Data analysis and marketing segmentation may not sound like sexy topics, but they can be game-changers for your business. Marketing segmentation is used by marketers to personalize their marketing strategy and cater to different groups of customers. When businesses decide to segment their customers and personalize their sales strategies, there is a high possibility of expanding their market and increasing revenue. Marketing segmentation also allows business owners to better identify their potential market and its size. But, you cannot perform marketing segmentation without good data. Data is the driving force for businesses and having the right systems in place to capture and track data is critical to any successful marketing segmentation strategy.
In this interview, gain insights into how to manage your data, segment your customers, and develop organic leads with the help of a proven and effective marketing segmentation process. The Five Echelon Group's Founder/CMO Eric Dickmann speaks with Sterling Woods Group Founder and CEO- Rob Ristagno about marketing segmentation and data management.
Rob Ristagno is the Founder and CEO of Sterling Woods Group. He holds degrees from Harvard Business School and Dartmouth College. Ristagno authored the book – "A Member is Worth a Thousand Visitors" and has guested and talked in multiple conferences and networks across the globe. He has also worked in different specialty roles for a variety of large companies like Pepsi, Visa, Comcast, and Mckinsey & Company. Rob has dedicated his life to data science and marketing leadership. With his team at Sterling Woods, they make it their mission to spur growth in both local and foreign businesses by applying data science to uncover relevant market strategies.
Making Use of Your Existing Data to Your Business' Advantage
Compared to large businesses, small and medium enterprises often do not have big budgets or marketing capacity to enhance data management strategies. Large companies have more ability manage their data apply market segmentation strategies to their marketing framework. Many companies are not aware of the amount of data they possess and the potential treasure trove of sales intelligence buried in it. The transactional data you gather when communicating with clients is an excellent place to start when planning to build your strategy.
Conducting interviews with a specific population and running surveys with your new or existing clients are a great way to supplement your current data. The funny thing is that businesses tend to think that they have too little data, but in reality, they have more than they think. However, this data is not organized and could be hidden on spreadsheets or old sales systems. Rob suggests that before you start organizing everything, you should first identify the proven value of the data you wish to compile. Then, get the organization comfortable with using the collected data to make better and more data-driven decisions. After gaining some momentum, you can look to implement addition tools such as a data warehouse.
Gathering Data and Marketing Segmentation Strategies
Business intelligence is often thought of as looking at historical activities. Weekly and monthly reports that are reviewed and then forgotten. But how can you use all this information to push your business forward? How can you use your gathered data to make predictions about the future? Utilizing powerful and automated statistical systems such as clustering, decision trees, and survival analysis can save you the time and effort of crunching bigger historical datasets. As technology continually gets faster and cheaper, you can implement analytical tools that can take all this data to produce reports and make predictions about where you business is headed. Whether you are a sales directed or technically inclined organization, the customers' welfare and best interest should always be the main focus of your business. By using data to identify and target the best customer segments for your business, you are able to provide the best level of service to customers who are the best potential fit.
Alexablog enumerates the major benefits of marketing segmentation to your business:
- Create stronger marketing messages
- Identify the most effective marketing tactics
- Design hyper-targeted advertisements
- Attract high-quality leads
- Stand out from competitors
- Building deeper relationships with clients
- Identify other marketing opportunities
- Stay focused
The Elements of a Market Segmentation Strategy
Ristagno introduces us to two marketing segmentation strategies:
This type of marketing segmentation focuses on how far your current data can lead you to in the future. Behavioral segmentation is based on how consumers act and perceive things. Understanding this type of strategy can help you make you and your team understand how to relay the proper messages to the right people. Knowing how this strategy works can make it much easier for you to identify your potential customers and redirect your sales strategies to increase your market and make clients want to return for your goods or services.
Some types of client behaviors to look out for:
- online shopping habits
- website actions
- benefits sought
- site and search engine usage rate
Psychographic segmentation recognizes the behavior of your clients. It identifies how their attitude, beliefs, and emotional attachment to brands or services affect their purchasing power. Assessing these variables and redesigning your market approach to satisfy their needs is the main focus of this segmentation. With content marketing data, you can make these attitudinal segments actionable by applying them directly to your marketing and sales efforts. Adding customized questions to customer surveys are a proven and effective way to gather more specific customer data. Effectively analyzing this type of data can help you adjust your prices without risking demand, encourage age groups to patronize your product or service, and reinforce customer trust and loyalty.
