To systematically improve your marketing, you have to have effective segmentation.
No company, no matter how big it is, can solve everyone’s problems or meet everyone’s wants or needs. One of the keys to unlocking steady business growth is to know whom your organisation is helping solve problems i.e. segmentation.
Segmentation is simple –take the people who are buying your products and “group” them so that you can develop a complete marketing mix (products, price, promotion etc.) for that group; this targeted approach means you’ll have the right customers coming to you for the right products paying the right price.
We all get it. But we don’t.
This is why my second conversation with clients to help them unlock their growth is always around segmentation.
About these five conversations
These are the conversations that I have with my clients to help them move from scatter-gun, ad-hoc, tactical marketing to focused, purposeful marketing that achieves their business goals. Read all five to understand what you need to do to create a methodical, focused approach to your marketing that will achieve results.
Conversation two: whose problems are you solving?
In our first conversation, we discussed the type of problems you’re solving and whether you are helping your clients address symptoms or root causes.
Now, let’s look at the type of people you’re helping.
Can you tell me whom you’re selling your products or services to?
I’d like to know how you’ve segmented your market. In a SME, there are two typical answers:
Typical answer one: “Anyone who buys it”.
This is fine for a start-up where, frankly, cash is king so you take any business to get that vital cash flow in, but in a growing business this approach can slow your growth.
A growing business needs to be very clear about which groups they are meeting the needs of and how. This clarity speeds up growth because you can be more focused and that yields better results at a lower cost than the “spray and pray” approach.
Typical answer two: customer segments based on geo-demographic data
Most growing SMEs have moved on to segmenting their target customers using geo-demographic data.
For example: “Our segments are solicitor firms who have a minimum turnover of £1m and operate in and around London; accountancy firms with the same profile; and web solutions firms with the same profile too.”
They then gear their sales and marketing plans around reaching out to these “segments” and convincing them to buy the solutions you offer.
How well does it work?
The inevitable answer is: with limited success and a lot of resource.
That’s because your segments are wrong.
Segments based primarily on geo-demographic data are too broad. It’s like saying you only sell sunglasses to brown-eyed people. It fails to take into account crucial nuances such as,
- What type of brown-eyed people require sunglasses?
- What do they use them for?
- Where can I find the ones who actually need and want my product at the price I’m charging for it?”
When I ask, “Can you tell me what your segments are?” here’s the answer I’m looking for:
“We’ve developed segments based on the problems we solve.”
Fast-growing SMEs have divided up their potential market place into different groups according to clients’ problems.
They have segmented based on a key behavioural attribute. Then they put all the geo-demographic data on top, so you can actually find these customers. This is segmenting the smart way.
I wrote a popular blog about this so do look at it for more detail: Segmenting the Smart Way.
Let’s pull the first two conversations together now: what problems are you solving and for whom?
In Conversation One, we looked at the problems you solve for your clients. In fact, we have a list of them. Here’s one problem from that list:
|Problem as described by the client||Symptoms as felt by the client||Do we want to solve these symptoms?|
|Our internal time records are poor because the team don’t fill them in, which means we aren’t billing correctly||The team don’t understand how to use the time recording system||We want to help the team understand how to use the system.|
We can now take this table and use it to determine what your client segments are.
Segment name: Poor comprehenders
Segment problem: The team don’t understand how to use the time recording system
Solution we offer them: Training delivered via seminars, online courses and 1 to 1 FastTrack Tuition
Where we can find them: In firms of solicitors, accounts and web solutions businesses who have turnover of over £1m and operate in and around London.
Indicators that they are struggling include: no in-house training team to provide training support for systems; they have recently had new time recording software installed; they have high intakes of newly qualified staff who aren’t familiar with these systems; partners / directors feel they should be charging for more than they are, which they tell to trusted advisors e.g. Accountants and Business Growth Coaches; they are accessing content about how to effectively record and bill time.
Compare this segment to one based solely on geo-demographic data.
With segments based on what problems you are solving, you can produce content that your prospective clients find interesting. As they access it, they are clearly signalling to you what problems they want to solve. You can now identify them and reach out to them with clear messages that show you understand and can solve their problems.
Your marketing can now be targeted, relevant and highly effective – a crucial step on the way to sustainable business growth.
Our next conversation
You’re now in a great place to have the next conversation that will unlock your growth. We now have a clear picture of the problems your organisation solves and whom they solve them for. So, what we need to talk about next is how you solve those problems. i.e. your products and services. We’ll talk about what you currently offer your clients and if your products and services are the right solutions for them.
About the author
Kara Stanford is a Strategic Marketing Consultant who helps ambitious SMEs understand how to create a structured, systematic approach to marketing that delivers results.
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