Market Segmentation & Your Small Business

It’s a term we hear a lot as marketers, but what does it actually mean?

Market Segmentation is the process of dividing your target market into groups; these groups will need different products or different types of marketing to pull them in.

How do you divide your target market into segments?

First of all, you need to absolutely know your target market or target audience. Who are they? What motivates them to buy? What are their interests etc.?

Once you know who your target market is, you can then divide them into different groups. The groups need to be big enough to give you a solid customer base.

You can use several different ways to segment or divide your market.

  • Demographics – this includes age, family size, occupation, job
  • Geographics – this is all about the location of your market – could be local, regional, nationwide or international markets.
  • Psychographics – things such as lifestyle, values and personality – for example, someone might like to visit the gym, have a Vegan lifestyle, focus on mental health, and be environmentally aware…this list is absolutely endless in possibilities – but all hangs on knowing your target market.

How to identify your segmentation groups

OK, so you know your target market – now it’s time to break that down into smaller groups.

Try and create a detailed description of your ideal client – a persona that describes them in detail.

For example is you sell children’s’ books, one persona might be female, aged 25 – 45, stay at home Mum with young children. Interested in eco products and the environment, and healthy eating for her family. Her hobbies could be reading, family time, socialising with friends and hiking in the countryside.

The questions

Once you have this persona, you can more easily target that audience with specific books that would be interesting to that target group.

You will most likely need to work on several different personas. I give each persona a name as it makes them more real for me!

Here are some questions that might help you sort out your different segments. 

  • What are your highest and lowest value customers regarding the revenue they bring to you and profitability?
  • Are there any things that your customers have in common – or any patterns of buying you notice that they have in common?
  • Can you divide your customers into demographic information – age, income, gender?
  • Can you divide them into location?
  • What interests and hobbies do your customers have?
  • Have you noticed that customers with a particular interest or value are interested in your services/products?
  • How much do your customers know about your industry, products or services?
  • Do your customers buy online? If you have several online outlets, which is the most popular?
  • Do your customers need to have a consultation before they buy anything from you, or is the purchase just a transaction?
  • From your reviews and records, are your customers more likely to be satisfied with a particular purchase, or are they likely to want to exchange or return it?
  • Do customers ever make a suggestion to improve any of your products or services? Again, look at your records to see if any have the same opinion. Maybe that’s something you can improve and then target that audience?  

The more information you can find out about your current customers, as well as your potential customers, the easier it will be for you to segment your market. You will find groups by age, which is quite a broad spectrum to target, but if you look at feedback and reviews, you may find other things that certain customers have in common. For example, it could be how they found out about you? They may have googled your products or services, or maybe had a recommendation. It’s good to know these things.

Segmentation allows you to aim at the right market for your products. It helps you to focus on the way you interact with your customers, based on their interests, hobbies and behaviours.

This article wouldn’t be complete if I didn’t give you a quick overview of the pros and cons of segmentation. This gives you lots of information so you can make up your own mind as to how you would segment your market.

The pros of segmentation

  • You can look at each segment and determine if your current offering satisfies the needs of that segment. If not, you can adapt your products/services to make sure that you do – this might involve new products/services.
  • If you have a marketing budget, knowing who you want to target and how, you can better allocate that budget.
  • Segmentation helps you to set realistic targets or goals for your business.
  • Understanding your market in more detail, can help you when looking at what your competitors do.

The cons of segmentation

The cons are around, quite simply, costs.

If you are serving several different segments with different wants and needs, you could find costs escalating due to the increased number of products or services, or product variations.

Marketing costs will also increase as you will be serving different groups of people with different marketing. If you do paid ads, you’d need to do more than one to target the different segments.

I think the benefits outweigh the downside, but you need to take everything into consideration if you’re going to go this route.

Donald Norman, an American researcher, professor and author, once said, “Market segmentation is a natural result of the vast differences among people.”

This is so true, even people with the same hobbies or interests have huge differences between them. It’s just about finding those differences and how you can use that information to your best advantage.

Seth Godin, an entrepreneur, best-selling author and speaker, has been quoted in saying, “Don’t find customers for your products; find products for your customers.”