Focus on the high marketing points (cost to acquire customers, annual average customer revenue, customer lifetime value) rather than the low marketing segments. Doing this will save you the time and effort of spending too much marketing time and budget on the unnecessary segments. Building your skills in developing these high marketing segments can allow you to center your attention on your most significant clients. Knowing what you want by targeting a specific segment gives you the opportunity to execute your sales strategy to the right clients at the right time.
What is the Platinum Rule?
"Treat others how they want to be treated." Rob Ristagno pushes marketers to give the people what they want by using available data and automated tools to gain more insights into target client personas. Before marketing to potential clients, it is essential to assess their behavior and communication patterns so you can communicate with them and have engagement with your messaging. Artificial Intelligence (AI) can assist in the implementation of the platinum rule because the software provides you with the "what you need to know" quantitative and qualitative information about your target market. Rob believes that we can become great salesmen if we understand what the data is telling us! AI is one technology that is being added to many analytical tools to make that data more meaningful and easier to read.
One mistake that businesses often make is assuming that their biggest customers are their best customers. From a numbers standpoint, your biggest clients may be the ones contributing to your sales numbers but not overall profitability. There are times that your biggest customers are demanding, may require larger discounts, or a higher level of service. It is better to focus on your highest value customers. Your highest value customers are your regular clients who purchase your products or services consistently. Sometimes, you'll be surprised at what the data can tell you when you realize how much market segmentation has contributed to your business's overall growth.
The best interest of the customers is the ultimate goal of any organization."
Taking the Risk
Many businesses prioritize competing with other companies, without realizing that all they needed to do was to make some adjustments to their market segmentation strategy, and invest more on their weak spots. Business often hate taking risks and stepping out of their sweet spots to experiment on something new and possibly beneficial for our their companies. Data can help push us out of our comfort zones and open our eyes to a broader range of business opportunities. We then begin to appreciate the advantage of taking risks, and the process turns to become much easier than expected. Just do exactly what the data tells you to, and you'll realize you are on the right path.
Building a Strong Relationship with Your Customers
Rob always reminds marketers to be more specific in their communication strategy because generic marketing messages never do the trick. To create more sales opportunities, you should work to create a direct relationship with your clients.
Having a real first-hand understanding of who your customers are helps companies develop the appropriate marketing segmentation strategy to generate revenue. Being able to assess who is unhappy with your products and services will allow you to adjust your policies, pricing brackets, and service quality to increase sales and customer satisfaction. While the goal is to expand your client base, it ideal, especially during this pandemic, to focus on your existing clients and try to do a little extra to keep them happy and loyal. Remember that active visiting customers are equivalent to consistent cash flow.
Essential Steps to Understand Market Segments Better
Rob Ristagno enumerates essential steps to understand marketing segmentation better:
- Start looking at your sales history data to identify your customers and what types of products you have available.
- Check if there are ongoing patterns or trends between your customers and products
- Talk to your customers. Initiate a survey gathering at least a hundred responses. You will gather a lot of data when communicating with people.
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- Utilizing powerful and reliable automated statistical systems such as clustering, decision trees, and survival analysis can save you the time and effort of crunching bigger datasets.
- Knowing what you want by targeting a specific segment will allow you to execute your sales strategy to the right clients at the perfect timing.
- Treat others how they want to be treated.
- Never forget the core values of your brand and the reason why you started business in the first place.
- Active visiting customers are equivalent to consistent cash flow.
Episode and Guest Links
- To learn more about Virtual CMO, strategic marketing consulting services, or anything else discussed here, please contact The Five Echelon Group.
- The Five Echelon Group's Resources to Restart Your Business
- If you have feedback, questions, or are interested in being a guest on the show, please contact us here.
Rob Ristagno - Founder and CEO of Sterling Woods can be found online on LinkedIn.
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