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Understanding & Segmenting Your Customer – Part I
Getting the Right Customer For Your Marketing Message
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So do I need to talk to all my customer to get to know them?
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A strong customer profile is a mixture of a number of characteristics that define your customer from a variety of items that make it easier to segment, target and sell your product, services and brand to them
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Nine Need to KnowsWhen It Comes to Knowing Your Customer
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9 Need to Knows Revenues are still relevant– Collect information about customers to establish how
much cash money they bring to your table Happiness is contagious– Focus on happy customers
Price sensitivity is NOT a good thing– Don’t make your market position about price– When Mickey Drexler took over a CEO of J Crew, he was
looking for customers willing to pay more for well-made clothing and increased revenue 170% in the first 5 years
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9 Need to Knows The bigger the problems the better– The bigger the problem your brand can solve, the bigger
the market response– In the early days of the internet, AOL went after people
interested in getting online but not willing to do it alone– As a result, 30 million people signed up and they became
4th on the list of events that shaped the first 25 years of the web
Be on the lookout for something new– Introducing new products and services can generate
organic growth companies crave– Focus on your customers that are most interested in new
innovations from your brand to generate bottom line growth
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9 Need to Knows Out there advocating for your brand– The greater the level of influence a buyer has among their
social networks and word of mouth marketing, the more a brand’s marketing ROI will benefit
A hub with lots of spokes– The more active and engaged a customer is with different
social media, the more valuable they can be to your brand– Ford Motor Co. picked out 100 twenty-something YouTube
storytellers who’d developed a fan community of their own and gave them a Fiesta for 6 months
– Each month they share their experiences with their communities via YouTube, Facebook, twitter and Flickr
– Ford received 50,000 requests for information and sold 10,000 units in the first 6 days of sales
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9 Need to Knows Distinctive needs and wants– The more similar and predictable a target group’s needs
and wants, the easier it is to develop compelling positioning and messaging
Meaningful to traditional and digital decision makers– Get a sense of how high-value customers use traditional,
digital and social media communications throughout the pre- and post-purchase process
– Understand how the like to interact with a brand within different communications channels
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What is Customer Equity?
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A firm is only as good as its customers think it will be the next time they do business with them
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When we talk about customer equity, we talk about 3 specific things…
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Value EquityA customer’s objective assessment of the utility of a brand based on perceptions of what is given up for what is received
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Value Equity is determined by:
Quality – value of the brand offeringsPrice – attractiveness of the priceConvenience – ease of doing business
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Brand EquityThe customer’s subjective and intangible assessment of the intangible, above and beyond its objectively perceived value
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Brand Equity is determined by:
Building awareness to attract customersBuilding emotional connectionsRemind customers to repurchase
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Retention EquityThe tendency of the customer to stick with a brand above and beyond the customer’s objective and subjective assessments of the brand
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Retention Equity is determined by:
Loyalty ProgramsSpecial Recognition & Value ProgramsAffinity/Emotional Connection ProgramsCommunity ProgramsKnowledge Building Programs
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Know Your Customer Types
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There are 2 major distinctions to customer types before we talk about the actual types of customers you will deal with
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Retail Customers
Retail customers are the buyers that purchase everyday items without regard to the brand – they are price conscious
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Brand Customers
Brand customers are loyal to a brand no matter where they purchase it – sometimes paying a premium
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The Resistant Customer Mindset: Hates your company and
holds deep resentment for your brand Behavior:
– Will spread negative word of mouth wherever possible
– Took their experience with your brand personally and is looking for revenge
– Will defect to your competitor first chance they get
Loyalty: Zero Possibility of Defection: Extremely
High (you can’t save this group)
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The Indifferent Customer Mindset: Sees your
company/product/service as nothing more than a commodity
Behavior– Will always try to get lower prices
to the point of near zero margin– They will promise volume or future
business, but see little unique value in your offering
– Always willing to walk away from the sale because they have other options available
Loyalty: One Possibility for Defection: Very High
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The Resistant Customer Mindset: Hates your company and
holds deep resentment for your brand Behavior:
– Will spread negative word of mouth wherever possible
– Took their experience with your brand personally and is looking for revenge
– Will defect to your competitor first chance they get
Loyalty: Zero Possibility of Defection: Extremely
