Understanding & Segmenting Your Customer - Part I

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Understanding & Segmenting Your Customer – Part I

Getting the Right Customer For Your Marketing Message



So do I need to talk to all my customer to get to know them?


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


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


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


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


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


What is Customer Equity?


A firm is only as good as its customers think it will be the next time they do business with them


When we talk about customer equity, we talk about 3 specific things…


Value EquityA customer’s objective assessment of the utility of a brand based on perceptions of what is given up for what is received


Value Equity is determined by:

Quality – value of the brand offeringsPrice – attractiveness of the priceConvenience – ease of doing business


Brand EquityThe customer’s subjective and intangible assessment of the intangible, above and beyond its objectively perceived value


Brand Equity is determined by:

Building awareness to attract customersBuilding emotional connectionsRemind customers to repurchase


Retention EquityThe tendency of the customer to stick with a brand above and beyond the customer’s objective and subjective assessments of the brand


Retention Equity is determined by:

Loyalty ProgramsSpecial Recognition & Value ProgramsAffinity/Emotional Connection ProgramsCommunity ProgramsKnowledge Building Programs


Know Your Customer Types


There are 2 major distinctions to customer types before we talk about the actual types of customers you will deal with


Retail Customers

Retail customers are the buyers that purchase everyday items without regard to the brand – they are price conscious


Brand Customers

Brand customers are loyal to a brand no matter where they purchase it – sometimes paying a premium



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)



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


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)


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



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



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



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


The Customer ProfileWho is my target customer?


When we talk about profiling customers, we start with the basics – or what is know as the old way….


Old WayStandard Demographics

Age, Race, Income, Education, Family Size, Employment


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


Why?


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


This is the limitation of the old way of marketing segmentation


New Way – Audience SegmentationGetting to the root of your customer


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


Is audience segmentation just about behaviors?


When we work with this method, we start from a different point than the traditional demographics


Where do you think we start in this method?


Life Roles are the different things that we are that make up our buying decisions.


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.


When you define someone’s life roles, you are better able to define

their – behaviors, habits, interests and

purchasing decisions




Understanding Market SegmentationLearning How to Break Down Your Customer’s Into Groups


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


Market Segmentation


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


How Do We Market To These Segments?


Marketing Segmentation

100% of visitors 100% of visitors

1 segment = all 16 segments = all

All New vs. Returning

4 KeyProducts

8 MajorMarkets

16 VisitorPersonas


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


Price

Volume

Direct Sales

Fill by ad networks

Results from Mass Marketing


Fill by ad networks

Price

Volume

Direct Sales

New RevenueAudience-based selling

Results from Market Segmentation


Price

Volume

Direct Sales

Fill by ad networks

New Revenue

Audience-based selling

Results from Audience Targeting