Thursday, October 15, 2009

All of my customers aren't all alike?

Here's a business story that a number of you might be familiar with. Hopefully it will motivate wholesale change with the manner in which you approach your customers.

Picture this.

A growing consumer products company has several successful products that are all the rage with homemakers who love to craft. These products potentially have other uses or customers but the housewives really love them and, as a result, become the fuel for this company's growth. All marketing efforts were devoted to this group, all consumers were considered similar, and all messaging was uniform. And the company continued to spite of this. Eventually demand leveled out and the company ceased to grow.

Is there a lesson here?

Rule #1 in marketing is "know thy customer". And if you have a halfway decent product or service that word customer likely has an "S" at the end of it. So let's make that "know thy customers." You likely have multiple customers and those multiple customers likely have unique tastes, buying habits, and preferences.

You know where this is leading....Market Segmentation. Since everyone has different reasons for using your products it is essential that you find an economical way to connect to those unique groups. In marketing parlance this is segmenting the market and there are several ways to do this ranging from simply interviewing several of your key customers to applying robust statistical analysis like CHAID to a large survey population. It is only common sense that, if your customers are different, that you adjust accordingly.

Some of the positive results of market segmentation include:
  • More accurate sales forecasting which means improved resource planning.
  • Increased revenue by focusing marketing efforts on the high demand customers.
  • You better understand your markets and they will appreciate your willingness to get to know them.
  • Cost savings when instead of marketing to the entire customer base you match messaging with the groups that will be the most likely to receive them.
Identifying and addressing the differences in your audience is Marketing 101. At the very least you need to have people within your organization who are familiar with the nuances of your marketplace. Ideally you have someone in your organization or you bring in a third party to help you identify these things. We recommend that perform several and regular activities to engage your customer base. This could be as simple as informal conversations at the point of purchase. And it can lead to performing an extensive survey of this same group to statistically distinguish between the groups. The internet has become a masterful place to engage with the customer and to determine their unique desires.

Go forth. Continue to sell your products. But do so smartly. Don't treat a Sally like a Fred. They may both buy your products but they are very different. It is your job to know those differences and provide incentives to ensure their loyal and profitable patronage.