Understanding & Segmenting Your Customer - Part I

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Customer Segmentation for higher value

Customer Segmentation for higher value

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  • 1. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Understanding & Segmenting Your Customer – Part I Getting the Right Customer For Your Marketing Message
  • 2. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 3. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So do I need to talk to all my customer to get to know them?
  • 4. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED A strong customer profile is a mixture of a number of characteristics that define your customer from a variety of items that make it easier to segment, target and sell your product, services and brand to them
  • 5. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Nine Need to Knows When It Comes to Knowing Your Customer
  • 6. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED 9 Need to Knows  Revenues are still relevant – Collect information about customers to establish how much cash money they bring to your table  Happiness is contagious – Focus on happy customers  Price sensitivity is NOT a good thing – Don’t make your market position about price – When Mickey Drexler took over a CEO of J Crew, he was looking for customers willing to pay more for well-made clothing and increased revenue 170% in the first 5 years
  • 7. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED 9 Need to Knows  The bigger the problems the better – The bigger the problem your brand can solve, the bigger the market response – In the early days of the internet, AOL went after people interested in getting online but not willing to do it alone – As a result, 30 million people signed up and they became 4th on the list of events that shaped the first 25 years of the web  Be on the lookout for something new – Introducing new products and services can generate organic growth companies crave – Focus on your customers that are most interested in new innovations from your brand to generate bottom line growth
  • 8. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED 9 Need to Knows  Out there advocating for your brand – The greater the level of influence a buyer has among their social networks and word of mouth marketing, the more a brand’s marketing ROI will benefit  A hub with lots of spokes – The more active and engaged a customer is with different social media, the more valuable they can be to your brand – Ford Motor Co. picked out 100 twenty-something YouTube storytellers who’d developed a fan community of their own and gave them a Fiesta for 6 months – Each month they share their experiences with their communities via YouTube, Facebook, twitter and Flickr – Ford received 50,000 requests for information and sold 10,000 units in the first 6 days of sales
  • 9. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED 9 Need to Knows  Distinctive needs and wants – The more similar and predictable a target group’s needs and wants, the easier it is to develop compelling positioning and messaging  Meaningful to traditional and digital decision makers – Get a sense of how high-value customers use traditional, digital and social media communications throughout the pre- and post-purchase process – Understand how the like to interact with a brand within different communications channels
  • 10. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What is Customer Equity?
  • 11. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED A firm is only as good as its customers think it will be the next time they do business with them
  • 12. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When we talk about customer equity, we talk about 3 specific things…
  • 13. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Value Equity A customer’s objective assessment of the utility of a brand based on perceptions of what is given up for what is received
  • 14. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Value Equity is determined by: Quality – value of the brand offerings Price – attractiveness of the price Convenience – ease of doing business
  • 15. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Brand Equity The customer’s subjective and intangible assessment of the intangible, above and beyond its objectively perceived value
  • 16. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Brand Equity is determined by: Building awareness to attract customers Building emotional connections Remind customers to repurchase
  • 17. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Retention Equity The tendency of the customer to stick with a brand above and beyond the customer’s objective and subjective assessments of the brand
  • 18. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Retention Equity is determined by: Loyalty Programs Special Recognition & Value Programs Affinity/Emotional Connection Programs Community Programs Knowledge Building Programs
  • 19. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Know Your Customer Types
  • 20. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED There are 2 major distinctions to customer types before we talk about the actual types of customers you will deal with
  • 21. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Retail Customers Retail customers are the buyers that purchase everyday items without regard to the brand – they are price conscious
  • 22. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Brand Customers Brand customers are loyal to a brand no matter where they purchase it – sometimes paying a premium
  • 23. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 24. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Resistant Customer  Mindset: Hates your company and holds deep resentment for your brand  Behavior: – Will spread negative word of mouth wherever possible – Took their experience with your brand personally and is looking for revenge – Will defect to your competitor first chance they get  Loyalty: Zero  Possibility of Defection: Extremely High (you can’t save this group)
  • 25. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 26. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Indifferent Customer  Mindset: Sees your company/product/service as nothing more than a commodity  Behavior – Will always try to get lower prices to the point of near zero margin – They will promise volume or future business, but see little unique value in your offering – Always willing to walk away from the sale because they have other options available  Loyalty: One  Possibility for Defection: Very High
  • 27. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Resistant Customer  Mindset: Hates your company and holds deep resentment for your brand  Behavior: – Will spread negative word of mouth wherever possible – Took their experience with your brand personally and is looking for revenge – Will defect to your competitor first chance they get  Loyalty: Zero  Possibility of Defection: Extremely High (you can’t save this group)
