3 items tagged "segmentation"

  • Brand research: segmenting consumers who aren't using your brand

    Brand research: segmenting consumers who aren't using your brand

    Knowledge of your brand's users is only part of the research equation. You need to understand who currently isn't choosing your brand, who never has and never would, and who used to choose your brand but no longer does: differentiating non, never, and lapsed users.

    Individuals not purchasing your brand fall into one of three categories: current non-users, lapsed users and never users.

    It’s brand research 101: measure and compare brand penetration rates across brands, knowing who qualifies as a user and who does not.

    Start with the survey question: I find that the typical question is subject to telescoping. That means you will always get overstatement. Typically, if a national brand really has 15% annual penetration, a question like “which brands did you buy over the past 12 months?” will elicit 25% or more claiming purchase. Now, there are some tricks you can use to trap telescoping.

    1. Use a longer time frame that you don’t care about. That way, a consumer can state positivity about the brand but give you a better answer. I used to ask, “which brands have you bought in the past 12 months?” and then “which have you bought in the past six months?”. Doing it that way, I found that the past six-month responses matched closely to recorded purchasing for 12 months.
    2. If the client has first-party customer data, onboard that CRM information to the survey panel provider and match whether or not they really are a customer. Self-perception and reality about being a customer don’t always align.

    Even with better ways to get accurate information on brand buying, this is still not enough to do an insightful analysis. What else would we want to know?

    Measuring consumer’s propensity to purchase

    Well, I might want to know a consumer’s propensity to buy my brand, and whether or not they bought it is an outcome. Someone could have a significant propensity to buy it but not yet actually be a buyer. Targeting those who have a propensity to buy your brand but have not yet bought it is the best way to develop a cogent new buyer strategy. Research I have done shows that those without propensity towards your brand are really hard and unprofitable to convert. However, there is a sizeable pool of non-buyers who actually have favorable thoughts towards your brand. Target them and you might be in business!

    The key to measuring brand propensity is to use a constant sum question. Let consumers allocate 10 points across their consideration set and you will find out who is persuadable and who is not. In a recent study I did, those who gave the brand of interest between 2-8 points in the constant sum exercise were more than 10 times more responsive to advertising.Not 10 percent…10 times.

    And this was not stated intent – this was based on merging in actual conversion behavior and known ad serving by pixeling ads or getting ID lists from the publisher or DSP. As a marketer, I should want to know everything about this segment called Movable Middles (from the white paper I helped to author on this topic via my MMA relationship).

    Non-buyers vs. lapsed buyers vs. never-buyers

    Going back to the past 12-month/past six-month question series, who are those who said “yes” to the past 12 months but not to the past six months? Treat them as lapsed buyers. This is a very important group. When I analyzed Numerator receipt scanning data broken into three time periods, I found that the smaller group of lapsed buyers accounted for the majority of non-buyers in period two who became buyers in period three.In other words, the non-buyers you win over are mostly lapsed buyers. This is an important group to analyze with an eye toward developing re-acquisition strategies.

    My final word of advice – differentiate between non-buyers and “never”-buyers. Those who are in the first group but not in the second are where you will get new customers from. Non-buyers who are lapsed buyers or those with a reasonable propensity towards your brand are a productive target for your advertising dollars. The never-buyer group, which is the majority of non-buyers, is a sinkhole for your ad dollars from which you will never see a return.

    Author: Joel Rubinson

    Source: Greenbook Blog

  • Market segmentation as a tool to help your business improve effectively

    Market segmentation as a tool to help your business improve effectively

    So, your organization has embarked, or is planning to embark, on concerted customer segmentation efforts. Or maybe you’ve already gone through segmentation work to identify key customer segments to target. Great!

    Practical, clear-eyed customer segmentation is vital to marketing and sales success. As tempting as it may be to claim: 'we sell to everyone!' , this ultimately only leads to confusion: poor sales enablement, weak demand generation, fuzzy content marketing, products and campaigns that perform worse than expected.

    What is segmentation, and what do I do with it?

    Segmentation is the process of dividing the market into target customers, acceptable customers… and everyone else. It means identifying who your products or services should be sold to, and of identifying which segments exist within that group. Segmentation prevents you from boiling the ocean, giving you clear direction for marketing and sales in terms of where to prioritize investment and effort. It helps you to really know your customers.

    Don’t boil the ocean on customer acquisition.

