Customer are considered as the heart of all businesses. Many business complaints that we got a good sale in our first time but then in a longer period number of customers went less, existing customers aren't buying more, failing in creating loyal customers, marketing campaigns aren’t effective, etc. A vital reason for this is inaccuracy in defining your customers, many businesses believes that all people in the market are their customers and they tried to promote their product or service to a mass audience. In fact businesses must make a conscious decision about which segment to serve and which segment to ignore.
How to define my customers?
There is a simple way to define our customers by asking a simple question of “who do we want to communicate to?” there are different ways to answer this question such as dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits. That is Customer segmentation.
Who needs to consider this?
When it comes to starting new business, it is vital to establish whether there is a market for your products and services and identify the type of people that would make the ideal customers. And for existing businesses it is important to change their current customer segment, to provide more offerings, create loyal customers, etc.
Who is your real customer?
Your real customers are those to whom your product or services matches 100%. In other words a real customer is the one who has the intention, ability and capacity to the product or service you offer. Moreover your product or service has to solve any of his/her problem.
Who isn’t your customer?
The main understanding of the customer segmentation is that everyone isn’t our customer. You have to be very specific about the customer you are going to serve. A business can’t make everyone happy but a business can make a smaller group of people happy. If you tried to solve the problems of many types / category people then you can’t offer different variety of products or service with many options. E.g. if a customer visit your retail home appliances business to buy a refrigerator with budget of 15000/- he would like to choose one among many selections but if your business decided to target all the customer group, then you can’t display many collection this will affect your business badly.
How Segmentation will Help You?
Segmenting your customers can help you to identify a niche market which is specific, well-defined area of your market and that may be overlooked by competitors, this allows for the effective allocation of marketing resources and the maximization of cross- and up-selling opportunities, possibility to create and deliver tailored promotional tools, offers, products and services, etc. marketing materials sent out using customer segmentation tend to be more valued and appreciated by the customer who receives them, this will help in customer retention and loyalty.
Finding of new products or services to the existing clients is more accurate and chances of sales conversion success is higher when we do a better customer segmentation. Not only do companies strive to divide their customers into measurable segments according to their needs, behaviors or demographics but they also aim to determine the profit potential of each segment by analyzing its revenue and cost impacts.
By Bareer Jazim
Ameen Ahsan Strategy Consulting