  • 28. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Indifferent Customer  Mindset: Sees your company/product/service as nothing more than a commodity  Behavior – Will always try to get lower prices to the point of near zero margin – They will promise volume or future business, but see little unique value in your offering – Always willing to walk away from the sale because they have other options available  Loyalty: One  Possibility for Defection: Very High
  • 29. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 30. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Acceptant Customer  Mindset: Expects your customer to provide the maximum of what’s asked and nothing more  Behavior: – Doesn’t think of your brand until absolutely necessary – Comes to you because you have become a habit or more convenient choice – Maybe aware of other, better options, but simply hasn’t made the effort to pursue them  Loyalty: Two  Possibility for Defection: High – Customer expectations can outpace what you provide
  • 31. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 32. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Preferential Customer  Mindset: Has grown to like your brand and tends to understand the unique value that you provide  Behavior: – Most of us make the mistake of making this customer type the top of our customer pyramid – When given a choice, they will probably continue to use your brand – Very aware of industry trends and can surprise by defecting if you have not given them benefits or raised the bar on service or innovation  Loyalty: Three  Possibility for Defection: Somewhat High
  • 33. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 34. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Evangelist  Mindset: The pinnacle of the customer relationship and would buy anything you offer  Behavior: – They tell everyone they know about your company – Mentions how satisfied they are even in casual conversations – Your brand has become part of their life – Finds personal meaning with your brand – Worth their weight in gold because they do more to grow your business than any ad campaign  Loyalty: Four  Possibility for Defection: None
  • 35. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Customer Profile Who is my target customer?
  • 36. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When we talk about profiling customers, we start with the basics – or what is know as the old way….
  • 37. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Old Way Standard Demographics Age, Race, Income, Education, Family Size, Employment
  • 38. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Now this way has given marketers a great deal of information over the decades, it has not improved the marketing performance of our activities and campaigns
  • 39. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Why?
  • 40. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The standard demographics are a very general way of looking at a customer – it gives us insights but not details which we need to drive our marketing
  • 41. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is the limitation of the old way of marketing segmentation
  • 42. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED New Way – Audience Segmentation Getting to the root of your customer
  • 43. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When you use a audience segmentation method, you are better able to break down your customer into clear sets of detail that allow you to target them more effectively
  • 44. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Is audience segmentation just about behaviors?
  • 45. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When we work with this method, we start from a different point than the traditional demographics
  • 46. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Where do you think we start in this method?
  • 47. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Life Roles are the different things that we are that make up our buying decisions.
  • 48. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When marketers start with life roles, we are better able to define our customer because different behaviors fall into the different roles we carry in life.
  • 49. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When you define someone’s life roles, you are better able to define their – behaviors, habits, interests and purchasing decisions
  • 50. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 51. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  • 52. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Understanding Market Segmentation Learning How to Break Down Your Customer’s Into Groups
  • 53. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Market segmentation is the process that companies use to divide large markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs
  • 54. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Market Segmentation
  • 55. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Market Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation Divides the market into different geographical units such as nations, regions, states, counties, or cities Divides the market into groups based on variables such as age, gender, family size, income, occupation and education Divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product Divides buyers into different groups based on social class, lifestyle, or personality traits
  • 56. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How Do We Market To These Segments?
  • 57. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Marketing Segmentation 100% of visitors 100% of visitors 1 segment = all 16 segments = all All New vs. Returning 4 Key Products 8 Major Markets 16 Visitor Personas
  • 58. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Market Targeting Undifferentiated Marketing Differentiated Marketing Concentrated Marketing MicroMarketing Mass Segmented Niche Local/Individual Targets the whole market with one offer Mass marketing Focuses on common needs rather than what’s different Targets several different market segments and designs separate offers for each to achieve higher sales and stronger position Targets a small share of a large market Limited company resources Knowledge of the market More effective and efficient Practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
  • 59. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Price Volume Direct Sales Fill by ad networks Results from Mass Marketing
  • 60. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Fill by ad networks Price Volume Direct Sales New Revenue Audience-based selling Results from Market Segmentation
  • 61. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLEDHTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Price Volume Direct Sales Fill by ad networks New Revenue Audience-based selling Results from Audience Targeting