Those of you who regularly read the articles here are only a small percentage of the general population who are even interested in what I do or the entrepreneurial topics discussed here. Less than the percentage of those reading these articles are those of you who are interested in and willing to pay for my online courses and consulting services. This isn’t because I lack expertise or something valuable to offer. It’s simple math.
Why should you care about how many people read this article or want to work with me? Frankly, you and I are in the same boat as every other small business owner. The more precisely focused our efforts, the less of our time, resources and money is wasted. It is wise to aim carefully towards your targets or a specific market segment.
The Problem: Market research costs time and money. Right? Well, yes but you can take on some of that leg work to reduce the overall cost and use the time spent more effective. Whether you handle your market research yourself or get outside support, having a foundation for it makes a big difference.
What is a Market Segment?
Begin with some basic information. Sort through your customers and organize them into groups, also called market segments. This will help you to understand who your customers really are and what they want. Grouping customers into market segments is a good foundation for closing more business and knowing how to deliver the best customer service for continued loyalty.
Advantages: Segmenting your customers can help you to identify the most and least profitable customers, and to identify where you should focus your marketing to reach the prospective customers who are most likely to buy from you. The second advantage of this segmenting activity is that both your customer service and product development will see improvements from it. You can discover what current customers want most and develop special offers customized to them, which will build loyalty among them – turning them into your biggest advocates. You may also get feedback from those current customers on ways to improve your product or service.
Not only does segmenting your customers help you improve customer service and increase overall sales, but it also helps you to save money. Think about how you will stop wasting time on those prospective customers who are not profitable for your business. You will be able to more wisely use your resources, which can put you ahead of the competition.
Creating A Market Segment
You can group your customers by factors such as geographical location, industry, lifestyle, personality and behavior. It may be easier for you to segment your customers based on whether you are marketing to individuals or businesses.
If you sell B2C (Business-to-Consumer) – whether it is to individual consumers or households – then look at these factors:
- Location: zip code, city, town, region, and country
- Personal profiles: age, gender, income, occupation, or education
- Lifestyle: social class, hobbies, and related interests
- Buying behavior: past purchases, product use, brand loyalty, up-sell / cross-sell purchases
If you sell B2B (Business-to-Business), then create market segments based on these factors:
- What they do: industry, public or private sector, size, location
- How they operate: technology they use, products or services they already use
- Past buying patterns: the way they place orders or set appointments, the size and frequency of purchases,
- Their behaviors: if they are loyalty, their attitudes toward your services, feedback
One note on separating your approach as B2C or B2B: People are still people. Even B2B companies should take the decision maker as an individual into consideration. While it is a business purchase, there are still important human elements to consider. I like to think of these decisions as having two layers: 1. the way someone decides on a business product or service is based on features first and 2. then the decision maker decides if they like you (the business owner or the brand) based on how you present the business. Never ignore the emotions that feed into our human decisions.
Below is an example from Claritas / Nielsen of a specific market segment from their tool called MyBestSegments. You can click on the image to view their tools and learn more about them. Warning: it can be a bit of winding exploratory path with many connections and offshoots, so you may not want to do this until you have an hour or two to spare.
Before Diving Into Research
Start with what you know. If you utilize a CRM software, then I recommend downloading the list of those customers and prospects into a spreadsheet first. This will make the information easy to organize, sort, and reference at a later time. Make each row represent the individual customer or decision maker and each column a factor. Fill it out to the best of your ability.
There are several approaches to market research. The two big picture approaches are internal and external research. Internal research involves contacting your customers to get detailed information about them. This may include in-person interviews, surveys sent by email or regular mail, telephone interviews, web surveys, and focus groups. External research uses published reports and statistics covering general markets to dig into the hard data such as demographics.
It is wise to carry out internal research before external research, so you can adapt your research plan to best utilize your time. To read more about the specific ways to carry out market research, you can check out this article: Market Research and Identifying Your Ideal Customer.
Defining Your Market Segments
While “market segment” is the proper jargon to use when talking about this step of your marketing plan, I prefer to think of these as individuals in “My Tribe” of like-minded people. I admit that it sounds a little cheesy or even cliche to some, but that verbiage speaks to me and works for me. Another way to explain this concept is that we are all in little communities (or tribes) who are seeking something and a way to grow and improve ourselves. The people in your tribe have one thing in common, but they are still unique individuals and should be treated as such.
Once you have created your spreadsheet, dug deeper into research, and begin to group your customers (tribe) into smaller groups, then you will see some patterns. If you are having trouble seeing those patterns, then turn to a respected colleague, coach, consultant, etc – someone you trust to offer business advice. The patterns you see can be summed up into individual personas or customer avatars (another piece of marketing jargon).
To create these personas, I recommend using those factors discussed above: gender, age, zip code, buying decisions, hobbies, industry they work in, etc. Start with 2 personas, but know that you may likely find many more. Big corporations often have 10 or more different personas. If you’d like to dig into this step some more, you may like this short article from Women Taking the Lead titled Meet Your Ideal Client by Creating an Avatar.
Want More? Need details or step-by-step instructions?
Comment below or message me directly by filling out this form.
If you are in the Austin, Texas area then join me for an upcoming Lunch & Learn with NAPW Austin (National Association of Professional Women). I’ll be discussing some of the strategies for how you can “Find Your Tribe” and creating marketing communications that speak to your ideal customers. Visit MeetUp.com to Register.