, many people just don't understand the power of segmentation or how to do it well. 

As I mentioned, segmentation drives key decisions related to your marketing strategy.  To do it well does take time, but it is absolutely, one-hundred percent worth it.   And even if your product is designed for the mass market, you still need segmentation to define who the most likely early adopters are and how to engage them.

For example, a chocolate brand segmenting the market based on use habits may choose to target those who primarily use chocolate for cooking & baking, while another might target those using it for daily snacking.  The choice has important implications for what kind of chocolates to make & in what shapes, how to package & price their chocolates, and where to sell it. 

Segmentation involves deciding on what basis to divide the variety of consumers that might benefit from your product or service.

Thought-starters:  How does your organization segment the market?  How should they segment it?  Are you using the right marketing tools to reach the segment you've chosen?

Need help answering these questions?  Email me.

Aspirin or Vitamin?

Which one are you?  Are you (and your product or service) addressing a real, unmet need - a pain point that your target customers have & feel deeply, therefore making your solution a must-have?  Or, are you trying to sell a vitamin - a nice-to-have product or service?

You need to be the aspirin.

If you are a vitamin, consider how you could change your product, service or delivery of it in order to become an aspirin.  Your target audience will thank you, and reward you for it.

Fast Company addressed this very concept in a recent article.  Worth a read - the Felt Need.

Gobbledygook

Great (and free) ebook from marketing veteran, David Meerman Scott, on writing messages tailored for your audience that focus on how your business, product or service solves their problem, versus blathering on about features.......worth the read!

Serendipitous Discovery

Many of your marketing strategies and tactics probably focus on ways to "reach out to" your target audience.  That makes sense. After all, you know who they are and why they value your product or service, so of course you should be seeking them out to engage them.

But, what tactics are you employing to let your target consumer and other consumers discover you?

A few weeks ago I attended an interesting session hosted by Social Media Breakfast Seattle with Holly Brown, 20 year marketing veteran, speaking about brands as publishers in the age of peer to peer communication.

She shed light on how to select and start conversations in communities that already exist and are of value to your target audience. Instead of relying on consumers to actively seek you out, you can leverage communities where they exist to engage with them with content that is relevant to them.

Letting consumers find you in this way is called "serendipitous discovery."

Does your marketing plan answer these 5 questions?

1. How do your marketing strategies & objectives support the critical organizational goals?
2. How are you measuring each marketing initiative?
3. What is your target cost per acquisition?
4. What is the customer lifetime value of your target customer?
5. What are your alternative strategies if things change?

These questions are fundamental to your plan, in addition to many others that I'll touch on in future posts.  If your plan answers these it means that you are headed in the right direction in order to move your business or organization forward and spending time on the right things.

If your plan does not answer these questions, get to work understanding where you are falling short.  Get your team together and answer them together.  Be prepared to change what you are working on after answering them......

Of course, I am assuming your marketing plan answers "Who is your target customer?" because that is fundamental. How well do you know your customer is an entirely different question.  Read this to get inspired on that topic.

Oh and if you said your target customer is everyone - don't believe yourself. Read this.

New Site Takes Customers on a Journey

Anthropologie's new web site caters directly to their core target customer's desire to discover, with amazingly crisp and life-like video footage of differently daily scenarios. If you missed my post on how "knowing your customer intimately like Anthro does" read it here.

Welcome to Anthropologie.com

How well do you know your customer?

How well do you know your customer?  

Do you know them as well as you know your best friend?  You should.  

You should understand their aspirations, their dreams, their fears & deepest desires.  And you should absolutely understand where you create value in their life and why they love you for it.

Take Anthropologie as a great example.  During the economic downturn, while retailers such as Gap struggled, Anthro, and therefore its parent company, thrived.

Why?

Because they continued to deliver what their core customer values about them, and nothing else.   And I'm not talking about just merchandise, but the entire shopping experience is built around her.  That has created extremely passionate customers who don't fade away when economic troubles arise.  

How did they do that?  And, how can you do that?

By knowing the core customer intimately:

 Ask anyone at Anthropologie who that customer is, and they can rattle off a demographic profile:  30 to 45 years old, college or post-graduate education, married with kids or in a committed relationship, professional or ex-professional, annual household income of $150,000 to $200,000. But those dry matters of fact don't suffice to flesh out the living, breathing woman most Anthropologists call "our friend." They can go deeper and describer her in psychographic terms: She's well-read and well-traveled. She is very aware -- she gets our references, whether it's to a town in Europe or to a book or a movie. She's urban minded. She's into cooking, gardening, and wine. She has a natural curiosity about the world. She's relatively fit.

These insights infuse everything Antrhropologie does, from designing its stores to be "a world of discovery, as if she (the core customer) is on a journey or trip."  Stores are designed using local artists that also understand the overall Antrho brand to create a consistent, yet unique & local feel to each store.  Catalogs are shot in different countries all of the world to appeal to "her".  Merchandise sets trends, just like "she" does.  

You can create passionate customers too, but you have to take the time to get to know them first.  Then, you have to build everything around them - from your messages to packaging to the way your customer service reps answer the phone.  

You can read more about Anthro's approach here.

Seth's Blog: Needs don't always lead to demand

Seth's Blog: Needs don't always lead to demand

Great post from Seth Godin today about understanding the difference between what consumers need and what they want and how businesses and organizations can choose to respond.  Good, quick read.

Why your marketing strategy has to start with the customer

Often businesses and organizations skip a critical step in formation of their marketing strategy - target audience segmentation, or essentially defining who, along the spectrum of potential customers, to attempt to serve.  Segmentation shapes every piece of the marketing strategy since the customer, not the product or service, determine the game plan and rules by which the game is played.

So why do smart people (like you perhaps) skip it?  Common response:

In reality, many people just don't understand the power of segmentation or how to do it well. 

As I mentioned, segmentation drives key decisions related to your marketing strategy.  To do it well does take time, but it is absolutely, one-hundred percent worth it.   And even if your product is designed for the mass market, you still need segmentation to define who the most likely early adopters are and how to engage them.

For example, a chocolate brand segmenting the market based on use habits may choose to target those who primarily use chocolate for cooking & baking, while another might target those using it for daily snacking.  The choice has important implications for what kind of chocolates to make & in what shapes, how to package & price their chocolates, and where to sell it. 

Segmentation involves deciding on what basis to divide the variety of consumers that might benefit from your product or service.

Thought-starters:  How does your organization segment the market?  How should they segment it?  Are you using the right marketing tools to reach the segment you've chosen?

Need help answering these questions?  Email me.