Exercise Your Segmentation Muscles
Muscles in our body atrophy when we don’t exercise them. The same can be said about our “customer insight muscles” that help us to understand changing customer needs.
When we stop exercising these muscles, our business atrophies. The Market Segmentation Process forces us to understand customers at a very deep level and maybe the most intense and powerful customer insight practice we have. Similar to how fitness and exercise keep us in touch with our real lifeblood, segmentation keeps us in touch with the lifeblood of our business — our customers.
How Do You Start Getting Your Segmentation Muscles in Shape?
In concept, both exercise and segmentation sound like good ideas – but they feel like a lot of work. A great fitness routine often starts with studying how others are getting in shape before you decide how you want to proceed. The same approach can work for segmentation.
When companies around you, perhaps in your personal life, roll out different options in their value propositions, pay close attention. This is an opportunity to work your way backward from the offer and discover a segment that the business is targeting. Observe these approaches and see which ones could be transferred directly — or with slight modifications — to your business.
Segmentation Example #1: Bicycle Repair
Many of us began riding bikes more since there were so many restrictions on other types of activities. This led to a surge in bike purchases – and the need for bike repairs.
One company, Velofix – Southern CT Mobile Bike Repair, identified an “underserved” segment of people who don’t have the time or ability to bring their bikes to the nearest shop. They created a personalized service to do on-site repair, tune-ups, and complete overhauls, right in your driveway or garage. They found that there is a segment of people who need this new service and are willing to pay. Their on-site bike repair business is booming!
Segmentation Example #2: Retail Store
A home accessory chain uncovered four different types of contemporary shopper behavioral preferences. They quickly developed a system for each of the shopper segments and began offering four ways to shop with them:
1) For the “technology-savvy ‘not-sure-what-I-want’” segment: a virtual walk-through of the showroom
2) For the “tech-savvy ‘custom-fit’” segment: a one-on-one Zoom meeting with a sales associate
3) For the “time-starved ‘I know what I want’” segment: a regular phone call with a sales associate
4) For the “traditional shopper ‘custom-fit” segment: an in-store private appointment
Segmentation Example #3: Exercise Studio
A national exercise studio recognized that there was a spectrum of attitudes and behaviors regarding their clients’ level of desired safety while working out during the pandemic. They surveyed their customers to better understand their fitness needs and health concerns. They identified five segments:
· Social Sally: Really enjoys working out with others and is okay with minimal precautions
· Cautious Cloe: Similar to Social Sally, but needs extra precautions & safety measures
· Warrior Wanda: Loves to stay fit at a distance & has a high tolerance for the outdoor elements (rain, leaf blowers, etc.)
· Team Terry: Safety first – Enjoys some of the social aspects virtually but takes extreme caution
· Efficient Edith: Enjoys staying fit on her schedule – between Zoom calls and kids
To appeal to these different segments, they developed five types of offers:
1) In Studio (mask optional when working out)
2) In Studio Masks Mandatory
4) Zoom class
5) IGTV (prerecorded videos)
Not only were they able to survive through the pandemic, but they actually grew their business and attracted new clients.
How to Apply and Grow Your Own Segmentation “Fitness Program”
Now, think about your own business. After reading the previous examples, is it a little easier to notice patterns with your own customers? Just this small bit of segmentation exercise may already have made you better at picking up on clues in your own market.
So, what’s the next step in your segmentation fitness program? As with a new exercise program, start small. Look for one segment to create an offer for. This is similar to the bike repair service example above.
Once you make this segment-specific offer, set up metrics that help you measure the impact. You will see results that are positive and undeniable. Customers will vote with their wallets, but you will also hear words of appreciation from your target segment. All of this will motivate you to go to the next stage of segmentation fitness.
Taking Your Segmentation Fitness to the Next Level
Buoyed by your initial success, you will undoubtedly start to see more serviceable segments emerge — similar to the retail store or the exercise studio. Contrast the needs of different segments that you identify.
Then, see if providing different levels of product features or services helps deepen your relationship with them. Should you provide more than one type of offer based on their needs? Are there opportunities to charge different prices?
At this point, you are well on the way to becoming a segmentation expert. Don’t go too far, though. There’s a rough number of segments (usually around 5) that constitute the maximum amount of complexity that any business wants or needs to deal with. Instead of creating more segments, reexamine your segmentation strategy on an annual basis — if not more frequently. You’ll want to make sure that your approach is still relevant and up to date.
Long-Term Segmentation Practitioners Are Seldom Out of Shape
People who are fitness enthusiasts seldom find themselves out-of-shape. Fitness becomes a lifestyle — the only thing that changes are the methods of exercise. Similarly, segmentation enthusiasts seldom lose touch with their customers’ needs. They are constantly looking for the latest methods for uncovering insights.
The good news is that — despite notions to the contrary — none of this has to take much time or money. For example, you may want to try our segmentation tool , discussions/round tables, Zoom coffee hours/happy hours, or formal research, depending on the amount of budget you have available.
Over time, you will find that your segmentation muscle gets stronger and stronger, and you will find new and more creative ways to serve your different sets of customers. Just like a fitness lifestyle brings many valuable benefits to your personal life, a segmentation program will bring vitality and health to your business life.
Your customers will appreciate your organization and may not even know why. But you will know the secret. You have built a segmentation muscle that strengthens your relationships by treating different customers differently.