ABOUT THE CONTRIBUTOR

Gai Hook
Gai Hook The common theme throughout Gai's professional career was, and is, managing sales teams of all shapes and sizes. No matter the industry, size and nature of the business, the forever changing climate and market has always fascinated her. The perception and intuition needed to provide strategy and sales growth for small businesses on a daily basis is paramount to working through the economic and competitive challenges in todays world.

Gai Hook has written 9 article(s) for us.

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Market Segmentation

August 21, 2012 | Gai Hook

Find out how to segment your market and discover exactly who your customers are.
Find out how to segment your market and discover exactly who your customers are.

Database segmentation has always fascinated me. The more you find out about your ‘ideal customer’ the more you realise the scope you have to satisfy their individual needs. Defining your market is not only cost effective but it ensures your prospects or current clients know you have put in the time and effort to get to know them. You now have a ‘loyalty’ database to nurture, and one where communication can be timed to avoid anyone slipping through the cracks and being snapped up by competitors!

But where do you start? Let’s look at the four main segments first – geographic, demographic, psychographic and behavioralistic. There are many variables to breaking down the information you have.

Geographic:

Region by continent, country, state, or even neighbourhood. Size of metropolitan area by population. Population density such as urban, suburban or rural. Climate according to weather patterns common to certain geographic regions.

Demographic:

Age, gender, family size, family lifecycle, generation such as baby boomers, gen Y, gen X. Income, occupation, education, ethnicity, nationality, religion and social class. Many of these variables can be further categorised for their values. For example, family lifecycle can be expressed as bachelor, married with no kids, double income no kids, full-nest with age of children, empty-nest and so on.

Psychographic:

Often surveys are implemented to group these customers according to their lifestyle. Some variables are activities, interests, opinions, attitudes and values.

Behavioralistic:

This segment is all about buying habits such as benefits sought usage rate and emotional triggers.

Once you have the data you need to match products, services or value adds you can begin to personalise your information and grow your database. Incentives for referral, focus groups, webinars and events, competitions, awards and of course ‘special offers’ create the interaction to cement those relationships and build trust.

The alternative to targeted marketing is mass marketing which is for short term return and for those that have the budget to spend. It creates momentum and relies on a response rate of 2-5 per cent if you’re lucky. This is great for large entities that have the infrastructure for fulfillment and do not require a long term database. Unfortunately, this method creates an initial impression in the eyes of those not relevant to your products that they have been disrespected in some way.

‘Burning’ prospects is never advisable and can harm your brand. For those relevant who don’t respond to this type of marketing, no amount of ‘telemarketing’ will salvage those who have already been contacted. Even if you personalise them in some way first, the horse has already bolted…you have already treated them like a number!

Have you ever looked into who your customers are? What interesting things did you find out about your customers? Leave a comment below. That way we can all learn from each other.

  • Sam Schelling

    Very timely post for me, Gai: I have just updated my ideal customer description and my next step is to segment my customers. My ideal customer has changed a bit in 17 years (!), but I think I also in this last review I have “looked inside” a bit more, and really thought more freely about the type of people I like to work with. My previous efforts at segmentation were simply by industry sectors then billings — a bit basic. This time I will approach it in a more structured, thoughtful way, which will no doubt make it more meaningful — with some guidance from Lynette, no doubt! Thanks for the tips!