Designing for superior business performance

A guide for technology, creative and startup leaders

"if you love what you're doing and you always put the customer first, success will be yours.”
Ray Kroc.

What outcomes are required?

The which customers strategic choice clarifies these important criteria for your strategic choices / your business blueprint

1. Which customers have the need and are willing to pay for the value or delight that your value proposition delivers?

2. Do those candidate customers experience the situations identified in the Jobs to be Done

3. Are those customers accessible to the business and via which channels?

4. Are there enough of those customers to be delighted, to justify the investment necessary or prove the value of the value proposition.

   In some cases your value proposition might be targeted at a smaller market to win that market with the intent of expanding the influence of your value proposition.

Keeping the which customers choice clearly defined enables you to

1. Ensure your value proposition is or can address the needs and desires of customer groups

2. Design your product(s) and/or service(s) to best meet those needs and desires

3. Discover and deliver opportunities to optimize the customers journey or experience based upon shared attributes of those groups.

4. Develop a marketing or communications strategy to reach a market open to your message.

Market segmentation

Why market segmentation

Market segmentation is a performance and productivity improvement tool. It enables your business to be more efficient in terms of time, money and other resources when communicating your offering, your value proposition. You can tailor your message, so it resonates with that customer segment. If for example a business is selling Database management software, then the message targeting technical personnel will be different to the message communicated to C-suite executives. The message must be different as the needs of the technical personnel are different from those of C-suite.

Channels for communicating the message will also likely vary. Technical personnel might be accessible via platforms such as Youtube, Technology websites. The C-Suite executives might be more accessible via direct sales, business journals and so forth. Market segmentation also allows companies to learn about their customers more specifically. Getting feedback from the technical teams on your product is a focused set of feedback. Getting feedback from a broader market segment with varied and undefined needs is likely to result in an incomprehensible and unactionable set of feedback. The better understanding of customer’s needs and wants allows focused communications to each customer segment and product improvements most likely to be valuable. Now you are up-to-date on the why of market segmentation, you can review the how.

Demographic segmentation

Demographic segmentation is the segmentation of a population-based on factors you would expect in a government census including attributes such as age, race, and sex, employment, education, income, marriage or relationship status and more. Recalling the needs satisfied by your value proposition which demographic factors would identify the people in society that are mostly likely to have those needs?

Age range		Relationship status
Gender identity		Family situation
Employment situation	[insert employment position in here as relevant]	Income range
Education level		Type of organization working for	[insert type in here as relevant]
Immigration status		Nationality
Country		Region	Urban | Suburban | Rural | etc

Psycho-graphic segmentation

Psycho-graphic segmentation is segmentation of a population-based on factors such on their interests, activities, personal values, and lifestyle choices. The best to start your psychographic segmentation is to discover the interests, hobbies, and lifestyle choices of your customers through dialog – call it an interview or discussion.

Lifestyle		Social status identity	What social status does the segment identify as
Values and attitudes	[insert values possessed by your target customers in here as relevant – Achievement oriented, Bold, Calm, Competitive, Co-operative, Freedom, Fun, Growth, Happiness, Honesty, Quality, Security, Speed]	Personality traits -	[Introvert Extrovert, Friendly, Emotional, Funny, Opinionated, Stoic ]
Interests	[interests common to this segment]	Concerns	Things that concern this segment
Influenced by		Other	[insert anything else in here as relevant]

Behavioural segmentation

Behavioural segmentation is the segmentation of a population-based on factors such on their interests, activities, and lifestyle choices. The best to start your psychographic or behavioural segmentation is to discover the interests, hobbies, and lifestyle choices of your customers through dialog – call it an interview or discussion.

Purchase behaviour

Purchase behaviour-based segmentation looks at how customers act differently throughout the decision-making process. It helps businesses understand:

• How customers approach the purchase decision

• The complexity of the purchasing process

• The customer’s role in the purchasing process

• Barriers along the path to purchase

• Which behaviors are most and least predictive of purchase-making

Purchasing behaviour can be broken down into four main categories:

Complex	Variety
A customer is highly involved in the purchasing and decision-making process, and there is a significant difference between the offers being considered. Examples include purchase of new luxury car, a new home, or a new Enterprise Resource Planning system for a fortune 500 company – a bad decision has ramifications	The customer isn’t too involved in the purchasing process, but there’s still a difference in the offers from different businesses. There is less at personal stake for the customer here and often the duration of the impact of the decision is shorter e.g., decided to try a new brand of coffee, pizza shop or similar. Businesses can enable this type of purchasing behaviour by providing trials, test drives, leases, rental arrangement and so forth to increase the confidence or decrease the durability of the decision.
Dissonance-reducing	Habitual
Customer is making an important purchasing decision, that could impact them personally, but they perceive the choices to be similar or undifferentiated. For example, when purchasing a new dining table, silverware set, or recruitment agency a customer might base their decision on price rather than the different attributes of the product	When a purchase doesn’t require much involvement, the product being offered doesn’t vary much across brands, and it’s mainly a personal preference or habit – the customer always buys that brand e.g. purchase the same laundry detergent or order pizza’s for the staff from the same nearby pizza shop.

