Market segmentation is part of any successful sales strategy. It will drastically increase your bottom line if implemented correctly. First, let’s talk about what market segmentation is, and then we’ll go over the different ways it can improve your sales strategy.
What Is Market Segmentation?
Many small business owners make the mistake of casting a wide net. They want to get as many customers as possible, so it initially makes sense to them that going after more people will bring more business.
But, the opposite is true. Even a large corporation with many stores (such as Walmart) uses market segmentation to create all their marketing programs, because going after a narrower audience works better. Therefore, market segmentation is going after a smaller portion of your audience, even the “audience of one”.
What Are Different Types of Segmentation?
There are many types of segmentation and more than what will be listed here. Essentially, you can segment your audience in many ways, then market to each individual segment in different marketing campaigns.
Ensure Your Segment Is Identifiable – You should be able to describe the segment in minute detail. The more information you have about the segment, the better. What are their desires? How much money do they make? How much money can they spend? What type of thing makes them want to buy? What are their fears and pain points?
Ask Whether You Can Reach That Audience – Is there a method of communication that you can use to get to the segment you’ve chosen? Do they use email, mobile phones, computers, telephones and so forth? How will you get your message to them?
Know If the Audience Is Large Enough – In each industry, there is a certain conversion rate you’ll want to drive toward. But, you need to know if the segment you’ve chosen to focus on has large enough numbers to make your financial goals a reality. No sales strategy will work if there aren’t enough people to buy.
Understand the Unique Needs of the Segment – The more you can understand the needs and desires of each segment, the more you’ll succeed in your marketing efforts. For example, are you trying to market to professionals who have MBAs? If so, what is unique about the MBAs you want to target?
You Can Also Segment by Obvious Sectors – Geographic, demographics, moral attitudes, and values are all good segments to start with when you set up your marketing campaigns. If you can match your values to the largest demographic in these cases, you can create a winning campaign.
Once you determine the segment you want to target, you need ways to get to them. A good way to do that is to create a freebie to give away to the sector that you want to target in your sales strategy. You can create the freebie yourself or you can hire someone to do it for you.
A good freebie should not be something you have to create fresh for each new potential customer, but instead a very targeted piece that you only create once for that audience and deliver inexpensively.
One of the hardest things to do if you have a service-based business is to figure out what your fees should be. You have to realize that there are two types of value. One is economic based and one is perceived value. What you want to focus on when creating your pricing is the perceived value you offer to individuals.
Boost Your Perceived Value
You can boost your perceived value by becoming an expert in your niche and a go-to person for advice about your industry. You can do this by writing a book, blogging regularly, getting interviewed, giving interviews, going to live events and online events, hosting and attending and presenting at webinars, and more.
In other words, the more visible you are, the more people will want to use you. And the more people want to use you, the more your value due to supply and demand.
Your Time Is Worth More
Most people start their pricing with an hourly rate commensurate with what others in their industry are charging. This is a good way to start. But it’s just a start. Do some research to find out what others are charging for the same service, then determine the value they deliver for the cost. Figure out ways to fill in the gaps in the services the others offer, which can boost your value tremendously.
Demand Affects Your Value
If you’re not yet in demand, it’s harder to stick to a higher price for your services. But, you want to create a perceived demand for your time by avoiding focusing on that right now. Instead, focus on building your business by filling in the gaps with other services that don’t take as much of your time, making anything involving one-on-one time your high priced item.
Experience Affects Your Value
If you’ve been in business for 20 years and have numerous connections to the industry, you’re simply going to be able to command a much higher fee. But remember, your clients get a lot more for their fee today than they did when you started, so it’s worth it.
The Problems You Solve
These really affect your fees, because it matters what the solution is worth to your buyer. If your service helps your client earn multiple six figures, what percentage have you earned of that? Surely, if your help turns a $50K business into a $250K business, you’re worth 10 percent of that, right? That’s $20K from one client, which on a monthly basis would be worth $1667 a month. What can you offer to them that will be worth that?
A lot of people fail with this part of the process. If you can’t communicate your value, it’ll be hard for you to justify your price. Incidentally, this works with information products, courses, coaching, and one-on-one services too. You need to be able to communicate how much in real dollars you’re worth, and why, to your potential clients.
When you create your offer funnel it should include products, services, and help to everyone in every stage of the buying cycle, with the idea to push them all toward your most expensive one-on-one services. You can do that by segmenting your leads based on their behavior. Qualifying each potential client before you make your offer is imperative.
So many people go into business with an employee mindset. Start thinking about the value you offer to your customers, and how you can improve that value. The more value you can offer and the more value you can prove that you offer, the more people will be willing to pay you happily. Wouldn’t you pay someone $10K today if you knew for a fact that if you did everything they said you’d make $250K from that investment?
There are many factors that make up your consumer insights. The more information that you can gather, the more you’ll be able to target your market. These insights will help you answer who your audience is, who your customer is, what they need, and more.
There are many ways to gather consumer insights. You can collect information from numerous parts of your business. Social media, your website, and email marketing all come to mind regarding where to gather the information using native analytics software. You can also use Google Analytics to get even more insights. Once you have the software installed, consider the following.
Customer Type – You probably have more than one type of customer that fits in with your ideal audience persona. It will help you to find out who they are using analytics with your social media, website visitors and more. This will help you create better-targeted marketing materials.
Observe Real Time Behavior – You can use heat maps via Google Analytics to find out what your audience is doing real time. You can also observe what happens on social media, within the email, and information such as how long your audience stays on your website consuming the information that you provide.
