Customer Segmentation

Who am I creating value for and who are my most important customers? Read our resource guide to customer segmentation.

Do you serve the mass market or a niche market? A good example of the difference is Nescafe coffee versus organic, locally roasted, fair trade whole coffee beans. Or perhaps your market is segmented, so that you serve different customers the same core product but in different ways.

Working with the same analogy, a coffee brand using customer segmentation would package coffee beans in small bags for the individual consumer for use at home, then package those same coffee beans in big bags for the restaurant who wants to buy in bulk.

The big lesson to be learned here is simple: once you know which different customer segments you are serving, you can design a service that fits them perfectly.

from The British Library

WHAT? An article which teaches you to segment your market in terms of its geographic, demographic, behavioural and psychographic characteristics

WHEN?  You have a product or service that serves (or could serve) different types of customers, which you have analysed using the resources on our Customer Research page

WHY?  One-size-fits-all is never true. Even with the same product, you might need to approach, sell to and service your market in different ways for the whole customer base to say yes.

OTHER RESOURCES?

>> Examples of different types of customer segmentation from Strategyzer

from the Harvard Business Review

Use the net promoter score in a single customer survey question to get reliable feedback on your business.

WHAT? A framework for understanding how you create value for customers at any stage of your product development and sales journey. It’s a bit like an extension to Maslow’s hierarchy of needs. The article is interesting (a long read), but the insight comes in the pyramid picture at the top, which is quick to interpret. Be sure to check out the second infographic in the article, with the subtitle “Which elements are most important?” which shows elements against types of business.

WHEN?  You need to assess how your product/service aligns with the market need

WHY?  Products and services deliver elements of value that address different needs: functional, emotional, life changing and social impact. Knowing what needs you address helps you hone your business strategy.

from Lean Startup Co.

WHAT? Detailed article outlining the 13 basic customer segments online stores often have, with suggestions about how to reach out to each one with relevant offers

WHEN?  You have an active e-commerce store with regular transactions

WHY?  If you categorise your customers into smaller groups of people that have something in common, it makes thinking of offers and calls to action easier and more effective

From Stax Bill

WHAT? This article will teach you how to price products and services for different customer segments. It is particularly useful for subscription-based business models.

WHEN?  You have developed a customer segmentation and want to know how this can be used to develop your pricing strategy

WHY?  Different customer segments have a different willingness to pay. If you can identify this and set prices accordingly, you can generate much higher profits.

From Smart Insights

WHAT? An article with infographics detailing segmentation, targeting and positioning (STP); a familiar strategic approach in Modern Marketing. It is one of the most commonly applied marketing models in practice.

WHEN?  You need to choose which segment to target and how to position yourself

WHY?  Targeting and winning over high potential customer segments will focus your resources and generate the biggest bang for your buck