Oftentimes, businesses struggle with knowing whether their marketing efforts are working. Are potential customers getting the message? Are there more effective ways to advertise? What will boost sales?
While there is a lot that can be said about crafting a message to have the biggest impact, the focus of this article is not on the message itself, but rather on who the message is for. It’s a crucial first step that many businesses skip. You can have a finely crafted message with gorgeous visuals, but if it’s not reaching your intended audience, you may as well be shouting in the dark. No one will respond.
What are Customer Segments?
Every business owner should take time to identify and define three Customer Segments. A Customer Segment represents the key groups of customers a company serves; combined, they represent the company’s ideal customers.
Why three? Because three is enough to force a business to look beyond the most obvious groups it targets to help expand its reach, and more than three will result in a loss of focus.
The primary distinction between the three segments should be the customer’s needs—a customer in one segment will have different needs than a customer in another. By diving up a customer base in this way, the business can develop targeted strategies and business development activities. (Business development encompasses all the activities that generate, grow, and sustain revenue, including marketing, sales, and customer service.)
An Example of a Fast-Casual Restaurant
A simple illustration will help explain how this works. A fast-casual restaurant is located close to residential neighborhoods, local businesses, office buildings, and several high schools and college campuses. The restaurant has identified three Customer Segments: Businesses, Families, and Students. Each of these segments requires a different business development strategy, different messaging, and likely has different buyer triggers.
Businesses - The marketing messages to the Business segment will focus on catering and team lunches. The marketing plan may include visiting local businesses and handing out samples or specials to entice employees to try the restaurant. The plan will also include contacting Office Managers at local businesses to market catering services, with an emphasis on how convenient it is to place group orders.
Families - Marketing messages to Families may include an emphasis on easy, healthy dinners with options that are enjoyed by all family members. The plan may include sending postcards to nearby neighborhoods, posting on online neighborhood groups, and advertising at local grocery stores. Special offers might include free kids’ meals on nights that traditionally have slower traffic.
Students - Marketing to Students may include special deals if a customer has a student ID. The restaurant might also set up a food tent during school events or sponsor sporting teams and other school clubs to broaden visibility and attract more students.
The restaurant’s messaging and business development strategy are more effective because they are targeted to specific groups. They aren’t marketing the convenience of catering services to students or spending time going door-to-door in neighborhoods to talk about student specials. They know who they are selling to and are making sure their messaging and strategies are aligned. Having three Customer Segments encourages the restaurant to pursue customer diversification; it also helps them to focus on a manageable number of segments, which keeps efforts from being scattered.
Before you spend time and money crafting your next advertising campaign, take a step back and define three Customer Segments. Then consider how your business development activities and strategies will need to be refined to most effectively reach each one.
The concepts in this article were taken from the book Business Model: Architecting a resilient, profitable business, coming October 2022. Find this book and more in the Elements of an Exceptional Business series, available on Amazon.