This absolutely puts it all into perspective. If you can work out exactly what your customers want and work to improve or change your products/services to meet their needs, you’re there! Customers always buy for their own reasons, not ours!

Discover my 7 Cs of marketing

In a previous article I’ve talked about the 7 Ps of marketing, which are a set of key principles that are at the heart of all marketing strategies. They are often referred to as the ‘Marketing Mix’.

Today’s article is about the 7 Cs of marketing and why you need to get your business online. These Cs are the ones that I think are important. Others may prefer other Cs!    

Credibility

Millions, yes millions, of people from all over the world go straight to the internet first when they want to buy something. Be it products or services, we all check out the internet for advice and information.

If your business, small or large, is online, then you are more likely to be found for what you do or what you sell. Potential customers can see your reviews, can look at your pricing and products, find out a bit about you etc. etc. And this gives your business more credibility.

Having a website is the obvious choice as you can explain everything you do all in one place. You can show your products or talk about the services you offer in detail. People can see who you are and what experience you have; you can list your qualifications and experience and more importantly, your website shows you are human. Your website will have contact details, so you can be reached and your potential customers can therefore get in touch if they want or need to.  

Customer

The customer! Ah, yes, now this is what everything in your business hangs on. No customers? No business.

This is why your business marketing strategy is so very important, (and why I bang on about it a lot with my customers)!

Your marketing strategy helps you find your ideal customer or your target audience. You discover where they hang out, what they’re interested in, how you can pull them in. Your strategy is about getting into the head of your customer and you can only do this by getting to know them.

Any content you put out needs to speak to your customers, be engaging, entertaining or educational. Once you’ve posted content, on whatever social media site you choose, or online, ensure you reply to every comment. Reply to those comments with a question and get a conversation going. And post consistently. You won’t hold your audience’s attention if you are posting once a month, but every day or every couple of days will keep their attention.

Doing your target audience research will let you know which social media sites they use, so you can target that site. Make sure your business is listed in ‘Google my business’, so you can be found locally. And there are loads of free, online business directories out there that you can be part of. Anything that helps your business be found online.

Consistency

I’ve already mentioned this, but consistency really is a key factor in marketing. You don’t just show up once, or just when you feel like it. You need to be showing up, delivering valuable content and products to your customers day in, day out.

If you have a website, which I highly recommend, start a blog and show your audience that you are an expert in your field. Share your blog to social media sites. Show up every day on social media and give something that is engaging, entertaining or educational. Make your audience laugh, teach them something new or point out something that they didn’t know.

Give your customers confidence in your ability to engage with them. They will see you as the ‘go to’ person and in time, this will convert to loyal customers. Consistency is what keeps your customers attention…it takes a long time to build up a customer base. And minutes to lose it. If you are not delivering, your customers will go elsewhere.   

Creativity

For me, creativity is about being original. Not about being the same as everyone else. For this reason, rather than use everyone else’s 7 Cs of marketing, or the industry standard, I’ve gone with what I feel is important. When I am helping small businesses with their marketing strategies, these are the things I concentrate on.

Creativity is HUGE! We are all constantly exposed to all sorts of advertising and, if you’re in marketing, you have to find new, creative, innovative ways to target your audience and get their attention. Creativity gets your brand noticed and makes your messages more memorable.

A lot of people out there buy things using their emotions, not for practical reasons. Being creative with your messaging enables you to communicate the emotional reasons for buying from you.

Every touchpoint you have with your customers is an opportunity to be creative and help your customers experience your brand in a positive and unique way.

Community/Communications  

I’m going to cheat here and do a ‘2 for 1’ offering! In my opinion, these two go together. Marketing is about communicating great messages to your target audience that reflect your brand, engage them and eventually convert them to customers. By regularly posting on social media, you will build up a community of people who follow you, who like your posts and engage by making comments, or asking questions.

You can set up your own social media groups, so customers can sign up for more in-depth information from you, or maybe coaching in a particular subject. They have to be a member to get access to this information – you may have a few freebie checklists, or helpful hints, or maybe even an e-book that they will get if they sign up. Building this kind of community really helps establish you as an expert and you gain the trust and respect of those who sign up. You’ll be recommended by them and so will grow your audience and also your customer base.

