Customer segmentation boils down to one simple question…your customers come from all walks of life – would you speak to them the same? Your marketing messages may not resonate with each customer in the same way. By segmenting your customer base, it allows you to research your target market and how best to appeal to them and their specific needs.
What is customer segmentation?
It’s the process by which you separate out groups of customers based on certain traits that they share. This can be anything from where they live to their age or ethnicity and everything in between – whatever is most relevant to you and your business’s research. It’s a simple and effective way to manage your brand’s relationship with its customers and personalise your marketing strategy to the needs of each specific group.
What are customer needs?
Customer needs are things that a customer wants or expects from a product or service and are a vital part of any good market research strategy. For example, functional needs include a product’s price or the way that it looks. There are also more emotional needs such as how fairly a customer feels they are being treated during the buying process. Once you have segmented your customers, you can use this information to dig deeper and find out what needs are important to each group.
Why segment customers?
Everyone communicates with others in different ways. For example, you probably chat to close members of your family way more informally than you would with colleagues. Each of these groups probably come with a variety of expectations.
This same principle applies to a brand’s consumers: as these people may have some traits in common but will ultimately have different tastes, needs and come from a variety of locations and backgrounds. Customer segmentation is the process by which you separate out your customer base based on qualities that they share, which could be anything from their location to their tax bracket. This process makes it easier for your brand to manage its relationship with each group of customers, and how to tailor your marketing and services to suit them best.
Why is it important to identify your customers’ needs?
There are a number of reasons why you should identify your customers’ needs.
- Improve your products: Researching your customers’ needs helps you identify the motives that drive the buying process. You can further understand aspects you may be missing out on, and areas where you can improve your product so it can appeal to customers better.
- Take your marketing strategy to the next level: By working out what your customers need, you can develop appropriate strategies to ensure you’re communicating with them on the right level, right place, right time.
- Upgrade your customer service: An important part of your overall service is how you interact with your customers when they need support. By identifying their needs, you can provide more effective support to them, in a faster and more efficient manner.
Identifying Customer Needs
Getting to know your customers’ minds is easier said than done. However, there are a number of techniques you can use to research what they want from you and how you can best deliver on these needs.
- Focus groups: Interview a group of people together who represent your target market. They are a powerful research tool and can help you gain a deeper understanding of how your customers feel about and interact with your brand and its products.
- Surveys: Surveys are an ideal, versatile method for data collection. They can be sent to consumers via post, online or conducted over the phone.
- Use existing data: If you’ve already got a website, chances are you already have a whole host of data readily available. Take a look at the analytics and identify where the pain points are, take note of who your current customers are and where they are coming from.
- Keyword research: A great way to understand your customers is to find out how exactly they’re landing on your site. What are they typing into Google? KWR is fantastic for giving you an idea of your customers’ needs based on their search data. It can also help you optimise your site to align it with what customers are searching for.
- Competition: Competitor research is an important part of market research, especially when it comes to identifying customer needs. You could find that there is an overlap in your target market, which means you can benefit from researching issues other brands are experiencing and how to resolve them.
Types of customer needs
Customers have all sorts of needs that are involved in the buying process, which can be identified through the research methods we have listed above.
- Functional: Customers look for products that solve a particular problem or desire they have.
- Price: Every customer has their own unique budget that dictates how much they spend on a product or service.
- Compatibility: The product needs to be compatible with other items that the customer uses, for example, a new pair of headphones to go with the phone they already own.
- Control: Customers want to feel like they have autonomy over the interaction with your brand from start to finish. For example, you should make it easy and simple for them to return products, ask for a refund, or change their subscription.
- Empathy: When customers are ordering from or requesting support, they want to feel like the brand cares about them and has their best interests at heart.
- Fairness: Customers need to feel like they are being treated fairly by a company. This involves fair pricing, in addition to other aspects such as terms of service and contract length.
Predicting your customers’ needs and how to meet them
It’s important to implement an effective strategy to be able to meet your customers’ needs and expectations.
- AI: AI can use data to predict your customers wants and needs into the future. An example of this is Netflix’s algorithm, which uses watch data to recommend other shows it thinks each viewer will enjoy.
- Understanding your customers: How well do you really know your customers? To effectively market and meet your customer’s needs, you need to know all you can about them. For example: their age, location and their income. Previous purchases will often help you predict what they will buy next. Loyalty programmes can also be utilised to track buying behaviour.
- Knowing their patterns and behaviours: How do your customers choose to interact with your brand? Is it over the phone, through your website or social media channels? If you aren’t present or offering a good service through that channel, you are missing out on great opportunities. There are many other factors that can affect demand, such as the time of year and the state of the economy where your business operates. Collecting data on purchase patterns can help you market more effectively.
Customer segmentation helps you in so many ways, from boosting conversions to communicating more effectively with your target market. It’s a vital part of a brand’s overall marketing strategy and should be done with care and attention.