Can you describe your customers in just three words? That challenge is harder than it seems because most businesses serve highly diverse markets. Since your customers have varied traits, demands, needs and respond to marketing messages in different ways, it's impractical and wasteful for you to try to sell your products and services in the same way to every member of your market. To segment your customers effectively, you’ll need a specific segmentation survey that captures customer traits such as their demographics, lifestyles, behaviors and beliefs.
Before we go into the specifics of segmentation surveys, let's quickly define what we mean by segmentation.
Market segmentation is a practice commonly used by marketing professionals to disaggregate a market into groups of prospective customers or buyers that share similar characteristics or needs, or who are likely to respond similarly to marketing actions.
In other words, using segmentation, you can divide a heterogeneous population of consumers into smaller groupings, composed of individuals that are more homogenous in terms of demographic, psychographic, and behavioural characteristics and needs. Once the market has been segmented, you can better tailor and target sales activities, design product packaging, and the promotional techniques in ways that your customers understand and appreciate. So segmentation is a smart, cost-effective, and necessary step in the marketing process.
Now, let’s look at how to use surveys to segment your market.
A segmentation survey is a survey that is specifically designed to help you to classify your customers or the market by segment. By posing a series of demographic, descriptive, attitudinal and behavioral questions, it helps you find out three main things about your customers:
Armed with this information, you can tailor products or services to the needs of distinct segments, expand the reach of marketing channels, and avoid unproductive marketing campaigns by asking and finding answers to segmentation survey questions.
There are five main approaches to customer segmentation that will be relevant to most businesses. Let’s take a look at what each means for your business and your marketing strategy.
Geographic segmentation groups customers according to their physical location, which might be defined at the macro level, such as the country location, or at a micro level, such as city of residence or even neighborhood. For instance, if you run a venue that hosts sporting events, you might aggregate customers according to distance from the venue—allowing you to target appropriate auxiliary products (e.g., travel and lodging solutions) for different groups of customers.
Seasonal segmentation is another form of geographic segmentation. Climate, rainfall, temperature, and other aspects of the weather vary according to location. Compartmentalizing your market by local weather patterns makes sense if you’re a clothing retailer selling rain boots, swimsuits, winter coats, and everything in between!
Demographic segmentation is perhaps the most common form of market segmentation, but it can also be one of the most powerful approaches. This involves classifying your customers by personal attributes such as:
For example, if you have a premium product, you might want to segment your market by income level, in order to gauge the affordability of, or demand for your product among higher earners.
Psychographic segmentation involves categorizing your customers according to their psychological attributes. This includes traits such as their:
Some of these dimensions are relatively straightforward to capture. If you sell sporting goods, a survey asking customers about their preferred sports or their favorite team can help you to identify who is most likely to buy tennis rackets, and who might buy Lakers shirts.
Other dimensions are a little more slippery. For example, some consumers – like Star Wars enthusiasts – are prone to fandom behavior, making them intensely devoted to products relating to specific brands or areas of popular culture. The adulation of Apple and Supreme brands among some segments means that their respective fans think little of queuing for 16 hours for the latest product drop.
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Behavioral segmentation means segmenting your market according to their behaviors. This might include their spending habits, such as the time of day that they spend, or how closely they watch their budget. Coffee shops, for instance, know that some people pop in for an espresso first thing in the morning, while others enjoy a leisurely latte in the afternoon. Knowledge about consumers’ buying behavior (such as their proneness to deals or flash sales), browsing habits and whether or not they’re impulse shoppers will also be immensely useful in helping you target your marketing activities appropriately.
Combining different forms of segmentation can help you really pinpoint who your customers are. For example, generational segmentation is a form of segmenting that involves invoking demographic, psychographic and behavioral dimensions. Millennials, for instance, who are below the age of 40 (a demographic characteristic) grew up in the digital era and are therefore more technologically savvy (a psychographic characteristic) than the demographic cohorts that precede them, like Baby Boomers or Generation X. Brands that market to Millennials know that they’re more likely to spend time researching products on the Internet before making purchasing decisions—knowledge that can be used to ensure that they get the information they need.
Demographic, psychographic and behavioral segmentation are all common in business to consumer (B2C) markets. If your company sells to other businesses instead of directly to consumers, it’s also possible to segment your market by characteristics. Firmographic segmentation means classifying business to business (B2B) customers based on shared organizational traits like company size, sector, or sales level might be used. For instance, if you sell cloud services, you might distinguish between small and medium sized businesses based on their differing storage needs, and then develop a tiered pricing strategy that best meets the needs of these distinct segments. You can read about how to reach your target market using segmentation or if you’re eager to learn more about how to create a segmentation survey that works for you.
To create a successful segmentation survey, follow these four simple steps:
Before you even think about drawing up a segmentation survey, consider the criteria you expect to use to segment your market. For many products, the lines of segmentation might seem obvious. If you sell smartwatches, your focus might be demographics and psychographics; for a local fitness class, geographical segmentation is likely to be more important. To be clear: you don’t have to know how to segment the market—that’s the point of the survey! But, you should have some inkling as to where to place emphasis in order to make sure that your segmentation survey questions are not wasted.
