When it comes to your customers, the one-size-fits-all sales approach will never give you the results you want. Think about it. Not all your customers are the same, so why would you communicate your product to them in the exact same way?
It’s time to talk about segmentation.
Don’t be afraid of the word. It is simpler than it sounds. Segmentation is simply a way to divide and arrange your customers into smaller groups according to type. These sub-groups should be characterized by particular attributes.
First things first, the main three approaches of market segmentation are:
- Priori segmentation: Divide your clients into groups using publicly available characteristics such as company size and industry
- Needs-based segmentation: Customer needs are discovered through extensive market research
- Value based segmentation: Groups are formed based on their economic value
It doesn’t have to be so complex though. If you are a small company, recognizing and dividing your customers into two or three types could be enough. The standard schemes for segmentation are:
- Organization size
- Product usage
- Socio-economic groups
But how can this help you and increase your revenue and commercial advantage?
Segmenting your clientele will give you a deeper understanding of each of your customers and discover what makes them “tick”. Here are the 4 main benefits of customer segmentation:
Benefit #1: Improving your product and services
WHO wants to buy WHAT and WHY? Having a clear idea on your customers’ needs will help you differentiate your company as the best solution for their problem. By doing so, you will increase the satisfaction of your clients and will have a better performance against your competitors.
Benefit #2: Getting quality revenues
Putting your efforts into the wrong segment can be more expensive to maintain. According to OpenView:
“[wrong segment…] may have a higher churn rate or lower upsell potential after the initial purchase has been made. Staying away from these types of customers and focusing on better ones will increase your margins and promote the stability of your customer base.”
Benefit #3: Increase in Sales
The point you all have been waiting for. Yes, it is possible to increase sales with the right customer segmentation. However, you need to consider this: you are going to lose some customers along the way. Narrowing down your list will have its effect on your customer database. But, once you establish the perfect strategy and become the master of your market, you are going to steal customers from your competitors.
Benefit #4: Focusing on your marketing message
Yes, marketing message. While you are improving your product, conducting a customer segmentation project will help you create a customized and more focused marketing message. The message will target each of your best segments, resulting in higher interest in your product.
As you keep analyzing your customer base, it will soon become clear what are the distinctive groups you need to segment your clientele and what are their specific requirements. It’s time to divide and conquer. The results will surprise you.