Do your know who your customers are? Understanding Market Segmentation
If you do not know your customers the odds are you are not going to be successful in the long run. Knowing your customers is a fundamental element in any business's marketing plan. Really and accurately knowing your customer's needs and wants is a characteristic of superior companies.
Companies who are leaders in their markets know who their customers are (names, addresses, email, etc.) when they buy (purchasing patterns), how they use the products or services purchased, what they are likely to need or want next, and why they buy (what they perceive your value to be) from you.
I am a firm proponent of customer and prospect segmentation, for all businesses, because I believe the information enables you to make much smarter decisions. Information from current customers is valuable because they are buyers - they can tell you what they like, dislike, need, want, etc. Information from prospects is valuable because they can reveal what is missing from your offering. Is there a feature or function missing? Is the price competitive? Is the value proposition clear? Businesses that segment their target markets and act on the information collected are more likely to succeed and profit than those who do not. But to be implemented effectively segmentation, as in all things marketing, must be understood.
Market segments are:
* Measurable - you can measure the size and purchasing power, identify the demographics. * Accessible - can you reach them and provide your product or service? * Substantial - is the group large enough to be profitable? Some large segments may in fact not be profitable conversely; some small segments may represent significant purchasing power. * Differentiable - in terms of what their needs and wants are. * Actionable - you have the programs, resources and products to attract the segment.
Once segments have been identified, data collected and interpreted, you can then make decisions about how to use your marketing resources. There are basically two strategies to focus on: retaining and obtaining. You want to retain the profitable customer segments and convert or obtain the most attractive prospects. The more precisely you identify customer's requirements the more effectively and efficiently you can position your products and services for maximum profitability. It sounds basic but if my experience is any measure, there are too many businesses not paying attention. You may not need more marketing - just more strategic marketing.
How to collect the information you need to effectively segment your target markets is a topic all its own and will be covered separately. The tools available to you include consultants, online or paper questionnaires, technology, do-it-yourself surveys, etc. I promise more on this topic next week.
Companies who are leaders in their markets know who their customers are (names, addresses, email, etc.) when they buy (purchasing patterns), how they use the products or services purchased, what they are likely to need or want next, and why they buy (what they perceive your value to be) from you.
I am a firm proponent of customer and prospect segmentation, for all businesses, because I believe the information enables you to make much smarter decisions. Information from current customers is valuable because they are buyers - they can tell you what they like, dislike, need, want, etc. Information from prospects is valuable because they can reveal what is missing from your offering. Is there a feature or function missing? Is the price competitive? Is the value proposition clear? Businesses that segment their target markets and act on the information collected are more likely to succeed and profit than those who do not. But to be implemented effectively segmentation, as in all things marketing, must be understood.
Market segments are:
* Measurable - you can measure the size and purchasing power, identify the demographics. * Accessible - can you reach them and provide your product or service? * Substantial - is the group large enough to be profitable? Some large segments may in fact not be profitable conversely; some small segments may represent significant purchasing power. * Differentiable - in terms of what their needs and wants are. * Actionable - you have the programs, resources and products to attract the segment.
Once segments have been identified, data collected and interpreted, you can then make decisions about how to use your marketing resources. There are basically two strategies to focus on: retaining and obtaining. You want to retain the profitable customer segments and convert or obtain the most attractive prospects. The more precisely you identify customer's requirements the more effectively and efficiently you can position your products and services for maximum profitability. It sounds basic but if my experience is any measure, there are too many businesses not paying attention. You may not need more marketing - just more strategic marketing.
How to collect the information you need to effectively segment your target markets is a topic all its own and will be covered separately. The tools available to you include consultants, online or paper questionnaires, technology, do-it-yourself surveys, etc. I promise more on this topic next week.