Segment Customers to Increase Leads, Sales, and Satisfaction

Guest Post on Infusionsoft: Big Ideas Blog

Guest post by Douglas Stayman, Ph.D.

As a small business owner,you’re probably an expert in your field. Or a technician with very specific, highly-developed skills. Or you have a passion for providing unique experiences. Whatever it is you have, or can do, you’re eager to offer it to consumers.

That’s great, but the problems come when businesses market themselves as if everyone wants what they have to offer. Unless you’re a company like Coca-Cola, targeting the mass market probably doesn’t make financial sense. Segment customers and touch on a key component in your framework for creating a successful marketing strategy.

Why segment?

Small businesses are always looking for lower cost, high impact strategies. By segmenting the mass market into well-defined groups of customers, you focus your resources on creating the best possible value proposition for each segment so you can deliver benefits that meet their specific needs.

You may spend a little more to do this, but as long as the benefits you deliver to customers exceed the cost to provide them, you’ll still maximize profits.

To balance the benefit / cost equation in your favor using segmentation, you have to assess the ideal size of each segment and which attributes you’ll use to divide the market, such as:

• Demographic variables, like age, income, number of children, marriage status

• Geographic variables, like where people live within the market, or where different competitors, channels or distribution are available

• Psychographic segmentation, like consumers’ personalities, values, attitudes, interests, and lifestyles

To be meaningful, each market segment should be made up of customers who respond to your marketing efforts in a very similar way AND in a way that’s different from customers in your other segments.

Segment for more leads

Segmentation is more about what certain consumers want than about what your business wants to be to those consumers. The difference is subtle, but important. Your target customers, the ones you really know, will find out about you. Because you’ve created meaningful market segments, you’ve positioned your business as the one that gets them, that knows how to help. Your messaging should speak to these segments more loudly; it should cut through the clutter. In essence, leads within your market segments are already looking for you. Targeted content and marketing simply helps them find your business faster.

Segment for more sales

By segmenting the market, you increase the benefits each segment derives from your product or service. And by meeting your segment’s needs and delivering a higher value proposition to them, you also increase the odds of a sale. If consistently done well, market segmentation also can increase the lifetime value of your customers through repeat business and referrals. Segmentation is also a tool that helps build credibility and trust with your customers. As they derive greater benefit from your offerings, and note your attention to meeting their needs, they learn to trust your ability to do so in the future — for them and for others with similar needs. These current customers become your business champions.

Segment for more satisfaction

You can aspire to have 100% customer satisfaction, but if you don’t segment and target customers, you’ll never get anywhere close. The old saying is true, you can’t be all things to all people all of the time. But if you create meaningful customer segments, work to understand them, then deliver benefits to them that they want — you’ll always see a positive correlation between customer sales and satisfaction. And satisfied customers keep coming back.

Do you segment customers?  How have you found success?

For tips on keeping your list as free of clutter as possible, download, “CRM Spring Cleaning- How to Scrub and Polish Your List for Better Results.”

This post is based on content from eCornell’s Applied Marketing Strategy and Decision-Making Tools course, created by Douglas Stayman, Ph.D., associate professor of marketing at Cornell University’s Johnson Graduate School of Management. It’s the second course is eCornell’s Marketing Strategy certificate series, designed to provide business leaders and entrepreneurs with core knowledge of marketing strategy frameworks and experience applying them to strategically segment the market, target customers, and position their products or businesses for success.