These interviews should be structured in such a way to help you understand the pains and needs that your target market is trying to solve. Another good way to learn about your ideal customer profile is to dig into your CRM data and analyze what type of customers have the highest Customer Lifetime Value CLV and shortest sales cycle.
For example, Metadata full disclosure: Analyzing this data allows them to create a view of your current customers with the highest Customer Lifetime Value and shortest sales cycle. This data is then used to run marketing campaigns that target look-alike personas. For early-stage startups with no, or a limited number of customers, the primary focus is finding a dream customer for your product. What company and what persona has the highest pain that your product is solving?
Early stage startups should narrow their focus when it comes to ICP and then slowly expand as they grow. Getting your ideal customer profile right requires looking inside and outside your organization. When a company focuses only on the profile of current customers they miss out on larger opportunities to attract customers that might be a better fit.
Sometimes teams fall into a mindset of thinking that just because they have a certain segment of profitable customers that this segment is the best one to focus on. Nonetheless, it is often because companies used non-effective messaging or run specific campaigns that they ended up attracting these customers in the first place.
This is why looking outside of your organization is as important as diving into your customer data. Market segmentation is a very underestimated strategy when it comes to improvement of your marketing ROI.
Essentially, market segmentation is the process of dividing an entire addressable market into clearly defined segments with similar pains and values. Let me explain how market segmentation can improve ROI for marketing campaigns and how I learned about market segmentation.
In , I was hired to join a newly created corporate marketing team at Sophos , a global security software company with over employees worldwide. Amongst other responsibilities, my task was to create and manage paid acquisition campaigns primarily Adwords. High cost per click was a challenge. First, the cost per lead was extremely high. Another problem we were facing was a big consumer market that could drive high cost per lead with absolutely zero value to our organization.
Unlike our competitors such as Symantec, AVG or McAfee, Sophos only sells to large organizations finance, retail, government, healthcare, non-profit. Therefore, we had to take into account high cost-per-click and consumers while designing our paid acquisition strategy.
How important was this cost to our marketing budget? But proving marketing ROI was never easy because our sales cycle was between 6—12 months. Today a case could be made that with such high CPL, the money would be better spent on outbound sales campaigns or an account-based marketing approach. We searched for a marketing agency to help us manage our Adwords campaigns as well as design landing pages.
I talked with almost every marketing agency in the Boston area and we settled on the one that proposed deep market segmentation for our paid campaigns. Along with the agency, our marketing team segmented the market based on vertical industries and product offerings. We started small and created targeted landing pages for companies that were looking for a specific product in a specific industry. For example, we first created landing pages for antivirus solutions in top industries, and had landing pages that focused on:.
For each page we created a separate ad campaign with unique calls to action and ad messages, as well as focusing on narrow keywords related only to this product and industry. Also, each page had unique content targeted to the ideal customer profile for a specific vertical. This allowed us to decrease the cost-per-click because Google saw the ads as very relevant. Our conversion rate increased and our cost per lead decreased.
When we saw that one industry performed well, we would segment that industry further and create another ad campaign and landing page; data protection solutions for banks for example.
In a couple of months, we had over 50 landing pages running across multiple industries and product lines. Beforehand we were directing visitors to generic landing pages and in some cases just product pages. This is a unique case study where the importance of market segmentation could be calculated and translated into dollar amount.
We learned a lot at least I did and based on our learning developed separate pages on the website dedicated to every top industry. It also helped us drive some organic traffic from search engines and let customers landing on our website segment themselves based on the industry they were coming from. There are multiple ways to segment your market besides simple vertical or industry segmentation that we saw in the Sophos example.
Narrow your market and go deep. Segmentation allows companies to narrow their market and go deep. What do we mean by going deep? Going narrow and deep is what constitutes the main idea of what we call account-based marketing which we will discuss later.
From a segmentation perspective, going narrow and deep means looking at your ICP and your market from the prism of a smaller, well defined group of customers. In general, best advice is to make sure segments strike a balance between being big enough to be economically viable and sufficiently different to justify modifying your message or changing the focus of the values presented to attract them. For example, at Sophos creating a segment that targets data protection for non-profits, larger than employees in south east Asia might be overkill.
Unless, A there are plenty such companies in this segment or 2 the order in which they perceive the value of your product is significantly different from other non-profits. So, you need to ask yourself:. Below are a few examples of how you can segment your marketing campaign.
The Sophos case study is a perfect example of vertical or industry segmentation. If your product solves pains across multiple industries it is worth taking a look and testing industry segmentation. Companies like Veeva and Vlocity built very successful companies just by focusing on specific verticals in otherwise very crowded industries.
This is a great example of market segmentation as a core strategy. Pain-based or value-based segmentation. Segmentation based on values and pains that target customers care about can improve your marketing campaign performance too. In this particular example even the first value category can be broken down into three segments revenue, retention and engagement. Your target customers may have up to 3 values that impact their buying decisions and the order of importance of these values may change depending on the segment.
If your product is well positioned against competitors, you can segment your marketing campaigns based on competition. The key here is to understand your strengths and weaknesses and to play to them. Both Volvo and BMW are great cars but the former focuses on safety and the latter is more focused on performance.
If done well, positioning competitors as inferior can be effective and some companies in consumer markets use this strategy often and successfully.
At Sophos we created competitor-based marketing campaigns betting on the brand keywords of the competition. We would create custom landing pages highlighting our advantages by comparing Sophos vs. McAfee or Sophos vs. That said, it is better to avoid marketing campaigns against smaller and less well-known companies. You will only validate them and diminish your perceived brand value. So, just ignore smaller players. Instead go after industry leaders or established companies that many people dislike.
