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Market segmentation is a particular strategy where you group your possible consumers into groups.
These groups can be based on factors such as:
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Unlock new competitive advantage using market segmentation. Explore new markets as you find growing and even untapped possibilities that feature low levels of competition. High-growth market areas without much competition mean an expansion of your customer base, driving product discovery.
Your product development process can always stand to improve. Uncover new segments and discover what needs they have. Satisfy the pain points of that group with new products.
Market segmentation work can help your marketing teams tailor their message for stronger communications. Calculated choices reduce your media spending and enhance the cost-efficiency of any marketing campaign.
This one is all about customer choices. Looking into the purchasing habits of customers is a very popular way to profile customers to fit them into marketing campaigns. Customer engagement levels and brand loyalty are specific examples of behavioral segmentation. Data is easily collected via consumer digital footprints.
Look into the benefits they were looking for from a product or service, their willingness to buy, the time they spend in the buying process, and specific trends impacting occasions or timing in consumer purchases.
This analysis focuses on qualitative traits of customers, including inner traits. These won't be immediately obvious, as they include habits, activities, opinions, values, social status, and lifestyle. It can be anything from certain religious and spiritual beliefs to someone who decides to buy new running shoes every year. Identify something specific about each customer and then cater to it.
This market segment breaks down customer personas by cursory traits, such as:
● Gender
● Age
● Education
● Income
● Family size
Occupations, political party status, and being a renter or homeowner can also be categories to look into. These segments let you divide up your target audience very quickly, and such information is usually painless to collect. Collecting data is often as simple as interviewing existing customers about their habits, asking quantitative feedback questions. You might also ask qualitative questions. Analysis of customer data can also be useful given the growing efficiency of AI tools.
The physical location of your customers matters here, since it can impact their lives and decisions greatly. You can zoom in on specific places, such as countries, states, cities, and even ZIP codes, or you can sort by economic status, regional climate, and population density.
Another popular strategy from companies is targeting cities that have a strong presence of their buyer types. If you are targeting tech companies or tech workers do some research to identify cities with a vibrant tech economy.
If you serve B2B markets, then firmographics are the equivalent of demographics to people. Firmographics are also useful if you're looking for investment opportunities in other organizations. You can break these down into nonprofits, businesses, government agencies, small retailers, and even independent contractors.
Categorize them by funding, scale, and size, as you consider annual revenue, performance metrics, the average sales cycle, ownership, and organizational trends.
Getting technical is going to happen with any segmentation, but sometimes, the technical aspects are what deserve attention. Anticipating prospect needs and then timing your product sales or price points for them is one such example. You can also review technical points to improve your current sales efforts either instead of or on top of finding new markets.
Looking for sales barriers is always a good idea, and a technical approach can help you overcome them. Improving marketing messaging will help any segment, and getting a competitive advantage is always something you want to happen. Customized and frictionless sales processes let you provide things others can't.
This particular segmentation strategy revolves around grouping segments based on either age or what stage of life they are in. This allows for precision targeting of what people need or want for where they are in life. Specific examples might include:
● Working adults
● Young married couples
● School kids
● Teens
● Retirees
This is also known as RFM modeling. Here, you look into consumer spending patterns to identify who is most valuable. RFM stands for:
R - Recency, as in how recently customers bought from you.
F - Frequency, as in how frequently they buy from you.
M - Monetary, as in how much they usually spend.
If you're looking to re-engage customers that have loyalty cards but haven't visited lately, then you can use their transactional data approach to create sales and opportunities that lure them back in.
Knowing your market segments helps, but you need to also make sure that they are useful segments. Ensure each segment passes the following four tests:
1. Measurable
You need to know how much anyone in a particular segment is willing to spend on your products and services.
2. Accessible
Are your products and services actually affordable to this market segment? Can you price them where they are willing to spend and still make a profit?
3. Substantial
Affordability is important, but does it matter enough to this market segment that they would see value in doing it?
4. Actionable
What would it take to actually convert interest into sales?
If you make market segments too small, it might be because you are getting far too specialized. Smaller segments can prove difficult, imprecise, and limiting regarding your total addressable market. Keep your objectives in mind, and be sure your market segment size is enough to let you actually meet your goals.
Your return on investment is the one metric that tells you if a market segment needs to be changed or tweaked. Review your tactics and pricing to identify specific factors that might need attention.
As much as you might need to change a specific market segment you've identified, also keep in mind that markets will change on their own over time. Don't miss out on possible customers by only paying attention to your current or older segments. Always look for new options to open up.
Win/loss analysis has typically been viewed as a one-off market research project. Clozd provides services and technology that make win/loss analysis a core part of you company's ongoing strategic decisions. To build a winning culture the reasons your company wins and loses and the initiatives to win more should be a constant, living and breathing part of your business.
One of the strongest growth strategies is deeply understanding how your buyers make decisions, and what they think of your company's offering and sales approach. Clozd provides multi-channel analysis programs that include adaptive buyer interviews, buyer surveys, sales interviews, and sales surveys. This data is gathered into the Clozd platform where stakeholders in your business can identify actionable insights.
Win/loss analysis works hand-in-hand with market segmentation because you are getting real feedback from buyers about what is working, what isn't, and what is impacting purchasing decisions. You can use win/loss analysis to build segments that you will win more in. Alternatively, you can use it to figure out how to win more in weaker segments.
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