Marketing is key to business success, and targeting the right customer is key to marketing success. In our last discussion I raised some questions and addressed three characteristics of behavioral segmentation. We talked about understanding the attitudes and behaviors of customers and the point in the relationship lifecycle they are in with your business. Now let’s talk about the next three areas of behavioral segmentation, including the current and future potential for revenue and profit, the firmographics (for business) or demographics (for consumers) of your customers and their specific buying history and/or product and services needs.
Let’s start by looking at the customer’s value to your company, in terms of current and potential future revenue and profits. While this may influence your marketing message, more likely this will determine where they fit within your marketing priorities. While it makes sense that your marketing dollars should be focused on customers that can return the highest level of revenue and profit to your business, most businesses take a much broader view in determining their target with a mix of high value and low value customers. They often look for quantity, which requires broadening the marketing focus outside of the target profile.
The next element we’ll cover is the basic firmographic or demographic data around your target. What does the customer look like as a business or a consumer or a family? What do they do, what’s their cultural background? What is their household income? What industry are they in, how big are they, how many employees do they have, where do they live? Knowing this information can help you assess some of the pieces you need to know in our other components of the segmentation. For example, the annual revenue of a company can help you determine the potential value they represent to your business. It’s certainly more complicated than that, but it’s a start. It can also help you understand similarities within your customer base and your target for new customers. Simple things like where they live or do business, number of employees, what industry they are in, etc. All of these data points help you complete the profile of your optimal target.
Finally, let’s address understanding core customer needs: their buying history and products and services they buy or don’t buy. This also includes what they may also need as an add-on accessory that compliments their primary purchase. Understanding purchase history helps you understand what specific product or complementary products you should market to your customer. For example, you wouldn’t try to sell a laptop battery or carry case to someone who just bought a desktop. You might, however, market a laptop as a complementary device when they need to be mobile or a second monitor to increase productivity. Additionally, if your customer bought the most expensive model in your product line the last time they bought, you wouldn’t want to market to them the entry level solution for their replacement. You’d want to show them a product in the same category for consistency in product experience, which also conveys that you know their needs and understand their priorities.
Targeting the right customer is key to maximizing ROI on your marketing investment. Segmentation is a way to help you get there. The only problem is where do you get all this customer information and how do you even begin to develop a customer profile? For that you’ll have to wait for part 3 of my series.
Until next time,
Michael
