Elevate Your Small Business Strategy with Customer Segmentation

Most small businesses have a general idea of their target customers and probably use segmentation for marketing. The digital marketing tools available today have made it possible to target specific groups of customers with great precision. Targeted marketing can be very effective at reducing marketing costs and tailoring messaging. However, as important as segmenting is for marketing communications, it is also highly valuable for strategic planning.

But how should we think about customer segmenting for business strategy?

Imagine your company’s front door opened to a large check-in area like an airport terminal with numerous lines.?

As your customers walked in, you sorted them by segment. ?

To decide where your customers should go, first, consider how an airport sorts passengers.

They sort passengers by the services they need to ensure they end up at the right destination. ? ?

Flying international? This is your line. ?

Need to Check Bags?? Check in here.?

Traveling domestically with just a carry-on? Right this way. ?

Similarly, businesses should segment their customers by focusing on the customers' needs and goals (destination). Once you learn what they are looking to accomplish, you can better serve that group of customers.

Here are four strategic reasons why a small business should segment its customers.

1. Better Alignment of Products and Services to Customer Needs. One of the best ways to assess your product alignment is to build an empathy map of your customer and compare it to your value propositions. What needs are you missing?? What pains or desired gains are not being addressed?? Sometimes, it’s not about the core product but how it’s delivered or how the customer relationship is managed.?
2. Identifying Underserved Segments. A great question to ask is, who is not your customer?? What would need to be true for them to be your customer?? Studying your unreached potential customers can help you identify opportunities to serve entirely new groups of people.? ? ?
3. Better Customization. Customization allows businesses to modify existing services or products to cater to new market segments. Sometimes, a small tweak is all that is needed to serve a new customer segment.? At the same time, the ability to customize can help further align the product or service with your individual customers’ needs, improving their experience and satisfaction.? ?
4. Enhanced Customer Service. Commercial customers often have different needs and challenges than direct consumers.? They may need a modified product or service, a different buying process, or desire a stronger customer service relationship.? By comparing the unique needs of each segment to one another, a company can identify ways to optimize the customer relationship. ?

Understanding and segmenting your customers goes far beyond marketing campaigns. It's ultimately about serving your customers and growing your business.

It's about aligning your products and services precisely with what your customers need and want. Tailoring your offerings to ensure every customer gets what they truly desire. Recognizing non-customers and learning how to serve and reach them. While providing top-notch service that caters to the unique needs of each customer segment.

So, take your customer knowledge deeper and discover the strategic advantages segmenting can bring to your small business.