Buyer journey or stage

A frequent cause of losing customers is to seek a commitment when it is too early in the relationship, a bit like popping the engagement ring into the champagne glass on the first or second date (without being a teenage Hollywood celebrity). The aim of Buyer journey stage segmentation is present value proposition to the prospective customer based upon the knowledge and level of commitment they can make based upon where they are.
Moreover, when we evaluate accessibility to the market segment, you can consider if the prospective customers are accessible to your business depending on the buying stage. For example, buyers late in the stage might be difficult to access as their minds are closed to more information. It can be easier to identify where a prospect is in the buyer journey with qualifying questions . Examples below

PROMPT FOR THE CUSTOMER TO RESPOND TO	LIKELY BUYER STAGE
Looking to understand more about the benefits of a CRM system?	Likely early in the journey – aim to inform the prospective customer of the benefits and roadmap and offer to partner with the customer in their evaluation
Still looking for the right CRM system? Overwhelmed by too many CRM options?	Further in the buyer journey but undecided
Has your CRM been underperforming for too long now?	Likely experienced with CRM systems but may be looking to make a change

Usage segmentation

Usage segmentation aims to segment a market based upon the type of usage the customer will make of the value proposition. As an example, consider, power tools. Power tools might be purchased by professionals and the occasional weekend Do-it-yourselfer. Putting together a compelling value proposition with superior performance, low total cost of ownership, durability and reliability is likely less valuable to the occasional DIYer, but much more valuable to the heavy professional usage person.
Consider a second example software. Software consumer of a business automation solution for use in a non-critical low value business process will be in a different segment that those looking to use it in high volume, business essential process automations. Usage segmentation considers:

• How customers are using your product or service

• How often they use it

• How much time they spend with it

• What features they use

• How many users from the same account use it?

Usage-based segments can include:

1. High frequency / importance users - Customers that most depend upon and spend the most time using your product or service, and purchase most frequently

2. Medium frequency / importance users - Customers that regularly, but not very frequently, use or purchase your products (often time- or event-based – tax time, seasonal

3. Low frequency / importance users- Customers that use or purchase much less than other customers, sometimes even only once

Event trigger

Event trigger segmentation aims to segment a market based upon the types of trigger events that drive the desire for the value proposition of your business. If you sell Pizza’s then Friday night might be a trigger or the day of the football finals. If you sell CRM systems, then the appointment of a new CEO, marketing executive or loss of a major account might be a trigger to stimulate the need. Finally, if you are retailer then festive seasons are a recurring event trigger.

Experience segmentation

Experiences is another way to segment customers behaviorally. Some of the most common include:

Category of experience	Description
No awareness and no experience	May need to be made aware that they have a problem in the first place
Some awareness and no experience	Need to learn why your product or service is their best option
First-time usage	Might need further instruction on how to get the most value from your product
Regular users	Ongoing nurture of the relationship Maybe candidates for product development growth via supplemental products or services you offer
Toward defectors	Customers dissatisfied with a competitor who might go back to the originating brand fixes the issue that caused them to leave. Alternatively, a competitor maybe in service delivery, reputation or other trouble and there is the chance to offer their existing customers salvation
Away defectors	Former customers who have switched to a competitor who might come back to your brand if you’ve fixed the reason for them leaving
Non-customers	Potential customers who have the need, but their unfavorable experiences have made them non-customers

Customer loyalty

• Promoter

  • Promoter of your business (> 8 on a Net Promoter Score)

  • Detractor (<7 on a Net promoter score)

  • Neutral (neither positive nor negative 7 or 8 on Net Promoter Score)

• Purchase frequency:

  • High purchase frequency

  • Medium purchase frequency

  • Low purchase frequency

• Purchase size:

  • Large purchase

  • Medium purchase

  • Low purchase

• Type of product

  • Premium

  • Standard

• Payment history

  • Reliable / timely

  • Unreliable / untimely

Segments a B2B market based upon the type of organizations being targeted e.g., Fortune 50, 500, SME, start-ups, government, non-government and so on. Organizations can be segments based upon:

• Industry(ies) operated in e.g. the Chemical engineering industry versus the Pharmaceutical industry

• Location or Geography

• Size (e.g. number of employees)

• Structure (public companies, privately held, fortune 500 or 2000)

• Status – market leaders, aspiration leaders, startups, favorable reputation

• Performance (Growing, Stagnant, Declining, Gained a particular round of venture capital)

Wrapping up the segment definition

At this point, you have been able to define one or more target segments based upon demographic, psychographic, behavioral, usage, event triggers, loyalty, and even firmographic attributes. The attributes of one or more target segments are now well defined. The remaining questions are can your business access and target these segments and if so, how will it do so? To answer these questions in the next sections, you can assess targeting feasibility and positioning approaches to win with your specified segments.

Purchasing behavior	[insert purchasing behavior you anticipate prospective / customers will use as relevant]	Benefits sought	[insert relationship status in here as relevant]
Buyer stage	[insert buyer stages in here as relevant]	Experiences	[insert experiences of the segment in here as relevant]
Usage
Usage scenario	[High | Medium | Low]	Features	[Product attributes that matter most based upon usage scenario]
Event triggers
Specific event		Recurring situations	[insert anything else in here as relevant]

Wrapping up the segment definition

At this point, you have been able to define one or more target segments based upon demographic, psychographic, behavioral, usage, event triggers, loyalty, and even firmographic attributes. The attributes of one or more target segments are now well defined. The remaining questions are can your business access and target these segments and if so, how will it do so? To answer these questions in the next sections, you can assess targeting feasibility and positioning approaches to win with your specified segments.

Continue on the segment targeting

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