Author: Mike Fletcher
What would be the benefits of segmenting your customers and, if so, how would you go about it?
Your customers may be attracted to your business’ products or services by their features, gains or pains in varying degrees, depending on their own unique set of circumstances. In order for your business to maximise the value of these elements to your customers, you would want to customise your business’ products or services to more closely match their requirements or desires for features, gains or pains.
Segmenting your business’ customers could then provide the detail for this customisation. Segmentation could be done on a number of dimensions evident within your business’ customer base. These could be, for example, based on an individual’s demography (e.g. age, gender, occupation, income, nationality etc.) and psychographic data (e.g. hobbies, social activities, clubs, holiday preferences, personality types etc.), or a business’ profile (e.g. industry, turnover, no of employees etc.) and objectives (e.g. corporate social responsibility, corporate vision and values etc.).
The extent of your segmentation would be determined by the economics of each segment: would the delivery of the products or services to each segment be profitable? This would be influenced by the number of customers in each segment or by the price you could charge each customer. This process is explained in more detail in this clip.
Examples of different customer segments range from mass market (i.e. no segments!), through niche market (i.e. select specialised requirements) to fully segmented. You may have multiple customer value propositions (“CVP“) which may be geared toward unrelated customer segments, or to multiple, yet related customer segments.
Creating a compelling CVP for each segment of your customer base would certainly drive your business to success. My next post will show how you can build a Business Model to deliver these CVP’s.