Knowing your customer segments gives you the power to deliver targeted brand messages and products more accurately, and to attract more ideal customers. Here’s how to find your segments, along with a few tips on what to do once you know what they are.
As a business owner, you probably already have a good idea of the single or multiple customer segments you currently serve. They might even vary widely, depending on your business’s location(s).
But look a little deeper into the individual people who are buying from you, and you may discover some surprises.
We learned through interviews with some of our franchise and retail clients that a prominent frozen treat business targets two distinct segments: families and Hispanic households.
This was not the information they had expected. But they took it and shifted their messaging in response.
In order to appeal to both of those distinct markets, the store owners decided to change the flavors on the menu, depending on which of those customer segments visited more frequently at the different locations.
Fine-tuning their product availability and messaging pleased and reached each of those specific audiences. Doing so delivered this business great success.
But how did they know who their best customer segments were? And how can you find yours?
Different techniques for finding your best customer segments will depend largely on the granularity of the data your business already has.
Home addresses are, obviously, precise and fantastic if you can get them. They’re just a little harder to access because your customers have to voluntarily share them, and they don’t always want to reveal that information.
Unless they’re purchasing something from you that needs to be shipped, in which case they’d have to provide an address, you have to find a good way to–politely–ask for it.
Some apps ask for permission to access a user’s location, which can be useful if it’s clear to everyone why that data is being requested.
Privacy regarding a person’s daily whereabouts remains an ethical concern and should be respected at all times.
Instead, customer surveys that issue rewards like BOGOs, freebies or discounts just for completing the survey are great for engaging your customers in a way that both values their opinions and becomes mutually beneficial to them and to you. Just be sure to include an address field as part of the survey, and don’t offer the free gift without it.
Website or in-store forms that ask visitors to sign up and plug in their home address in order to receive a special newsletter or weekly coupon roundup in the mail are another great way to gather addresses and offer your customer something worthwhile in return.
And loyalty programs that offer specific perks to your business’s VIP customers (i.e., those who’ve signed up to get the discount card, or to play that groovy interactive game you designed, or to get unfettered access to premium content…) work well for gleaning addresses responsibly.
BlastPoint’s customizable, interactive platform gives users the power to enhance the data they already have, gain clearer insights into who their customers are, design effective marketing campaigns, and lift the roof off sales. Learn how BlastPoint can help your business grow, too.
Once you possess that street-level address knowledge, you can find out whether more of your customers rent or own their homes–which could tell you something about their stage of life or circumstances.
It’ll tell you whether they live on a crowded, urban street or on a spacious cul-de-sac–which is even more telling about how they spend their free time.
You’ll be able to access information such as how many other people dwell in that home–which indicates much about their family makeup.
(Home improvement contractors, landscapers, cleaning companies and organizing businesses find this kind of info to be a huge help in attracting more of their ideal customers.)
Pay attention to what data arises from this effort, because these are your customer segments that are emerging. Track them. Make spreadsheets!
Look at that data, column by column, and analyze your records statistically. For numerical data like age and income, you can use Average and Median to get a clearer picture into your customers’ lives. For categorical data, such as whether a customer owns or rents their home, their education level, or the breed of dog they own (this is a big data point for our user who is a doggy daycare franchisor), it’s possible to break each answer into counts and see what attributes are most prominent.
Knowing all this at a glance will help you decide, next, what kinds of products, services and messages would most appeal to these various groups. It helps you understand how your unique business can be a godsend to them, specifically, so that you know the right thing to say to them.
You can unveil your customers’ ZIP codes through, again, surveys–either online or in person–or by gathering point-of-sale data that asks each customer to enter their five digit code at checkout.
With ZIP code-level data, you might not be able to figure out whether your customers are homeowners or renters, but you can learn a lot about them. ZIPs will tell you the average income levels in a zone, general demographics like age breakdown and employment status, and external characteristics of that area (e.g., whether it’s urban or rural).
Publicly- and privately-sourced data can flesh out a particular area. We like to use this approach more qualitatively than quantitatively, meaning that instead of focusing on precise number counts, we compare a ZIP code to its state or county.
Going Deeper With Analytics
Another way to segment your customers uses advanced statistical techniques like clustering and factor analysis. These are powerful, highly valuable techniques that BlastPoint offers enterprise and retail clients. To learn more about them, keep reading, or click here to speak to us directly for more info.
Clustering is an organizational method that, essentially, refers to the process of classifying groups of customers who have similar attributes, and then assigning them a label so that you can treat them in a unique way that differs from the way you handle other customer clusters.
For example, clustering your middle-aged vegan customers apart from your millennial meat-eaters would help you to clarify what type of messages will most (and least!) appeal to them, and what kinds of products would be most relevant for their lifestyles.
Another way of clustering would be to track peak times of day that customers visit your store or website, and then focus in on more details about who those visitors are. Are they under 40 or over 70? Do they own a car or use public transit?
Knowing this information begins to paint a picture of your customers you can use to deliver precisely-targeted messages, via the right mode, at the right time.
Companies use these insights to know the best hour to email special sale announcements, for example, or to decide where, physically, to spend advertising dollars (on suburban billboards or on the insides of buses, for example).
A basic overview of factor analysis is the method we data scientists use to simplify a large sample of variables and then look for any additional, underlying variables that might indicate a deeper connection.
Let’s say you decide to run a customer survey to test the viability of a new smoothie flavor. You might ask your customers not just “How likely are you to try a watermelon-broccoli-ginger drink?” but also, “How did you hear about our business?” Let’s say 90 percent of respondents answer, “I saw your billboard on the highway.” Knowing that, you would investigate what else all of those billboard noticers have in common.
At the very least, you can assume they’re driving in cars, as long as you’re pretty sure that highway isn’t on a common bus route. But who are those individuals, really? Where are they coming from? How far have they traveled, and what else did they notice on the way to your store? What do they purchase once they enter your doors?
The answers to all of those questions reveals the details about your customers’ needs, desires and preferences. And what business owner isn’t yearning to know all of that?