I haven’t mentioned communications specifically, but it runs through everything I’ve just talked about. Digital marketing, or online marketing, is without doubt, the most effective way to communicate with your target audience. You can talk to millions of people from all over the world.

Communication is at the heart of every business, big or small. Regularly communicating with them allows your customers to ask questions; it makes them care about your business; be loyal and recommend you to their friends and families. Most important of all, communicating shows you care, shows that your customers are valuable to you, that they matter and that you value their opinions.  

If you have a website, set up a monthly newsletter and ask your customers/potential customers to sign up. They will then hear from you every month. You can use that newsletter to talk about new trends, new ideas, ask questions, teach them something, share your blogs, share new products and show them your human side by sharing what you’ve been up to away from work. The list is endless, but it will be engaging, entertaining and educational which is what marketing is all about.    

Customer Service

I can’t stress enough how important good customer service is. Whether you’re looking for new customers or making sure you keep the ones you have, it’s important to make them all feel valued and wanted.

When you have been in business for a while, you will start to recognise the problems that your customers face. If you can answer those questions and solve those problems, they will become loyal customers who will recommend you to their family and friends. If you have a list of common questions that you know your customers need an answer to, put an FAQ section on your website and point to it from your social media pages.

Monitor your social media pages and email – if your customers ask a question, make sure it is answered promptly. You might be trawling a group chat or forum and see a question that you know the answer to – don’t hang around, answer it straight away. Show you are an expert.

You can also give your customers incentives to keep their interest and reward them for being good customers. You can offer freebies or special deals if they join your mailing list…or membership to a closed, member’s only Facebook group.

And, most importantly, say ‘THANK YOU’ to your customers. Make them feel valued, that you care and that you appreciate their custom.

Conversion

There are lots more Cs I could use, but this has to be my seventh…Conversion. It’s the reason we do all the marketing, spend hours on blogs and engaging content. We are trying to get new customers…that doesn’t mean this is the be all and end all, but it is necessary to pay your mortgage and bills!

Knowing your audience and what they want…what their pain points are, will all help you to convert your audience into paying customers. The first thing to do is to make sure you keep track of your customers and potential customers. If you have subscribers to your email, they will all be at different stages in the marketing funnel. Some will be at the bottom, just starting to engage with your business, taking an interest in your content, products or services, but not yet ready to buy. These still needs lots of nurturing by producing that all important engagement, entertainment and education that I keep banging on about!

Next up are the ‘Market Qualifying Leads’ (MQL). They might have come to your email via a free download, (checklist, workbook etc.). And they might have signed up to your newsletter to find out more about you and your business and what you have to offer. They will respond well to receiving more information, but not necessarily to the hard sell. They won’t want to feel any pressure to buy, nor will they want to be bombarded with sales emails. That will just put them off and they will unsubscribe and you’ll have lost them.

The next group are ‘Sales Qualified Leads’ (SQL). This group may have been subscribers to your email for a while, downloaded several freebies, and maybe taken part in some free training. They will be engaged with your online content, following you on social media – and maybe a member of your social media private group. They will be familiar with your business, know how you work and what you stand for. There will already be some trust and respect for what you do. They might start asking specific questions which qualify a meeting. They’ll already know that you can solve their problems, and that you know their pain points, and will now be ready to move on to get the solutions for themselves. They might be open to coaching, or paying for a course, buying an eBook, or buying your products or services.      

  • Always make sure you follow up on new contacts, engage with them as much as possible.
  • Ask questions, show an interest in them and be genuine!
  • Always listen to your customers. You may hear something that you hadn’t thought of – another way that your products or services can solve their problems. Or you might hear something that the customer doesn’t realise is a problem, so you can then educate them into recognising that problem – then offer the solution.
  • Whenever you put content out, make it easy for your potential customers to contact you. Add a Call to Action so they know what they need to do next.   
  • Include testimonials so you have proof that what you offer or do actually works and that you give value.

And…I am at the end of my list of 7 Cs of marketing. I hope you have found this useful. Please follow my blog for more articles to help you with your marketing.

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