Step by Step Marketing - Getting to Know your Customers or Clients. Part One: Segmentation

Hi and welcome to the first of a series of blogs to help you understand your target markets. The series will cover:

  • How you define your audience

  • What you need to say

  • How should you say it

  • Where and when you should say it

By taking the time to do this, you'll be able to ensure your messaging resonates with your audience: ultimately persuading and motivating them to buy your product or use your service. And you need to know this ahead of any marketing activity so it can be finely tuned and targeted. Mass marketing is so last century!

The first step is segmentation.

Why should you segment your audience?

I was working for the financial capability arm of the Financial Services Authority (now the Financial Conduct Authority) when it decided we should be ‘talking’ to ‘consumers’ directly as well as going through trusted intermediaries, such as Citizens Advice. We had a remit under statute to improve financial capability across the UK.

When I asked who our target audience was, I was told ‘everyone in the UK’. Well, even if we had a budget the size of Jeff Bezos’, Elon Musk’s and Bill Gate’s fortunes combined, it’s highly unlikely we would be able to get the attention, interest, desire and action of ‘everyone’ as ‘everyone’ is not a homogenous group. ‘Everyone’ wouldn’t benefit from our offerings. ‘Everyone’ is not a marketable segment. They’re too scattered, too varied in demographics, needs, values, beliefs…. I could go on.

So we spent a bit of time (well quite a lot really) honing and defining our target segment. A segment that would benefit from our products and services. As a result, this became a much more manageable, realistic and, importantly, measurable group. And from this we were able to research and build personas – fictional characters representing our audience. This made the task of understanding our ‘customers’ so much easier and helped ensure we were ‘speaking’ to them in a language they understood, with the right tone of voice and with messages that resonated with them and motivated them into action.

On a slightly reduced scale, this is what we, as small businesses, need to be doing. You will have spent time researching your audience when developing your business plan. Maybe you’re at that stage now. Or maybe you’ve veered off course and need to take a step back and re-address who your customers are.

Let’s start with the basics.

1. What is a marketable segment?

A marketable segment can be defined as a subset of a market based on demographics, needs, priorities, common interests and other geographic, psychographic and behavioural similarities. Essentially market segmentation divides a market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes.

You may well have a broad target market and that’s okay. But, for marketing, it’s advisable to segment in order to hone and target communications. And it’s important that each target market is identified clearly at the outset of any communication or marketing campaign to ensure messages resonate and motivate, ultimately leading to action.

2. How do you segment your audience?

There are four main segmentation models: demographic; geographic; behavioural and psychographic.

Demographic Segmentation. This is a simple breakdown of your market by:

o Age

o Gender

o Income

o Educational Levels

o Religion, Race and Ethnicity

o Occupation or Job-Type

o Family Structure

Geographic Segmentation. This segments your audience based on the region in which they live or work:

o By country

o By region

o By county

o By postal code

However, demographic and geographical segmentation will only deliver a broad segment as neither allow for differences in behaviour or values within each sub-set. It’s therefore advisable to further hone the segmentation using behavioural and psychographic models.

Behavioural Segmentation. This is best used as a tool to get a clearer understanding of the sub-sets you wish to target, identified through demographic and geographic segmentation. This allows you to group your segment by behaviour, helping you to understand how different groups of your customers should be targeted, for example, with different offers at the most appropriate times through their preferred channels. It allows you to predict and influence future behaviour and prioritise by identifying high-value customer segments.

Psychographic Segmentation: This will help give a better picture of your audiences’ values, interests and attitudes. Questions to ask to ascertain this include:

o What motivates my audience?

o What principles does my audience have?

o What are their inherent beliefs?

o What drives them to make conscious or unconscious decisions?

By doing all of the above, you will be able to create your own customer personas, helping you develop headlines, narrative and key messages that will resonate, motivate and ultimately drive action.

3. How do you use the above segmentation models?

The answer is through research: speaking and, more importantly, listening to your customers. This can be done informally through a phone call or meeting, or formally through surveys, questionnaires and/or focus groups. And, depending on the size of your market, you could do this yourself or use an external agency or consultancy.

Top Tip

As there are likely to be different marketing strategies required for different market segments and different marketing objectives for individual campaigns, it may be advisable to build a stable of personas that can be used depending on the objective and target market for each of your marketing campaigns.

I hope you’ve found this useful. My next blog in this series will cover how to ‘speak’ to your customers’ using language, tone of voice, headlines and key messages that will resonate and motivate them into action.

In the meantime, if you’d like any further information or if I can help in any way do get in touch.

Best wishes, Marie