Why new Customer Segmentation tactics can improve your ROI

I recently came across an excellent example from marketing thought leader, Brian Solis, illustrating the pitfalls of simply relying on demographic segmentation when targeting customers. He shared an example of two wealthy English men who were both born in 1948.  Each had married twice and had two children.  They both liked to holiday in the Alps and had a shared love of dogs.   However, when their identities were revealed it was clear we were being introduced to two entirely different characters.  One was Prince Charles and the other Ozzy Osbourne.  It’s comical to think we marketers might lump them into the same group, but that’s been common practice for many decades now.

 Fast forwarding to today, the latest customer segmentation theories seek to address these issues by getting us to focus more on the customer experience rather than simply looking at gender, location or spending power.  Over and above these factors, it’s important to consider the context of a purchase and the expectations, perceptions and needs that colour our thinking before we swipe that credit card or hit the ‘buy now’ button.

 For example, LiveWork Intelligence, an agency specialising in customer experience research and design, has developed a framework that considers how customers typically group their purchases into particular experience categories.  They have highlighted five categories that consumers typically use to group their purchases:

  • Essentials – products or services you need to invest in in order to live your life
  • Wellbeing – Any purchase relating to areas such as education, work, healthcare, social interactions, religion etc.
  • Household – regular purchases that support the smooth running of your every day life. 
  • Interests – products or services that excite, entertain or motivate
  • Obligations – purchase we feel we have to make

Below I’ve illustrated how each of these groups could be used by a brewery to segment its target customers and further illuminate what a customer is looking for when they buy from each perspective.

For example, if you’re looking to target the home drinker then value for money, a predictable, consistent product experience and extra levels of convenience are likely to be appreciated by your customers.  If you work with this insight, you may think about developing packaging that works for bulk-buy customers or those packaging options that provide extra beer for a better value price point. – a 500ml bottle option for example.  Clear, attractive branding that really stands out will also help you make your mark in a crowded retail environment.  Great home delivery options for online purchasers will be essential.  Your competitive advantage with this segment will come from paying added attention to all these aspects in-house or choosing to work with wholesalers and other third parties who can deliver the best experience to your consumer.

Once you’ve done some similar research for your own business, I believe it starts to get much easier to predict what a customer will want when interacting with your products or services. Then following on, you are better able to start designing products, services and experiences that more clearly match your customer’s needs and expectations which in turn will lead to a greater return on investment for your business.

For more advice on segmenting your customer base, why not get in touch for a no-obligation chat to discuss the process in more detail.