    There are numerous different segmentation approaches, from needs-based, to demographic, geographic, firmographic, psychographic, or combinations of the above. All these approaches are typically focused on identifying what a good customer looks like for your organization.

    However, marketers often raise the question what one should do with customer segments once you have determined them. Once you know what your ideal B2B or B2C customers look like, what then?

    Applying segmentation work to marketing activities

    Segmentation results can be applied to a number of marketing activities:

    • Account-based marketing (ABM): When taking an account-based marketing approach, segmentation allows you to determine which customers deserve the greatest attention and effort from marketing. At minimum, your key accounts who you target with ABM, will likely come from your key customer segments. So, not knowing who those key segments are is an enormous barrier to continued customer growth. Segmentation can also drive a more efficient, tiered approach in which key accounts get the most effort, while at the next tier, accounts that 'look like' those accounts but don’t share all their characteristics, receive some marketing effort and resources. This allows you to focus on the customers most likely to repurchase and buy more, and scale some of the benefits of ABM to other accounts as well. Once selected, your segmentation work will inform the kinds of campaigns, themes, and messages that are sent to those accounts, and how sales engages with them.
    • Content marketing: Tighter focus on a specific customer segment even at the highest level (e.g. content for large enterprises vs. content for small or midsized businesses) will yield clearer understanding of customer needs and competitive alternatives, which allows for the development of more disruptive and differentiated content marketing. You may find benefit in selectively tailoring content marketing pieces to appeal to a few specific segments or buyers within those segments as well. Creating a few prestige content pieces can yield great returns in helping those prospects better see themselves in your customer set, and answering their most pressing questions. This may be done in combination with a vertical strategy, creating content that speaks to specific industries who may buy or use your product or service differently, or you may wish to create content that targets key sub-segments based on psychographic profiles (e.g. content targeting a growth-business). Regardless, understanding how different segments buy differently from you helps you create content that speaks more effectively to your customer base, and to prospects.
    • Customer experience: Customer segmentation is a core part of customer journey mapping, and customer experience improvements. The customer journey may look different for different key segments, and different segments may engage with different products differently! They may have different pain points, and there may be different places in the journey where investment in improving the experience drives higher ROI. Identifying your priority segments also allows you to map customer journeys more effectively, because you can focus your efforts and resources on improving experiences for your best or most profitable customers, first. Indeed, we often recommend approaching customer journey mapping segment-by-segment and product-by-product, examining how your most important customer segment buys your core products/ services first, rather than trying to map all the customer journeys for all products and services, all at once. (Remember what was said about not boiling the ocean?)
    • Demand generation: Understanding your target market segment, ideal customer profile, and buyer personas (particularly when selling to a B2B buying group) helps marketers and sales teams build stronger target audience lists for initial outreach, and can help inform channel strategy (e.g. determining whether a customer is more likely to respond to an email vs. a phone call, or social media message). Segmentation also helps you determine which messaging themes to develop, and which calls to action or offers to highlight.
    • Product marketing: It’s been touched on in the bullets above, but strong customer segmentation helps you better investigate and understand customer needs and challenges, which in turn provides the foundation for tighter messaging, more fine-tuned campaigns, better channel or partner selection, and in general, higher degrees of decision-making confidence in campaign planning, leading to higher response rates, more inbound interest, higher credibility with sales, and improved marketing and campaign efficiency over time.
    • Sales enablement: Clearly defined customer segmentation will allow marketing to develop stronger sales support that speaks to customer pain points and challenges. It also helps sales more directly, by allowing frontline sales reps to classify individuals they are speaking with (or, potentially, to identify an individual as non-target, thus saving themselves some time and effort). Marketing can develop customer-classification questionnaires and tools that can be easily used by sales so that reps can identify what segment a prospect likely belongs to, and in turn, which pieces of sales collateral are most likely to resonate.

    Segmentation fuels marketing and sales success

    Segmentation work, the approach you select, and how many key segments you define will vary based on your product or service category, and even your geography. Your target market in Asia might be very different than your target market in Europe, even for the very same product. And as in all cases where we attempt to better understand our customers, you will need to ensure that your segmentation work is a truthful representation of what your customers are actually like, rather than what you imagine they are like. This means drawing on customer voice, synthesizing behavioral and attitudinal data, and engaging sales in the segmentation process. You may also wish to revisit segmentation work periodically as markets and market dynamics continue to shift, and as your organization continues to evolve.

