How to understand which customers you should be targeting | Issue #14
In this week's Bulletin, we turn to targeting your segmented audience, recommend a book on squiggly careers, and invite you to #LearnEveryDayOfMay with us at Edfolio.
Welcome to the latest edition of The Leadership Bulletin.
If you're anything like me, it feels like 2022 is running away from you already. And that often means learning and development has taken a back seat to day-to-day priorities.
This is something we hear quite a lot at Edfolio, and we’re using the month of May to try and make a difference. That’s where this week’s Bulletin begins.
LEARN EVERY DAY OF MAY.
My company, Edfolio, has launched an initiative to help everyone to #LearnEveryDayOfMay. We’ll be sharing content with tips and insights into key skills for leaders and managers. Why are we doing this? Well, because learning more and improving our skills is one of the most important things we can do, but it's also one of the easiest things to overlook as we work on urgent priorities day-to-day. You can follow us across social media where we’ll be sharing graphics and videos throughout the month. Find us on Twitter, Facebook, LinkedIn and Instagram.
IN FOCUS: FROM SEGMENTING TO TARGETING
Last week, I began the first in a three part series looking at the Segmentation, Targeting and Positioning (STP) model. (You can read last week’s Bulletin here). We wrapped up that edition by looking at how any customer base can be segmented by their demographics (e.g. age, gender, educational level, family status or wealth), location (e.g. town, region, country or international) and behaviours (e.g. online shoppers, in-person shoppers).
This week we’re looking at the second part of the model, targeting, which helps us to discover which segments of our audience we should be focusing on. I recommend that you complete the segmenting of your audience first and have the key segments to hand, that way you can consider each of the five key criteria I use for targeting as we go through them.
Profitability. Some customer groups are more profitable than others, for example those who buy higher value goods. Analyse your segmentation to discover which segments of your customers represent the most profitable customers. It is likely you will want to focus on these types of customers and expand your marketing and/or offer to them.
Size. How big are the individual segments? Are they large enough to enable you to achieve your business objectives? You want to make sure that the market you’re targeting isn’t too niche, but the important thing here is to consider the size of your market in connection with the other points. For example, fewer customers may be okay if you have higher profit margins and significant repeat custom. Similarly, it might be that your audience is currently limited by geography, but by investing in your online offer you could expand the number of potential clients beyond your town or city.
Growth. Are your segments of the market growing, shrinking, or staying the same? What does this mean for the segments you are targeting? A business in an area of declining population might struggle without adjusting how it reaches its potential customers. As part of this, I recommend analysing whether your products and services are experiencing a surge, or a drop, in general demand. If your product is becoming less popular with a general audience, this will impact which segments you target and how. These considerations may be less pressing if your products and services are in high demand all over the country.
Your credibility. How well-positioned are you to serve the needs of any one segment? Do you have some credibility with them already (e.g. in the right place; endorsements from similar customers) or would you have to invest significantly in attracting new customers from that segment (e.g. a new shopfront, or more sophisticated website)? No business starts out with credibility; it has to be earned. And, even when you have it, you don’t always have it with the right people. Ideally, you want to target segments where your credibility is strongest.
Your ability. Finally, you want to consider your ability to reach and serve the needs of each segment of your audience. Are you trying to sell into a territory with barriers to sale? Is overcoming them something you could invest in to reach a new market (e.g. changing your website to sell in $ as well as £ and bringing in a consultant on exporting beyond the UK)? Your ability as a business is never fixed, but it’s important to know how your operations can currently meet the needs of each segment of your market and whether any particular segment can justify investment in your business.
If you work through these five topics for your audience segments, this should help you to discover which segments are most profitable, sufficiently large or growing, and with whom you are (or can become) both credible and competent to serve. There’s lots more we could discuss on targeting, but I hope the above has given you a flavour of how targeting can build on segmenting to fine-tune the way your business understands and targets customers. Next week, I’ll consider the third and final part of this model: positioning.
A READING SUGGESTION ON PROFESSIONAL DEVELOPMENT.
The Squiggly Career by Helen Tupper & Sarah Ellis. In this best-selling book, Tupper and Ellis claim we're living in a world where moving frequently and fluidly between roles, industries, locations, and even careers, is becoming the new normal. To make the most of our increasingly squiggly careers, we need to answer some important questions: What am I good at? What do I stand for? What motivates and drives me? Where do I want to go in the future? This book leads you through those questions and helps guide you through your own squiggly career. You can buy it from Blackwells by clicking here.