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How to Sell More to Less People: Essentials of Segmentation

Businesses often make the mistake of trying to sell more to everyone.

Why is this a mistake? Well, if you try to please everyone you end up delighting no-one. This is why best-in-class marketing works with best-practice segmentation. Read on to find out how.

Every brand needs to appeal to a precise group of customers. This means that you need to make a choice of who to target amongst all category users. Making a choice also implies that you will have to ignore some category users who you could perhaps attract. Does that scare you?

It certainly worries many marketers and yet it’s the only way to sell more. Although this may sound counter-intuitive, segmentation ensures you have the best possible chance to satisfy the needs of your targeted customers.

Where to start

When deciding who to target, most companies conduct some sort of analysis. This can be as simple as identifying your users by what you observe, such as young men, or large families. Or it can be more complex, like trying to appeal to those who value freedom and are looking for brands that can provide or suggest this dream. This latter one would result from a values and motivational segmentation.

As already discussed in an earlier post called “The 3 Rules of Effective Targeting”, the deeper your understanding of your target customer, the more likely it is to provide you with a competitive advantage. Therefore segmentation alone is insufficient; you must then get as close as possible to your target customers in order to understand them as deeply as possible.

 

The MIDAS touch

Whatever method you use for segmenting and choosing your target customers, the results of your exercise of customer grouping needs to meet the following five conditions, known collectively as the MIDAS touch. (>>Tweet this<<) 

Measurable: The individual groups need to be clearly defined and quantifiable using KPI’s such as size, market share, value share.
Identifiable: Each segment must have a distinct profile and each customer must be attributed to only one segment.
Definable: Every cluster must be easy to describe and share with others so that you have mutual understanding of each of them.
Actionable: The groups must be easy to identify, in order to be able to target your actions and communications to them.
Substantial: The chosen segment must be financially viable to target, which means that it should, in general, be stable or growing, and durable over the long term.

All good segmentations or clusterings will fulfil these five key conditions, or at least they did until recently. Today the last condition is being adapted thanks to personalisation. It is more important to assess whether or not it is sustainable rather than substantial.

Even with this change, it is still easy for you to evaluate your segmentation, to ensure it is both valid and robust. If it does not meet these five conditions, then you will struggle to activate it and target your actions to your chosen group of customers.

As already mentioned, understanding your target as completely as possible is vital to the success of your business. I would, therefore, suggest that you review your own segmentation and decide how it can be improved. (>>and%20the%20customer%20group%20deeply%20[tweetlink]%20%23segmentation” rel=”nofollow”>Tweet this<<) (There’s always room for improvement, isn’t there?)

This may mean simply completing the information you have on each segment. Or it may mean running a whole new segmentation exercise. However, it is definitely worth getting your segmentation and target customer choice right. After all, they form the very foundation of your brands’ customer centricity.

 

A solution for those with few resources

If you do not have the time, money, or expertise to run a detailed segmentation study, you can still make an informed decision based on simple criteria. These could be gathered by mere observation, an analysis of who your purchasers are, or a review of contacts from your customer services group.

Once you have identified the different types of users you are attracting, you can then decide which is the most important group to you, using what is often referred to as the Boston Matrix. This analysis was first developed in the 70’s by the Boston Consulting Group. At the time, the matrix  was created to help corporations analyse their business units and was based on market growth and relative market share.

Today this scatter plot is created using various elements to make up the two axes. Whilst the criteria you use for each axis can vary, this simple analysis has the advantage of being able to be further refined over time, as you get more information.

 

Choosing the criteria for the axes

The two axes you specify for the Boston Matrix can be as simple or as complex as you like. Obviously, the more criteria you use, the more accurate your analysis is likely to be. Examples of the criteria you can use include:

Attractiveness: Segment size, segment growth rate, segment value, competitive environment, how well the group fits the company or brand – or vice versa.

Ability to win: Attractiveness to your customer, completeness of your distribution channels, your media mix, your reputation.

You can use any or all of the above suggestions for creating the two axes. C3Centricity provides an automated tool for calculating the two axes and then positioning segments on them. This is made available to all participants of the Customer Centricity Champions Classes. Find out more by signing up to one of the forthcoming webinars.

 

Choosing the actions to take on each segment

Sell more through better customer targetingOnce you have positioned the different segments or groups of customers on the axes, you can easily see what needs to be done for each:

Target: these are your core users as they are both attractive to the business and easy for the company’s product or service to attract. Therefore, they need to be protected from possible attacks by the competition.

Convert: these users can be attracted to your product or service but your ability to win them is currently low. To win these customers you probably need to consider improving one of the elements of the mix in order to attract them.

Grow: your product or service can easily win these groups but perhaps they are not as profitable as you would like. This might change, so it is important to review them from time-to-time or develop a different strategy to attract them.

