Segmenting Your Customer Base

Find More Customers and Improve your Marketing Through Segmentation

The article Finding out who Your Customers Really Are introduced the subject of identifying a target audience. Segmentation is a more sophisticated technique for doing this and could help your micro-business to develop a more effective marketing approach.

Segmentation basically means splitting your potential customer base – your target audience -into groups. Each group should be noticeably different from the others, but the members in a group should be similar to each other. They won’t be identical, just similar enough to warrant a common marketing approach. Each group can then be targeted in the manner most appropriate for them.

Segmentation in Action

Imagine a group of families predominantly aged 35 to 50 with two teenage children where both partners work and who live in a 3 or 4 bedroom home in a neighbourhood which has similar families. It’s easy to picture the types of products and services they might be interested in. It’s also easy to see how 21 to 28 year old single females in professional occupations living in city centre apartments would have completely different interests to the family.

See the difference? Splitting your customers like this would create two very different marketing approaches. A single approach may not sufficiently attract sales from either group, but two carefully targeted approaches could generate more sales from each group.

Segmentation Techniques

There are several approaches to segmentation listed below. These techniques apply whether you are selling to individuals or businesses.

Demographics – these are factors such as age, the area lived in (identifiable by postcode), education level, income, family composition, etc. When selling to businesses it could be turnover, number of employees, whether office or factory based, the industry they operate in or perhaps based in a single geographical location such as near a specific town.

Lifestyle and attitudes – some people want adventure and excitement, the thrill of trying something new, or being one of the first to experience something. Others prefer a more traditional approach and rely on safety and security messages.

Purchase process – do you have a group of customers who prefer personal interaction and would like to see a sales person or visit a shop, perhaps as part of ‘retail therapy’? There may also be another group who don’t want to see anyone and would rather buy online in the comfort of their own home at a time that suits them.

Benefits sought – some people buy from a supplier because they are the cheapest, others look for quality of advice. Identify what your customers would prefer and how you would like to be positioned in their minds.

Usage – how do you use your computer? Is it for work or occasional internet usage? The choice will determine both the computer you have plus the software and equipment you use. How do your customers use your product?

Multi-level segmentation

It’s possible to have multi-level groups. For example, people in the same age group may be further split between those who want something more adventurous and those who prefer physical shopping to buying online.

Don’t try to shoehorn groups into boxes that they don’t neatly fit into. Instead, accept that multiple groups will create more work and greater complexity, but also potentially higher returns if you tackle each one individually and get the approach right.

The different media options presented in Choosing the Right Media will naturally benefit from a segmentation approach, in that different segments are best served by the media they are most likely to see and be interested in.