Segment Your Customers to Reach the Right Ones
Why should I group my customers into segments?
How do I do customer segmentation?
How does this help my marketing be more targeted and focused on my business goals?
You can’t be all things to all people. You may have heard that before. But let’s update it to this: Your business and products can’t be all things to all customers.
Let’s say you work at Mazda Canada and need to market the new Mazda6 sedan that comes standard with the latest high-tech gadgets. Try and picture one ad that will sell that car to any customer – young, old, male, female, in any Canadian region.
It’s pretty hard, right? At best, you may come up with an ad so generic that it becomes completely ineffective. By attempting to advertise to everyone, you’d end up appealing to no one.
Now try separating potential customers into different groups or segments and see which one is better for the Mazda6.
Customer segmentation is when you group current and potential customers based on their behaviors and who they are.
It helps you market to customers better so you don’t, for example, promote a sports car to a mom who needs to chauffer her 5 kids to various after-school activities. This targeted marketing can get you closer to your business goals.
Of course, for customer segmentation to work, you should figure out what your goals are ahead of time. Do you want to boost sales, get more interactions, up your newsletter signups, convert new customers, etc.?
Once you have a goal, target fast conversions (an easier segment to target to reach your immediate goal) or focus on gaining long-term profits (a segment that is harder to win but has the most potential over time).
For example, let’s say the Mazda6 marketers had to pick either bored, midlife crises dads or savvy technophiles. Dads might impulse buy now, but technophiles can be long-term fans of companies that meet their gadget love.
After you’ve chosen a goal and which type of result you want to target (fast conversions or long-term profits), start thinking like your customers.
Ask yourself: Why do your customers use your products or services? What need does your business fulfill for them? Once you’ve answered those questions, get more detailed and look for patterns.
Do all of your customers have the same needs? Do certain products appeal to a specific type of customer? Which product do you want to promote right now?
Now you can start grouping your customers into segments, using data and analytics to help.
You can segment your customers by where they live (geography); their age, gender, or income (demographics); or their interests, values, attitudes, opinions, and lifestyles (psychographics).
After you’ve figured out what your main segments are, think about how each group’s needs differ. It helps to look at the questions you asked yourself during your prep work.
Finally, figure out which segment and its specific needs will help you reach your business goal better, and how those needs will change the way you market and talk about your business.
Let’s see how this would all play out by imagining a vegetarian Tex-Mex restaurant called Freddy’s Fauxjitas. Their goal is to get more delivery orders.
They check out their current customers’ needs, and find that their business fulfills a need for healthy yet authentic-tasting Tex-Mex food.
Going deeper into their research, they realize their customers’ food preferences are split between those who want it spicy and those who like it mild. They begin segmenting their audience so they can target these 2 customer groups better.
Their main segmentations are:
GEOGRAPHY
The northside of town or the southside of town
DEMOGRAPHICS
Ages 25 to 49 or 50+
PSYCHOGRAPHICS
Workaholics or people with good work/life balance
Freddy’s Fauxjitas then looks at what type of food each segment wants the most: spicy or mild.
They realize that northside dwellers who are 25 to 49 years old and workaholics tend to like spicy food the most.
This segment places more delivery orders (AKA the business goal) and is full of loyal customers. Freddy’s Fauxjitas knows it’s more valuable (and easier) to target them instead of convincing less loyal segments to order more.
Based on this insight, the restaurant creates marketing that positions themselves as the best delivery service for Northsiders craving healthy, SPICY Tex-Mex food.
DO THIS NOW
While the Freddy’s Fauxjitas example is fairly simplified, customer segmentation doesn’t have to get much more complicated. Let’s start you on the prep work now.
If you’re participating in the course, go to the next section to access your self assessment.
KEY TAKEAWAYS
Segmenting your customers helps you market to and reach the right people in the right way.
Pick your business goal and think about your customers' needs before you start segmenting.
You can segment by geography, demographics, or psychographics to reach your business goal.