Why Segmenting Will Boost Your Sales
To scale efficiently, companies must not only focus on a broad base of potential customers but on a subset customer base similar to the best current customers. Successful companies master the art of revenue management and formulate a customer segmentation strategy. This is what helps such companies recognize that every customer is different from the other and all of them should pay varying prices. Segmenting a market allows you to maximize your reach and increase sales.
What is Market Segmentation and Why Does it Matter?
This is the process of dividing a marketplace to help you use different strategies for different customers. Segmentation is an integral component of the marketing strategy where you must strategically position yourself in your marketplace. It is the process of splitting a market into clearly identifiable and homogenous subdivisions. While recognizing that segmentation is important, it is meaningless until it is acted on.
The best way to successfully segment is by targeting people of various demographic characteristics such as income levels and gender. You can then target your prospects more appropriately with the help of a sales dialer. You get more positive returns when the message is perfectly adapted to your target. Rather than sending out an emailing campaign to a large list, focus on a small list of targeted customers. The division is based on:
• Needs: To ensure that the product satisfies each discrete group.
• Buying habits: Including sales and marketing approaches that can be used to sell products economically and competitively. What are customer responses to communication modes such as messaging?
Trying to reach a specific market segment allows you to decrease your distribution channels. You can better target the outlets that have a high amount of traffic. It becomes easier to target customer shops and focus sales budgets in such outlets. Also, targeting a particular audience allows you to choose channels such as TV, radio, magazines and more that are more likely to reach your customer base. However, it is vital to analyze data.
The data must be organized into customer segments without omitting all business related activities to drive decisions across sales and pricing. A successful strategy focuses on having enough control to sell the needed products to the right people with the right price. Without segmentation, you may sell few products to one customer segment and more to another. Taking the right control over segments involves making several changes to the business processes and predicting demand. In segmentation, there are three major approaches including:
• Priori: This is the simplest approach where a classification scheme is used based on the available characteristics to create a customer base within a given market. This approach is not too common given that different companies may have varying needs. You want to be very comprehensive since differentiating can go beyond characteristics such as company size and geographical region.
• Value-based segmentation: This approach classifies customers by grouping them into individual segments that can be easily targeted.
• Needs-based segmentation: This approach focuses on the needs expressed by customers on a particular commodity or service being offered. Primary market research is carried out to ascertain this. Segments are then created based on the researched needs rather than characteristics.
Segmentation and Branding
Segmenting your market allows you to position yourself with a particular benefit. It is the surest way to creating a unique selling proposition that communicates to an audience looking for the set benefit. Status, customer service speed, price, and affordability are the characteristics that will help you create your brand.
Segmenting the market with a different product using a different name can on the hand help in protecting the main brand. For example, if you sell high-end products, do not add second-hand goods to your store otherwise, you will send customers to your competitor. Get a new store for the resale goods under a different name to protect your main brand.
Catering to a specific audience may contribute to the loss of sales among customers who are not part of your target audience but increase sales among people in your target demographic. As opposed to an audience outside your target market, a target audience is more likely to increase their shopping habits with you and this will further boost your sales.Customer segmentation can drive huge sales and lead to millions of dollars in incremental revenue. All you must do in your segmentation strategy is analyze and gain control.