Once you know where you plan to focus your attention, it’s time to start writing! There’s no hard and fast rule as to the optimal number, but you’ll need to ask several questions for each line of segmentation you expect to be using. For example, if geographic segmentation is one of your major focuses, you might ask three questions, such as:
Respondents find surveys much easier to navigate if questions are arranged in a meaningful way. That means organizing your survey so that, say, attitudinal questions are grouped together and demographic questions are asked at the same time (usually at the beginning or the end of the survey).
Sure, segmentation is about the attributes of your customers, but don’t forget to ask questions about your customers’ perceptions of the product or service! A survey helps you get into the mind of your customer, helps you to understand the product from their perspective, and gives you insight into the attributes that they demand from the brand. So, if you’re trying to segment buyers of your ice cream brand based on age, gender and frequency of purchase, it's also a good idea to ask them questions like:
Combined with information about your customers, the answers to questions like these might lead you to realize that younger women are more concerned about the sugar content, or that people who live in rural areas are especially concerned about price—great insight for your marketing efforts.
The knowledge you gain from your survey is only useful if your audience is representative of your market. That’s worth repeating: if you collect data from the wrong market, you’ll end up with inaccurate segments, and that can be very costly to your bottom line. Stuck on who to survey? SurveyMonkey Audience can help you find out who to ask.
Once you’ve gathered and analyzed your data, you’ll be in a great position to realize some major benefits:
Until you segment the market, you’re likely to be creating marketing strategies on the mistaken assumption that all customers have similar wants and needs, leading to wasteful, unproductive campaigns.
Take, for example, Eco laundry and washing detergents, bathroom and kitchen cleaners. When these products were first launched and marketed as environmentally friendly alternatives to conventional cleaning liquids in the late 1990s, sales expectations were high because of the rise of the sustainability agenda and the green consumer. After several years on the market, sales remained unremarkable and expected market share had failed to materialize. Brand managers soon realized that one of the reasons for the poor sales of these products was that despite their green credentials, they were vastly more expensive compared to competitors, and often did not clean clothes and bathrooms as well.
But, this problem could be addressed through effective targeting. Consumers are driven by many concerns and demands, and they make their ultimate purchasing decisions for a myriad of reasons. Some consumers of cleaning products may be motivated to purchase environmentally friendly versions of the household staples that they regularly use simply because they’re eco-minded—they place less weight on price and cleaning performance. Other consumers are unlikely to be influenced to switch to green items unless the price is equivalent, or they’re convinced by their superiority over their usual products.
Once brand managers mastered how to segment green consumers according to motivations and preferences like these, sales of eco products began to rise.
One of the great things about segmentation surveys is that they help you identify profitable and unprofitable segments. For example, imagine your survey data told you that the market for your tattoo parlor is comprised of two segments: The Tattoo Addicts, who are older, more willing to travel further to your spot, purchase frequently and tend to spend more than $300 on each occasion, and The Tattoo Anxious, who are younger, live locally, and want to spend less than $100 for a one-off inking. Since the Addicts are more lucrative, it makes sense to focus your marketing techniques on that segment. Alternatively, you might offer discounts for repeat visits to encourage anxious customers to return in future.
Segmentation helps you know your customers at a deep level, which is valuable information you can use to edge out the competition. BlackBerry, a now largely defunct smartphone brand, learned this a little too late. The device was initially developed for high income, business executives and professionals, based on the notion that this was the only segment of the market that demanded the functionality of smartphones. However, BlackBerry failed to appreciate demand for such functions like WiFi access and a full QWERTY keyboard among other, untapped segments of the market, such as young people, university students and early adopters. In addition, the brand positioning that was aimed squarely at business executives failed to resonate with other segments of the market. This inability to properly segment, target and position the product paved the way for competitors, such as Apple, to enter the industry and capture market share.
One last thing to note: customer segmentation is not to be confused with market segmentation, but it is the distinct practice of market segmentation. When you perform customer segmentation, you focus on categorizing customers in a narrowly defined marketplace. In contrast, market segmentation considers the entire market.
For example, beverage retailers are unlikely to try to sell products to every consumer in the drinks market. Instead, wine producers will focus on the wine drinking subset of the market, further segmenting these customers into, for example, drinkers of red wine, white wine and sparkling wine, or into those who enjoy wine tastings, and those who prefer to take their bottles home with them. These segments all have distinct needs, and as a wine producer, you’ll get better results by treating them as distinct rather than trying to serve the whole market.
This article has shown you how demographic, psychographic and other characteristics can be used to segment your consumer base. By understanding differences in consumer traits, you’ll be able to better understand their different needs and preferences, so that your marketing can be tailored to meet those needs, making for more cost-effective and powerful marketing campaigns.
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