Daniel Cruz 7m 1,628 #business
The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Is Your Business Targeting The Right Audience?
An understatement: the current business terrain is rife with competition. And how would it not be given the richness and varying strategies that bolster a brand’s visibility and popularity? Brand awareness is easily boosted by a presence on different social media platforms.
But there’s one question that business owners should be asking: are they targeting the right audience? Sure, coming up with a smart and catchy business name and tagline will get them the attention they are due, but nothing beats turning cold leads into loyal customers.
For this cause, we turn to Customer Segmentation.
What is Customer Segmentation Exactly?
Customer Segmentation to the process wherein businesses divide their customers into segments. These segments are based on their audiences’ common characteristics ranging from populations to their buying attitudes. This will establish grounds for brands to build a marketing persona.
In a recent study published by Marketing and Branding blog site, NotifyVisitors.com their data revealed that firms’ understanding of their clients’ needs and issues increased by 60% once they used customer segmentation to strategize. Meanwhile, their capability to determine their customers’ intentions increases by 130%.
The study furthered that if segmentation is anchored in personas, it will arm 90% of firms with a wider knowledge of their client base. Concerning this, 82% of firms that are based on personas have augmented their value proposition.
These figures suggest that Customer Segmentation will help interested business-minded individuals grow startup businesses. Employing this strategy will serve to attract the right market and provide them with a standout user experience.
Customer Segmentation Research: Practical Tips
The return on sales is an area that Customer Segmentation will have a strong hand in. In a study published by McKinsey & Company entitled “Marketing & Sales Big Data, Analytics, and the Future of Marketing & Sales” a European retailer experienced an increase of 3% to 5% in returns upon using segmentation methods.
The retailer was able to achieve the increase through scrutiny of its clients’ past behaviors. Through their reactions within the retailer’s marketing channels, the company was able to determine which strategy is relevant and what prices to set.
Any business would benefit when Customer Segmentation research is done holistically, taking into account the significant types:
the behavioral, demographic, geographic, and psychographic. For the sake of discussion, let us ground each in simple definitions.
Behavioral – This is a segment type that deals with customer behavior. Through this customers are divided into groups that are indicative of the patterns in their behavior. The study discussed above used this segmentation technique.
If a business opts to perform Behavioral segmentation, it would be advisable for it to consider the following:
Location, Location, Location
It would be wise to account for location data. This allows businesses to market to clients based on their former, present or desired areas of work or residence. Geofencing will prove a potent way to notify app users once they are in a certain area that could be close to a business.
Review Customer Preferences
Looking at past consumer behavior will be a good barometer of what they would want to purchase in the future. Marketers will be able to ascertain trends in behavior by reviewing their purchase history.
Offer Products That Complement Previous Purchases
Based on what the customer had previously bought, businesses can offer products that may match such. Amazon does this through its product recommendations. In a published data, the major eCommerce stipulated that they owe 35% of their current sales from these recommendations.
Demographic – This type focuses on specific customer characteristics namely age, gender, ethnicity, level of education, income, religion, occupation, and family structure.
Scrutinize Occupation, Income, and Family Structure
If a Business-to-Business approach is taken, it is recommendable for the marketer to look at occupations. This will allow them strong insight into the buyers who avail of their product for their firm.
Looking into the family structure and income will be useful for retailers. This will allow them to zero in on specific groups.
Geographic – As the term suggests, this segmentation type looks into the target market’s location. The idea is, that businesses would want to serve a specific area better.
Focus on Population, Density, and Cultural Preferences
For those who opt to perform Geographic segmentation, it would be best to consider the population and density of persons who reside in a target area. Businesses should bear in mind that the type of area determines the varying wants and needs of its people.
Another thing to take into account is the Cultural Preferences of the dwellers. One good example is how McDonald’s fits its menu to the country it is in. In the United States, the food is confined to burgers, fries, soda, and all the trappings of Fast Food culture. In the Philippines, they have meal variants that have rice in them, recognizing that rice is a staple in the Filipino diet.