High (you can’t save this group)
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The Indifferent Customer Mindset: Sees your
company/product/service as nothing more than a commodity
Behavior– Will always try to get lower prices
to the point of near zero margin– They will promise volume or future
business, but see little unique value in your offering
– Always willing to walk away from the sale because they have other options available
Loyalty: One Possibility for Defection: Very High
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The Acceptant Customer Mindset: Expects your customer to
provide the maximum of what’s asked and nothing more
Behavior:– Doesn’t think of your brand until
absolutely necessary– Comes to you because you have
become a habit or more convenient choice
– Maybe aware of other, better options, but simply hasn’t made the effort to pursue them
Loyalty: Two Possibility for Defection: High
– Customer expectations can outpace what you provide
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The Preferential Customer Mindset: Has grown to like your brand
and tends to understand the unique value that you provide
Behavior:– Most of us make the mistake of
making this customer type the top of our customer pyramid
– When given a choice, they will probably continue to use your brand
– Very aware of industry trends and can surprise by defecting if you have not given them benefits or raised the bar on service or innovation
Loyalty: Three Possibility for Defection: Somewhat
High
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The Evangelist Mindset: The pinnacle of the customer
relationship and would buy anything you offer
Behavior:– They tell everyone they know
about your company– Mentions how satisfied they are
even in casual conversations– Your brand has become part of
their life– Finds personal meaning with your
brand– Worth their weight in gold because
they do more to grow your business than any ad campaign
Loyalty: Four Possibility for Defection: None
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The Customer ProfileWho is my target customer?
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When we talk about profiling customers, we start with the basics – or what is know as the old way….
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Old WayStandard Demographics
Age, Race, Income, Education, Family Size, Employment
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Now this way has given marketers a great deal of information over the decades, it has not improved the marketing performance of our activities and campaigns
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Why?
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The standard demographics are a very general way of looking at a customer – it gives us insights but not details which we need to drive our marketing
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This is the limitation of the old way of marketing segmentation
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New Way – Audience SegmentationGetting to the root of your customer
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When you use a audience segmentation method, you are better able to break down your customer into clear sets of detail that allow you to target them more effectively
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Is audience segmentation just about behaviors?
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When we work with this method, we start from a different point than the traditional demographics
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Where do you think we start in this method?
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Life Roles are the different things that we are that make up our buying decisions.
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When marketers start with life roles, we are better able to define our customer because different behaviors fall into the different roles we carry in life.
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When you define someone’s life roles, you are better able to define
their – behaviors, habits, interests and
purchasing decisions
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Understanding Market SegmentationLearning How to Break Down Your Customer’s Into Groups
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Market segmentation is the process that companies use to divide large markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs
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Market Segmentation
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Market Segmentation
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Divides the market into different geographical units such as nations, regions, states, counties, or cities
Divides the market into groups based on
variables such as age, gender, family
size, income, occupation and
education
Divides buyers into groups based on their knowledge,
attitudes, uses, or responses to a
product
Divides buyers into different groups based on social class, lifestyle, or personality traits
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How Do We Market To These Segments?
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Marketing Segmentation
100% of visitors 100% of visitors
1 segment = all 16 segments = all
All New vs. Returning
4 KeyProducts
8 MajorMarkets
16 VisitorPersonas
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Market Targeting
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing MicroMarketing
Mass Segmented Niche Local/Individual
Targets the whole market with one offer
Mass marketing
Focuses on common needs rather than what’s different
Targets several different market segments and designs separate offers for each to achieve higher sales and stronger position
Targets a small share of a large market
Limited company resources
Knowledge of the market
More effective and efficient
Practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
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Price
Volume
Direct Sales
Fill by ad networks
Results from Mass Marketing
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Fill by ad networks
Price
Volume
Direct Sales
New RevenueAudience-based selling
Results from Market Segmentation
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Price
Volume
Direct Sales
Fill by ad networks
New Revenue
Audience-based selling
Results from Audience Targeting