Listen to the 2 min Audio on market segmentation below:
Some of you may already know about market segmentation, but you may not understand how it really impacts your conversions. Many people think market segmentation is either for the big businesses or that it is a good idea, but not really needed. I want to put it in perspective so that you can see the depth of value in it as well as make it simple and easy to integrate into your current business. Let’s get started.
Market Segmentation – The process of defining and subdividing a large market into clearly identifiable segments having similar traits, needs, or wants.
Sales is about targeting. Some people might think that 100 prospects is 100 prospects and that dividing them up into sub groups isn’t going to change outcomes, but that would be wrong. Good sales is about understanding your prospect and lining up your sales pitch and solutions in a way that resonates with them and meets their needs. We would all like to think of products and services as commodities that simply sell themselves but the fact is your product is often not what wins or loses you the sale, it is the approach. Marketing and sales create emotions, thoughts, and work people through the buying process.
A one size fits all approach to sales is not likely to get great results and also ignores your prospects by nature. The mechanics of this is that your product must fit your prospect. It is smarter and more efficient to make your prospect fit your product. In order to do this you need to segment your prospects in a way that the similarities and differences can regroup them into smaller groups. It has nothing to do with your product. Some prospects may want the best price, others are concerned about quality, even others need fast delivery. Selling on the features to someone who is looking for the best price is a waste of time. Telling someone how quality the product is when ease of use is what matters is also a waste. Segmenting your market helps you tailor the marketing and pitch to what they prospect cares about most, this will drive conversions.
Segmentation allows you to do more with less. Market segmentation is not just for the large organizations. It actually favors small businesses. The reason is that it allows you to get more sales out of less prospects. Resources are often lower for smaller businesses so making the most of what you have is key. Also, if money is tight you need to see results because you may not be able to fill the top of the funnel with unlimited numbers. Segmenting your market takes paying attention and there is so much data out there already online that it isn’t hard to quickly ask good questions about your prospects and look for patterns online. Another great source is talking to past customers and getting to know them and their reasons for buying your product.
If you want to be lean and mean you have to know what your buyers want and what makes them unique. From there you can fine tune your process and marketing to speak to them. Don’t do a poor and generic job and then think you just need to do more of it. That is like a race car driver ignoring his car and just thinking he needs to be a better driver. The fact is better tires or suspension may help him as well as being a better driver. In business, so many people put little effort into understanding their customers and prospects and they spend countless time and money trying to get more prospects. Work smarter, not harder.
It’s time to flip your iceberg. Market segmentation takes time and research. Most people aren’t clear on their market and then they run out to capture it. Buyer personas were a big thing for a while and though I don’t think you should use them instead of getting to know your actual customers I do think they serve a great purpose. Your ideal buyer is often thought up in the mind of the business, but you don’t have to chase who you think might buy, you have to use the data from your current customers to tell you who your buyer persona is. From there you need to search for different types of buyers within your group of buyers. Sometimes the differences are obvious and sometimes they are subtle. Research and time are often a tiny part spent once if at all in the beginning and then the massive part is spent in marketing and getting more prospects. It is time to flip your iceberg and put more time into targeting and research so that you won’t need as many prospects because your conversions are higher.
So how do you do this today? It’s easy, if you have customers now get serious about profiling them. You can look them up online or just ask them. All data helps, you can get basic information such as gender, age, even the products they bought. From there you get look for other things and then see if you find patterns. Gathering data from the success your business already had with prospects is key to recreating that success again and again. If you aren’t mining this and asking questions when they buy or following up then you are trying to re-create random success. Their purchases aren’t random, you just need to find the commonalities and triggers and weigh it against both the buyer persona you created and the sales funnel you created.
Build in systems to get to know your customers. When done right this can show you care about them and value them. You can do surveys or run contests that are built around the data you want to learn about them. It can be as simple as asking, How did you find us? or What was the biggest factor for you in buying our product? Go on a data hunt and find out what you know about your customers and then segment them. Next, brainstorm the different benefits of your product to different people or situations. You can go category by category (price, features, quality, ease of use). The more you know about yourself, your customers, and your prospects, the easier it will be to make both sales and sales growth.
Watch the 6 min video below to dig deeper into this subject:
I would love to hear how you are using market segmentation in your business in the comments or hear your ideas on it below!
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