Psychographic – This segmentation type compartmentalizes clients following psychological factors. Contained in this segment is an observation of beliefs, lifestyles, personalities, and behaviors which may be endemic to the individual or resulting from societal conditions.
Go Into Focus Groups
Businesses can administer Psychographic segmentation by holding focus groups. Through this, they can discuss their products and what the brand is all about. Since this is a targeted group, the business should pick members whom they think would be buying their product or availing of their service.
Talk to Clients
Businesses need to ground themselves in their existing clients. They should be personable in their approach to delve deeper into themselves. Through this, their clients’ goals and motivations.
Customer Segmentation Fosters Strong Client Connection
Suffice it to say, being able to determine the appropriate customer segmentation technique will reap the business tremendous benefits. Probably the most notable among these is the tight-knit relationship the brand will establish with its client base.
Customer Retention is thus secured. Recent data released by customer communication platform provider CommBox.io showed that typical American businesses will normally lose 15% of their clients every year. The data also laid out that 80% of a business’s future profit comes from 20% of its customer base. What this means is that if a business fails to perform customer segmentation, it is highly likely to report more losses. The report furthers that American companies usually lose over $136 billion a year as they turn to other companies for their services.
Through customer segmentation, keeping clients satisfied would be easier. Businesses would be able to know which tactics in marketing would be effective for each segment. This allows businesses to provide top-tier suggestions that their clients will be receptive to. This will also allow space for businesses to determine actionable goals on what direction the business should take.
Apart from this, the business should also invest in competent content management. Being able to choose the right content management system will enable a business to take full reins on its design, functionality, and of course content. This becomes crucial in getting your clients to stay attuned to your business. After all, the content remains king on the online terrain. A good system means high-quality content that clients would be able to consume and experience.
Keeping up with providing superb service to clients, businesses must provide consistent customer support. The availability of customer service representatives assures clients that all their needs can immediately be addressed and resolved by the company they place their trust in.
Advertising Through Online Platforms
British security consultant and former politician, Amber Rudd was once quoted saying “Automation is driving the decline of banal and repetitive tasks.” What this implies is that when societies choose to rely on the ease that technologies can offer to the jobs humans usually undertake, we get to channel our efforts on things that are of greater importance. Automation of processes through innovative and standout technologies allows us to delve into more productive and creative endeavors.
For instance, automating customer support through the development of live chat software will increase a brand’s good reputation. This is the case as this will help bring down customer issues to a minimum while giving complainants the impression that their concerns are given importance.
Customer segmentation and automation go hand-in-hand as these permit businesses to determine highly-specific solutions for every segment. Automation of processes gives businesses a chance to improve their services further, hence helping in Customer Retention.
The Importance of Social Media
Social Media is a potent venue for all digital marketing and customer segmentation efforts. Both Brick-and-mortar and eCommerce-based businesses know the value that brand presence in Social Media increases their chances of being seen, engaged with, and turning these engagements into steady profit streams.
Social Media makes for fertile grounds to perform customer segmentation through. The influx of users across Social Media platforms gave rise to Social Media Audience Segmentation. This is an approach where marketers divide their companies’ social media audience’s key characteristics through consumer data. The data derived from this segmentation technique can give contextual information. This gives companies the capability of providing exclusive user experiences.
The Takeaway: Every Business Needs Customer Segmentation
The importance of performing Customer Segmentation cannot be stressed enough. The current climate of business conduct and what is being touted as “Hustle Culture” demands that business entities work smarter around the resources they are availed of.
Data gathered from Customer Segmentation techniques are valuable to this cause. At the end of the day, the most valuable commodity is still information and segmentation provides just that in such a way that it is compartmentalized into what is essential to the business. And at the heart of it all is the idea that superb customer experience should take precedence.
So if you are looking into growing your business, we urge you to perform Customer Segmentation today!