Customer segmentation

One of the first consideration in setting up a marketing plan to to consider customer segmentation. Regardless of the business your current customer base buys different products and services from your company. Some customers buy more than others. Some are more profitable. It's critical to begin your marketing plan by understanding your customer base.

80/20 rule


The old 80/20 rule states that 80% of your sales volume will come from 20% of your customer base (Group A). I always encourage new customers to look at this first to see where their 80% actually comes from. Since 80% of your volume comes from 20% of your customers then respectively 20% of your customers only sent you 80% of your sales (Group B). In both the 80% and 20% segments you will find additional customer segmentation.

After segmenting your clients into an 80/20 bracket take each group and look at their buying information to break each group into additional segments. Look at segmentation in several areas. For example:

• Sales volume
  
• Profitability
  
• Frequency of purchase
  
• Type of product purchased
  
• Age of the account as a customer
  
• Logistics
  
• Demographics such as age, gender, married/single, children

The more you understand about your current clients the better you will be able to create a marketing campaign to target each segment. Often companies using this process as a starting platform will find existing customers in Group B with the same profile as customers in Group A. That means they have missed sales opportunities by not recognizing the similarities in buying habit or customer profile.

Once your team has segmented your current customer base it's wise to perform a SWOT (Strength, Weakness, Opportunity, Threats) analysis on each segment (after performing one on your company). This will give you additional insight into what may be affecting client buying habits as well as events that may affect future buying decisions. Though SWOT analysis is normally used in continual improvement programs throughout a company it can be very effective in helping you understand what strengths you can use in your marketing and what opportunities could be key targets for marketing campaigns.

Emerging Solutions Now works with clients to help them re-think sales and marketing programs. Marketing requires an understanding of what has been done in the past, sales trends and industry shifts. With this information new programs can be designed to drive customer retention, increase the opportunity for customer sales and improve new client prospecting. For more information on our products and seminars please contact us at roger.buck@emergingsolutionsnow.com or visit our website at www.emergingsolutionsnow.com.

Marketing and ROI

Marketing Analysis
In today's economy many companies are looking at their marketing and deciding what to cut. In making that decision they should look hard at the purpose and ROI of each marketing program. What was the purpose of the marketing campaign and subsequent spend? Did it achieve the purpose? Did it produce the expected or at least acceptable ROI?

Each program and marketing tack should be reviewed individually then again by segmentation based on such items as new product launch, cross channel marketing, customer retention, customer growth and prospecting. Understanding marketing spend and ROI takes time however it is necessary for companies to truly determine if their monies are being used wisely.

After performing the analysis, companies can make a more informed decision as to cuts or money shifting to more effective programs. Cutting in-effective marketing may reduce your cost but then have negative impact on your sales revenue.

Re-Allocation of funds
After a company has determine what spend could be re-allocated a company should further consider what marketing is needed. Will it be product oriented or to promote branding? What marketing channel best suits the targeted objective? How will this be tracked and reported?
When? By whom?

Marketing is perpetual
A marketing plan should follow the PDSA formula: Plan, Do, Study, Act. This is an ongoing, self-educating mechanism. Each program should gather information which can be applied to the next version of the same program. Changes are made based on the learned data and the program becomes more effective and intelligent.

Email ?'s to me at Roger.Buck@EmergingSolutionsNow.com

It's old, it's new and it will always be vital...it's called marketing!

I saw an old business forms printers joke recently where a caveman is holding a club and chisel in front of four stone tablets. His supervisor is saying, "Hit hard, your making four copies.".

My thoughts? Who sold him the four stones and how would you market them? Was the salesman's business card a river stone? Who did he show the value of his stone tablets compared to the competitors?

Marketing is a vital key to any successful business whether you sell stone or RDIF tags. Understanding the role of marketing in the sales cycle is equally important. Many companies view these as the same function however marketing does not create sales as much as it creates an environment for a sale to occur. What's a good environment and where does that environment exist? How do you get a customer or prospect to visit that environment? When do you want them to visit? Good marketing can answer these questions and begin the ongoing process of bringing customers and prospects to the sales funnel.