Ignore: many organisations struggle to make the decision NOT to go after a group of category users. But if you have neither the product / service nor the segment size that would be profitable to you, why spend time, money and energy going after them?

 

Conclusion

All businesses want to sell more. They also want as many customers as possible. However trying to sell to everyone is unlikely to meet with the success you hoped. Choosing the right group of customers to attract with your product or service is essential. But so is doing everything you can to then understand your chosen segment as deeply as possible. Truly customer centric organisations excel at doing both; do you? (>>Tweet this<<)

Need help in segmenting, identifying or understanding your target customers? Let us help you catalyse your customer centricity. Contact us here or check out our forthcoming Webinar Customer Centricity Champions. You’ll learn far more about segmentation, how to use the Boston Matrix and a whole lot more. Reserve your slot before it’s too late!

C3Centricity used an image from Denyse’s book “Winning Customer Centricity

This post is an updated version of one first published on C3Centricity.

How Well do you Know your Customers? Can you Answer these 12 Questions?

How well do you know your target customers? I mean really know them? Are they men, women, young, old, Fortune 100 companies, local businesses? If you can at least answer that, then you have the basics, but how much more could you know about them? Can you answer the following twelve questions?

I was recently working with a local service company who was looking for help with their online presence. They were keen to get more active on social media and had asked for advice about the best platforms, optimal frequency of publishing and possible content ideas.

C3Centricity how well you know your customers

However they were in for a surprise. Rather than getting straight onto the “sexy” topic of social media, I started by taking them through the basics of target customer identification. Lucky for them that I did! When we had finished the exercise, we had found five different targets for them to target, rather than the mere two they had been addressing until now. This clearly would have a huge impact on the where, what and how they communicated online.

These are the twelve questions that enabled us to brainstorm, identify and then complete a better and more complete description of their target customers. Their use also resulted in clear differentiated segments for their services – three more than they had originally thought!

How would you like to double your own market potential? Read on:

  1. WHO DEMOGRAPHICS: OK this is usually a “no-brainer” and is how most organisations describe their customers. Not really original and definitely not competitive, but still the essential foundation.
  2. WHAT THEY USE: Whether you are offering a product or service, you need to know what your customers are using today. And not only for your category, but in adjacent categories too. What do they use – if anything – if your product / category is not available?
  3. WHAT THEY CONSUME: Here we need to underst and what types of information and media they are consuming; what do they read, watch, listen to in their spare time. Which social media do they use, what websites do they consult on a regular basis?
  4. WHAT THEY DO: How do your customers spend their time? What type of lifestyle do they have? What are their hobbies? What do they do all day, and in the evening and at weekends?
  5. WHAT THEY BUY: This is where you describe their current category purchasing habits. How frequently and what quantity do they buy? Do they have regular buying habits? Do they do research before buying or repurchasing? Do they compare and if so how, where, why?
  6. WHERE THEY USE: Is the category consumed in home, in work, on vacation? With friends, with their partner, their children, with colleagues? Are there certain surroundings more conducive to consumption? What makes it so?
  7. WHERE THEY BUY: Do your target customers have certain places and times they buy? Is it an habitual or impulse purchase? Is it seasonal?
  8. WHERE THEY CONSUME: Today “consume” covers not just traditional media but new media as well. From where do they get information about products? From manufacturers, friends, family, colleagues? Do they access it online, in print, on radio or TV, at home or on the road? What websites and people do they follow, listen to and value the opinion of? What interests do they have in general and concerning the category?
  9. WHERE THEY SEE: One reason to target a specific group of customers is so that you can better communicate with them. Where are they most likely to be open to your messages; what media, what times, which days?
  10. WHY VALUES: What values do your customers have that you are meeting with your product or service, and explain why they are using it? Do they have other values that are not currently addressed, either by you or your competitors? Do these values offer the possibility of a differentiated communications platform or product / service concept?
  11. WHY EMOTIONS: What is the emotional state of your customers when they are considering a purchase or use, both of the category and the br and? Clearly identified emotions enable you to more easily resonate with your customers through empathising with their current situation. You are more likely to propose a solution that will satisfy their need or desire when their emotional state is precisely identified.
  12. WHY MOTIVATIONS: What motivates the customer to consider, buy and use their category and br and choice? Emotions and motivations are closely linked both to each other and to the customer’s need state. By identifying the need-state you want to address, you will be better able to underst and your customers and increase the resonance of your communications.

If you can answer all twelve of these questions in detail, then you certainly know your customers intimately. But before you sit back and relax on your laurels, remember that people are constantly changing and what satisfies them today, is unlikely to satisfy them tomorrow. Therefore you need to keep a track on all four layers of your customer description to stay ahead of competition, as well as to satisfy and hopefully delight your customers.

As mentioned above, by answering and completing a detailed description of the target audience for my client, we were able to identify a couple of new segments that my client’s services could address. Although their demographics were similar, their emotional and need states were quite different. This gave us the opportunity to respond with slightly different service offers for each group.

