Why Market Segmentation is crucial to your business success!

Most startups fail because they build a product or identify a service they can deliver—then they try to find customers to buy what they’re selling.

This approach is all wrong.

If your business hasn’t invested in market research, can you be sure who your customers are and what services or products would appeal to them?

Without intimately knowing the ins and outs of your target audience, your marketing message will never connect. To do that, you have to figure out

1. Who is fun to work with?
2. Who’s most profitable to your business?
3. Whom you can really help?

Market segmentation is a great way to do this. But what is it? And can it mean the difference between success and failure?

What is market segmentation?

Market segmentation is the process of dividing a broad target market into segments which consist of a group of customers with shared characteristics. So they have similar interests, needs, and problems that only you can solve.

Homing in on a tightly defined market segment allows you to enter the conversation going on in your prospects’ minds.

As a result, your marketing strategies will be more effective, and you'll generate a positive return on investment. 

Why is market segmentation important?

The reason why most small businesses close their doors in the first five years is (drumroll)... poor market segmentation.

They rely on guesswork instead of market-based research. For instance, they make assumptions about:

• who their customer is
• what media they consume
• which social networks they follow
• the difficulties they face daily
• the messages that would resonate.

Unless you are your ideal customer, your marketing efforts will be ineffective. Any sales you make will be random at best. You’ll repeatedly be dipping into a fountain of cash (you likely don’t have) to pay for advertising costs and generating a host of low-quality leads who’ll never buy your product or service.

So correctly segmenting your market is critical to your success. Here’s how: 

Six ways market segmentation benefits your business

1. Find a better quality customer. Not all customers are created equal. Some are a dream come true. And others, well, leave a lot to be desired. By identifying your customer segments, you can focus your marketing efforts on the segment that is most profitable.
2. Ensures you can personalize your message to the market. Within a market segment, you’ll have a range of customers, so your message needs to differ. People respond better to personalized messaging because it means you've taken the time to get to know them and you're more likely to a higher conversion rate.  
3. Make better decisions and so waste less time and money. When you get the segmentation of a market wrong, you make bad decisions. You target a broad audience, get a lot of low-quality leads, and waste your time nurturing people who will never convert to customers. Choose a niche, talk to them, learn what they need, and deliver, and you build a sustainable and financially lucrative business.
4. Position your business differently from competitors. What's going to make someone cross the road to come to your business? You need a unique value proposition. It'll probably be the experience you deliver. But it's what makes you memorable.
5. Build brand-loyal customers. Raving fans. They become repeat customers and they bring in a lot of new business. Think lifelong customer retention—the ultimate dream. 
6. Move on to create new products your customers need. Customer feedback allows you to branch out and create products that cater to their needs. For example, Uber began as vehicles for hire. But soon they realized their customers wanted more than just the convenience of a taxi at their fingertips. They wanted to be able to order food and have it delivered. They wanted to be able to courier packages. And they’re still evolving. So this is a prime example of a brand branching into new services. 

To learn more about the types of market segmentation and how to zero in on the right target market, read the original article here.