Communication with Customer Service – A good CSM will help you judge how well your customer service agents or virtual assistants are working with customers. You can view old conversations and find out what complaints there are and how to resolve them before it happens again.
Note Personal Preferences – Using the systems at your fingertips, you can note what your audience prefers. For example, if you have a membership site and you have video as well as transcriptions for the video, which do most of your audience use? This can help you develop better information delivered in the right format.
Reward Referrals – You can use analytics to find out where your traffic is coming from, which can enable you to do a couple of things. One, you can reward referrals and two, you can do more of what you did to get the referral.
Know the Favorite Parts of Your Website – You can use the analytics to help you figure out what pages are most viewed and for the longest time. This can inform future content that you create in very targeted ways.
Understand Your Audiences’ Demographics – You may not realize how important demographics are, but what if you thought your audience was one thing and then you finally realized it was completely different? Your marketing messages will become more targeted and effective.
Understanding your customers more is going to help you boost your business to a whole new level. Plus, it’s not even that hard. Most platforms offer some form of native analytics that you can use to find out more about what your customers like and don’t like. Then you can use that information to keep improving.
Ensuring that you’re doing all that you can to get your digital marketing mix right depends on your audience mostly, as well as the product or service that you want to promote next. After all, there is no point in promoting anything to the wrong people in the wrong place.
Your digital marketing mix consists of the various forms of content and the platforms you will use to get your message out. This mix depends on your audience and your goals. Let’s look at some potential goals and the answers to what marketing mix to use.
Increase Brand Awareness
Most people want to increase brand awareness. This could take place with a list-building campaign. You’ll need to use social media and content marketing to get your brand message out to the world. To ensure that you do this right, you’ll need to study your audience, know which social media networks they use, and what type of content they enjoy consuming.
You can use different forms of content such as video, infographics, memes, blog posts, and more. What type you use depends (as always) on your audience and the different types of content they are most likely to view – and not only that, react to by sharing and answering your calls to action.
Generate More Leads
One way to generate more leads is to buy ads. But, you can also generate leads organically through the content that you share with that goal in mind. Using the same research you gathered when you wanted to expand awareness, promote a freebie or “ethical bribe” to help you collect email addresses for your email list.
Your lead magnet (another word for your freebie) should be created in the form that your audience will want the most. It can be something easy like a checklist, cheat sheet or even a short course that is text based or video based. It’s up to you and up to your audience’s preferences.
Move Leads through Your Funnel
Once you capture a lead, you need the right marketing mix directed toward the people who have already joined your product funnel by getting your freebie. When they got the freebie, they had to sign up using their email address, so now they’re inside the funnel.
The messages you send should teach your audience about your offerings in such a way that makes them trust you enough to make the purchases moving through your funnel – until they’ve purchased most, if not all, of your products or services. Hint: Make sure one of your offers is a continuity program to increase lifetime customer value potential.
Focus on Customer Retention
If your goal is customer retention, then you’ll need to create content for people who have already purchased from you. For example, if you have a membership program or mastermind that people can participate in continuously, you can retain customers by continuing to add enough content and interest for them to make them want to stay.
If you have moved most of your audience through your funnel, it’s time to create new products and services to help them so that they remain in your funnel. It’s easy to do this if you’re surveying your audience about their satisfaction level. At that time, you can ask them what else they’d like to see from you.
As you can see, getting the right marketing mix takes knowledge of your audience, your niche, your products and an understanding of your product funnel. The more you understand about these factors, the more successful you’ll be at getting your digital marketing mix right.
Improving profit margins can make or break your business. After all, if you’re putting in a lot of work, have high revenues, but low profit margins, you will still have trouble staying in business. Following these steps to improve your profit margin will go far in helping you create the business of your dreams that allows you to live your dreams too.
1. Create Systems and Processes
No matter what type of business you have, it’s imperative to have systems and processes in place for everything. Automate everything you can, outsource things that aren’t in your wheelhouse, and use the technology that is available to you to make everything simpler.
For example, having the right autoresponder plus autoresponder series is part of the process of nurturing leads, retaining customers, and educating your audience.
Creating the right filing system on your computer so you can easily find things is also part of a system. If you do things the same way each time (and yes, you can improve it as you go), it’s going to make many types of tasks faster and more effective.
2. Upsell and Cross-Sell
Using that system, add upselling and cross-selling to every single product or service that you promote. Even if you are promoting someone else’s product or service, you can still offer additional value to them for making a purchase via content upgrades, prizes, and more.
By increasing the average order total, you’ll increase your ROI exponentially. Be careful about adding too many, though. You may need to test it for your audience as each audience is different, but one or two and even three upsell offers can make a huge difference.
3. Cut Low-Margin Products/Services
Track the numbers so that you can discover what you’re doing that’s making you the most return on your investment. If you have low-margin products and services that take a lot of time, ask yourself what would happen if you spent that time on the products and services that have a higher return. More than likely you could increase profits by simply switching efforts to do more marketing for the high-return items, and less for the low-return items.
4. Nurture Your Customers
When someone buys from you, they’re much more likely to buy from you again. Therefore, set up automation to sell new products and services to the people who have bought from you that you believe they need or will like. This doesn’t even take that much work if you really know your audience, your product offerings, and are good at finding other people’s products to fill in the gaps.
5. Track Your Expenses
How many monthly fees do you pay for things that you really don’t use often? Automation and software are wonderful, but if you’re not using something, then it’s just a waste of money and an added expense that you don’t need. If you’re using it every day, and you’re seeing a good return on the investment, keep using it. Otherwise, let it go.
Plus, tracking your expenses and matching them to the products they help you promote, will ensure you don’t have expenses on the books you don’t need and which are lowering your profit margin.