If you would like to try out this exercise for yourself, we have some useful templates that we make available to C³C Members. Why not sign up and get access? It’s FREE to join.

For more information on better identifying and understanding target customers, please check out our website: https://www.c3centricity.com/

C³Centricity used images from Dreamstime and Microsoft in this post.

This post has been adapted from one which first appeared on C³Centricity in April 2013.

12 Things you Need to Know about your Target Customers

How well do you know your target customers? I mean really know them? Are they men, women, young, old, Fortune 100 companies, local businesses?

If you can at least answer that, then you have the basics, but how much more could you know about them? Can you answer the following twelve questions?

I was recently working with a local service company who was looking for help with their online presence. They were keen to get more active on social media and had asked for advice about the best platforms, optimal frequency of publishing and possible content ideas.

However they were in for a surprise. Rather than getting straight onto the “sexy” topic of social media, I started by taking them through the basics of target customer identification. Lucky for them that I did! When we had finished the exercise, we had actually found five different targets for them to address, rather than just the two they had been addressing until now. This clearly would have an impact on both where, what and how they communicated online.

Customer persona template
Click image to download the template

These are the twelve questions that enabled us to brainstorm, identify and then complete a better and more complete description of their target customers. Their use also resulted in clear differentiated segments for their services – three more than they had originally thought! How would you like to double your own market potential? Read on:

  1. WHO DEMOGRAPHICS: OK this is usually a “no-brainer” and is how most organisations describe their customers. Not really original and definitely not competitive, but still the essential foundation.
  2. WHAT THEY USE: Whether you are offering a product or service, you need to know what your customers are using today. And not only for your category, but in adjacent categories too. What do they use – if anything – if your product / category is not available?
  3. WHAT THEY CONSUME: Here we need to underst and what types of information and media they are consuming; what do they read, watch, listen to in their spare time. Which social media do they use, what websites do they consult on a regular basis?
  4. WHAT THEY DO: How do your customers spend their time? What type of lifestyle do they have? What are their hobbies? What do they do all day, and in the evening and at weekends?
  5. WHAT THEY BUY: This is where you describe their current category purchasing habits. How frequently and what quantity do they buy? Do they have regular buying habits? Do they do research before buying or repurchasing? Do they compare and if so how, where, why?
  6. WHERE THEY CONSUME: Is the category consumed in home, in work, on vacation? With friends, with their partner, with friends? Are there certain surroundings more conducive to consumption? What makes it so?
  7. WHERE THEY BUY: Do your target customers have certain places and times they buy? Is it an habitual or impulse purchase? Is it seasonal?
  8. WHERE THEY READ: Today “read” covers not just traditional media but new media as well. From where do they get information about products? From manufacturers, friends, family, colleagues? Do they access it online, in print, on radio or TV, at home or on the road? What websites and people do they follow, listen to and value the opinion of? What interests do they have in general and concerning the category?
  9. WHERE THEY SEE: One reason to target a specific group of customers is so that you can better communicate with them. Where are they most likely to be open to your messages, what media, what times, which days?
  10.  WHY VALUES: What values do your customers have that you are meeting with your product or service, and explain why they are using it? Do they have other values that are not currently addressed, either by you or your competitors? Do these values offer the possibility of a differentiated communications platform or product / service concept?
  11.  WHY EMOTIONS: What is the emotional state of your customers when they are considering a purchase or use, both of the category and the br and? Clearly identified emotions enable you to more easily resonate with your customers through empathising with their current situation. You are more likely to propose a solution that will satisfy their need or desire when their emotional state is precisely identified.
  12.  WHY MOTIVATIONS: What motivates the customer to consider, buy and use their category and br and choice? Emotions and motivations are closely linked both to each other and to the customer’s need state. By identifying the need-state you want to address, you will  be better able to underst and your customers and increase the resonance of your communications.

If you can answer all twelve of these questions in detail, then you certainly know your customers intimately. But before you sit back and relax on your laurels, remember that people are constantly changing and what satisfies them today, is unlikely to satisfy them tomorrow. Therefore you need to keep a track on all four layers of your customer description to stay ahead of competition, as well as to satisfy and hopefully delight your customers.

As mentioned above, by answering and completing a detailed description of the target audience for my client, we were able to identify a couple of new segments that their services could address. Although their demographics were similar, their emotional and need states were quite different. This gave us the opportunity to respond with slightly different service offers for each group. 

If you would like to try out this exercise for yourself, we have some useful templates that we can send you, to make it easier and a lot more fun; just drop us a line and ask for them.

For more information on better identifying and underst anding target customers, please check out our website: https://www.c3centricity.com/home/underst and/

C³Centricity uses images from  Dreamstime.com  and  Kozzi.com

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