This is a perfect opportunity to segment your market based on the technology that your target customers use. They build a dedicated page for every single integration. This is a great example of how you can create marketing campaigns focusing on technology that is supported or used by your product. Marketing campaigns targeting document automation for Salesforce, Hubspot or Pipedrive reaches companies that use these technologies and allows your message to be tailored specifically to the targeted technology.
Once you have segmented your target market, you need to adjust your strategic messaging to fit customers in each segment. Outline how your product enhances experiences or saves time. Strategic messaging at this stage impacts the content on your landing pages, in ads and so on.
The main point to note is that only once you understand your customers, have segmented them, and adjusted your messaging can you move into the specifics of launching marketing campaigns whether through Linkedin, Twitter, Facebook or any other channels. Obviously each channel has different targeting capabilities, limits on content, and politics around calls-to-action, so some adjustment will be needed. Your customer acquisition model will dictate the call-to-action, marketing assets, and landing pages that you use.
With broader and simpler products that use freemium or free trial models, you can drive prospects from marketing campaigns to free trials or signups. Marketing assets using this strategy become optional. Many companies with this approach move away from gated content, signup forms and marketing qualified leads MQLs.
Drift , for example, only asks prospects to provide an email to access their free 14 day trial, and the rest of their content, such as marketing assets, ebooks, etc. However, I personally believe that gating content has very little benefit and it may harm, more than help a company grow.
Opening up your content can increase interest and social media shares. Students and small business outside your target customer profile might give you their email to access an educational white paper but they are unlikely to sign up for demo. The bottom line is that you have to understand your customer acquisition process and create appropriate call-to-action and landing pages.
Marketing assets can help you spark interest and generate leads if your marketing team still relies on MQLs. We will discuss marketing and sales alignment more closely when we talk about account-based marketing below. The last thing you want to do is to pitch your prospect a generic value proposition if the company came from the financial sector.
Engaging your product team in the market segmentation process can provide necessary input for changing and adjusting your roadmap. It is much more effective to have product managers in the room when you develop your ICP, messaging, segmentation, and marketing campaigns than discover crucial information afterwards.
To avoid confusion, marketing and sales should develop battle cards for each market segment to use in their marketing campaigns. Battle cards include message and qualification questions specifically for each vertical. Segment-specific case studies, references, and customer reviews can also be tremendously helpful.
In the early stages you can just mark in your CRM or marketing automation that a prospect came from a specific industry so your sales team can adjust their initial qualification call accordingly.
For example, Sophos took the importance of understanding vertical segmentation to the extreme. Our sales team was set up in a way to allow reps to focus on just one or two vertical markets.
This setup allowed sales reps to be deeply immersed in the problems that industry faces and highly aware of competition and other market forces that impact the industry eg. Obviously you need to have some tracking and analytics in place. Marketing campaigns need to be tracked on following levels:.
What has more impact on an athlete becoming an Olympic champion; the first practice or the last? While these are both true, the practice patterns over a long period of time is what correlates most with successful performance. In your marketing, do you focus on understanding the pattern of how your prospects interact with your content, your product or your marketing campaign before they become a customer?
Look for overall patterns and a correlation between free trial signups and how many times a customer visited your website, consumed your contented, or was exposed to your marketing campaign. It is not the first-touch or the last-touch that matters, it is about the number of times the pattern that prospects are exposed to before they sign up or buy from you that matters. Calculating marketing ROI is often tricky.
This probably means that you have a longer sales cycle. This meant that estimating customer acquisition cost vs customer lifetime value was difficult. Demographic segmentation is based on variables such as age, gender, ethnicity, education, occupation, income, and family status.
Psychographic segmentation is based on variables such as values, attitudes, and lifestyle. Behavioral segmentation is based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought.
The optimal bases on which to segment the market depend on the particular situation and are determined by marketing research , market trends, and managerial judgment. While many of the consumer market segmentation bases can be applied to businesses and organizations, the different nature of business markets often leads to segmentation on the following bases:.
Geographic segmentation - based on regional variables such as customer concentration, regional industrial growth rate, and international macroeconomic factors.
Customer type - based on factors such as the size of the organization, its industry, position in the value chain, etc. Buyer behavior - based on factors such as loyalty to suppliers, usage patterns, and order size.
The identified market segments are summarized by profiles, often given a descriptive name. From these profiles, the attractiveness of each segment can be evaluated and a target market segment selected. This book is a crash course covering most of the marketing topics taught in MBA programs, including the marketing concept, the 4 P's of marketing, marketing research, marketing strategy, and segmentation, targeting, and positioning. The articles on this website are copyrighted material and may not be reproduced, stored on a computer disk, republished on another website, or distributed in any form without the prior express written permission of QuickMBA.
A market segment should be:
Market Segmentation. The division of a market into different homogeneous groups of consumers is known as market segmentation.. Rather than offer the same marketing mix to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs. Not all elements of the marketing .
Marketing > Segmentation. Market Segmentation. Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers.
Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotion, distribution or some combination of marketing variables. Customer Segmentation is the subdivision of a market into discrete customer groups that share similar characteristics. Customer Segmentation can be a powerful means to identify unmet customer needs. Companies that identify underserved segments can then outperform the competition by developing.
Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits. Customer segmentation, also called consumer segmentation or client segmentation, procedures. Customer segmentation enables businesses to create messages that will resonate deeply with particular audiences by dividing consumers into niche groups.