Pippa Highfield of Brainwork Marketing talks us through how and why small business should employ big company customer segmentation tactics.

You will have seen how the likes of Tesco use the masses of data they hold on their customers to make all sorts of marketing decisions and perhaps dismissed it as being irrelevant to your fledgling business. The truth is that almost all big marketing ideas can be harnessed by small businesses too.

 

What is customer segmentation? Simply put, customer segmentation is a way of dividing up your customers into distinct groups depending on common characteristics. The key benefit of using segmentation is that it allows you to develop customised marketing campaigns for each group and thus increase the effectiveness of your marketing.

How should you segment your customers? The exact criteria you use to segment your customers will depend on your particular business. The groups you choose though will need to be meaningful (ie based on characteristics that make members of that group act in a similar way) and measurable (ie based on characteristics that you can identify and reach). It is all very well developing a segment containing left-handed Scorpios who enjoy windsurfing…but they are probably a pretty difficult bunch to track down!

If you are selling direct to the public, (B2C) some of the more common criteria on which to segment your customers will be age, gender, location and financial status. If you are selling to companies (B2B) your criteria could include company size, sector, and turnover.

Where do you start? You can start by looking at your customer base, working out which products or services they buy from you and trying to identify any common characteristics. If, for example, you are an accountant you will probably find that clients who use your VAT return service have different characteristics to those that simply call upon you to complete an annual tax return.

What do you do next? Armed with information about your different segments, you can start to tailor your marketing to appeal more precisely to your target segments. Sticking with the accountant example, you can see that there is little point in promoting a VAT return service to your smaller clients who come under the VAT threshold; instead perhaps you could offer them bookkeeping software to help simplify their processes.

What to look out for.  Apply a healthy measure of common sense when you are developing your customers segments and don’t be ruled solely by the numbers. Remember too that people, and companies, move in and out of segments so don’t miss an opportunity to sell more services to a growing company. Equally, children grow up so try to avoid sending baby wear catalogues to mums with teenagers!

For more marketing tips and to find out how Pippa can help you develop segment your customer base go to www.brainwork.co.uk