Finding a product-market fit requires a company founder to connect a value proposition to customer segments.
Truly defining your customer is one of the most important and hardest things to do as an entrepreneur. Some entrepreneurs learn the hard way through trial and error. Others never learn and fail. Then, there are entrepreneurs who take the time to define their customer segments and devise a strategy to attract them.
How should a small business define and discover its customer segments?
We surveyed a variety of marketing professionals and small business owners for their customer segmentation discovery tips. Here are their recommendations on how to define customer segments.
There is new software called Clearcut that I’ve found useful for understanding your customer segments. It helps you create strategic surveys for your customers and uses AI to help you understand what your customer segments might look like. I’ve played around with it a bit and found it’s a handy tool!
-Zack McCarty, Qwick
Place Your Leads in “Buckets”
Every year, I learn more about my clients and identify new areas to focus on and better target. The best way to define your customer segments is to review all your leads over the last 6 months and place them into various “buckets.” Chances are, you will find a lot of commonalities among them and the segments will create themselves!
-Eric Blumenthal, The Print Authority
The Standard Industrial Classification (SIC) are four-digit codes that categorize the industries that companies belong to based on their business activities. OHSA has a SIC System Search that entrepreneurs can use to research which codes may pertain to your customer segments. Generally speaking, using a pre-existing and well-thought organization system to help define customer segments can be a beneficial exercise for small businesses.
-Carey Wilbur, Charter Capital
As an SEO agency, we service a wide variety of clients across various industries. From pipeline pigging to eyelash extensions, we do it all! With that said, when I analyze our clients in Pipedrive, it is easy to define our segments and identify commonalities among our clients. I would highly recommend tools like Pipedrive that allow you to visualize your existing clients and what verticals you should focus your business development in.
-Nikitha Lokareddy, Markitors
Clearly Define Your Services
I find the most effective and thriving businesses have clearly defined the solution(s) they offer. Once the solution is defined, it is much easier to recognize current and potential customer segments. Every business isn’t for everyone. Be honest about what your business offers and the value of that solution to your customers.
-Candace Cotton, HALO Branded Solutions
Clearly Define Your Target Market
This is one of the first steps in marketing. Clearly define your target market — and you can have more than one. Create personas based on their pain points or problems you’re going to solve with your product or service. Do some research. Which social media networks do they frequent the most? If you’re B2C, then you want to focus on Facebook, Instagram, and Pinterest, with Twitter secondary for exposure & LinkedIn for credibility. If you’re B2B, then LinkedIn and Twitter will be your primaries, with Facebook 2nd and Pinterest 3rd for SEO. If you span generations, your research will help you find how best to reach them.
-Giselle Aguiar, Digital Marketing Strategist and Consultant
Determine Inputs and Outputs
Defining and discovering a customer segment starts with planning. This means outlining the customer segment's objective, identifying people involved in the segment, the project’s input, and outputs. Go ahead and execute it through a realistic work plan and ensure the plan is incorporated in the business’ marketing strategy. Remember to develop a customer list that you can use as a data set as a best practice.
-Gresham Harkless Jr., CEO Blog Nation
Small businesses can define their customer segments using various characteristics, including age, gender, occupation, location, behavior in regards to products, and interests. Google Analytics is an extremely useful tool to discern this information about site visitors. It can help small businesses determine what types of people each of their site pages are appealing to. If you have an email list, having people fill out a couple of extra fields when they sign up can also help you learn more about them and send better-targeted emails to them in the future.
-Jennifer Fulmer, TechnologyAdvice
Start With Your Network
Understanding your ideal customer profile (ICP) and the personas within that ICP (the types of people who will buy from you) is essential for a business of any size but especially for SMBs. To discover the customers you should target for marketing, start with those already in your network who may buy from you in the future. Your friends, colleagues, people who have worked in the industry vertical you’ll be targeting are all a great source to set up 1:1 interviews to ask questions. Small business owners need these insights to ensure they have a product-market fit for their potential customers.
-Lauren Patrick, Curricula
Allow Customers to Use a Preexisting Account
One of the simplest ways to segment information about your customers is to allow them to create an account during your customer journey using an existing account or email. We’ve all seen sites that allow you to use your social media to create an account. While this simplifies the customer's process, it also gives you access to their demographic data without having to ask for it. Potential customers become suspicious if you ask about their demographic data,. Still, they’re more than willing to give you access to all of that data where it already exists in the name of convenience.
-Mark Varnas, Red9
Use Sales Data
I recommend using sales data to define and discover customer segments. For example, identify your "highly loyal" customers by looking at sales records to find people who have bought from you each month for the past year. Consider developing a special loyalty program and deals just for them. After you have a good program in place to address that segment, look at other segments.
-Bruce Harpham, Technology Marketing Consultant
For Remote Companies, Segment by Location
As a small business, I’d firstly analyze who your current customers are. You may notice that they share some interests, live in one location, or work in the same industry. This will be the first sign for segmentation by any of the characteristics. As a remote company that works worldwide, it makes sense to segment customers by location—either country or city— and focus on those places where your network is bigger or the competition lower.
-Yulia Garanok, datarockets
Segment Based On How the Customer Discovered You
In terms of marketing, how you want to communicate to and entice that customer requires thinking about the types of journies your customers tend to undergo, how they tend to find your business/product and key touchpoints in that journey. We are a B2B software provider and mainly tailor our communications to customer segments based on how they found our software - organically through our website or through a recommendation from one of our partners? We also further segment as appropriate by location, business size, or industry type to create even more relevant communications. This helps ensure customers are engaging with messages tailored to them.
-Camille Brouard, Myhrtoolkit
Listen to Your Sales Staff
A small business should look at the segments where their core business comes from firstly. Those are the "low hanging fruit" areas that a business can immediately capitalize on. Business owners can identify additional segments by going to industry events, looking at what segments your competition is in, and listening to your sales staff. Your competition could already be in vertical markets that you should be a part of and align yourself with. Your sales staff hear many things from prospects and customers and could be receiving interest from segments you haven’t thought of entering. Always be open to new business segments but also be wary of jumping into too many at once since this could stretch your resources and budget significantly.
-Larry Drago, Independent Marketing Consultant
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.