    But once completed, segmentation is the driver of a range of marketing and sales activities. It’s all about knowing the customer, and knowing yourself, understanding that nexus between what your organization does well and what your organizational goals are, and who your customers are and should be. Segmentation is only a part of this puzzle, and there’s certainly more to solve. But without customer segmentation firmly in place, it’s a much harder puzzle.

    Author: Kristina LaRocca-Cerrone

    Source: Gartner 

  • Precision in Practice: The Power of Optimizing Market Segmentation  

    Precision in Practice: The Art of Optimizing Market Segmentation

    Segmentation studies are a large investment, which makes it critical to ensure that your organization will utilize the results to their fullest to justify the ROI. Here are several actions you can take to use your segmentation results:

    1. Develop & Implement A Bridging Model

    This process will apply the segmentation solution to your database to classify your customers (or even prospects) into one of the new segments. Once applied, you will have an overall picture of where your current customers over- and under-index on the segments and can identify where opportunities for greater penetration exist. You may also wish to take a look at how your current customers differ from your total addressable market to understand gaps, such as whether the customer base is younger or older.

    Importantly, segment assignment allows you to identify which of your current customers fall into your target segments and which are of lower priority to your business. In turn, you know where and how to focus your direct marketing efforts to maximize ROI.

    In addition, segmentation assignment can help with customer service and retention strategy. Knowing a customer’s segment can guide how your organization treats them. With the knowledge of customers’ key motivation factors, you can keep them satisfied and retain them.

    This information can help your organization create a dashboard to monitor KPIs and shifts in segments over time.

    2. Conduct An Activation Workshop

    An activation workshop allows you to bring internal stakeholders or department leaders together to socialize the learnings and bring the segments to life across the organization. The workshop is similar to an innovation session, with guided, moderated creative exercises used to brainstorm about the segments.

    If not already done, one goal of the session might be to select target segments. Typically, an organization will focus their efforts and strategy on 2-3 key segments—the segments that best represent their current customer base or the segments that will benefit the most from their future strategy. This activity will help team members evaluate the segments on attractiveness and ability to win and generate reasons for or against targeting the segments.

    After target segments are identified, a common goal of these sessions is to determine a strategic action plan. The activities will focus the team on developing or modifying how the organization will appeal to the key segments with messaging, marketing, products, and services. The goal is for each stakeholder to leave with next steps of how to focus efforts to appeal to the key segments from the perspective of their role in the organization.

    3. Craft Training For Employees:

    Not only is an activation workshop important for your leading stakeholders to buy into, but implementing the use of the segment information throughout the organization is also critical. As referenced above, segmentation can help guide your customer service efforts. A better understanding of the needs and motivations of your target segments can help develop standards for how to approach them both during a sales process and ongoing customer service. Training manuals or sales techniques should be modified to appeal to key segments and disseminated to sales and customer service associates.

    For example, if these segments are ‘quiet shoppers,’ training manuals should be altered to advise sales associates to approach shoppers less frequently. However, if your key segments are ‘information shoppers,’ advise sales associates to carry product information sheets or QR codes that display additional information available on the product to ensure the shopper has what they need to make an informed shopping decision.

    4. Utilize A Typing Tool In Other Research:

    In both qualitative and quantitative research, a typing tool can be used to classify future respondents into your segments. When your organization wishes to test new messaging, packaging, or develop new products, the typing tool can be programmed directly into the survey instrument to classify all respondents into your segment groups. This allows you to not only have the general reaction of respondents to your new messaging, packaging, or products, but it also allows you to analyze reactions by segment to ensure you are appealing to (or at least not alienating) your target segments.

    For example, if you wish to test two new snack food package designs, the typing tool will allow you to analyze research results by segment group. If one package is significantly more likely to increase the purchase intent among your key segments, you can now easily identify the winning package.

    Monitoring

    Changes to your organization over the years may also change how segments look over time. If the segment size has changed, if there are mergers or acquisitions of your organization or industry, if buyers change the way they shop, or if the segmentation has been conducted more than 5 years ago—it is time for new segmentation models to be developed. In addition, it would be time to re-educate your team and likely some new team members as well about the segments.

    Date: August 12, 2023

    Authors: Ellen Williams and Stephanie Trevino 

    Source: Decision Analyst

     

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