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Introduction to Segmenting Your Customers

Introduction to Segmenting Your Customers 2781-daily-golden-nugget-756As a small business owner, it's often difficult to balance your time between helping customers, managing your books, and building your business. There are a lot of tasks that small business owners must handle and none of them are more important than the other.

Marketing and advertising together are some of those necessary tasks that you have to spend time and money on; otherwise you will never grow your business. I was first introduced to the idea of advertising and marketing by my father back when I was a teenager. He was the first person to tell me that "it is a numbers game." I've since heard that expression over and over again in many aspects of business, and I even use it myself; but I no longer believe that your marketing plan and advertising methods should be based on quantity of numbers. Instead it should be based on segmentation.

I'm going to spend a few days covering this topic of segmentation. To get started I need to portray how different advertising methods and marketing plans sometimes use segmentation and sometimes ignore it. In later Nuggets I'll explain each advertising medium in more depth.

Your typical marketing company will tell you how many people your ad will be delivered to; a newspaper will tell you how larger their distribution is; a magazine will tell you how many subscribers they have; and a radio station will tell you how many listeners they have. When you're purchasing advertising in these types of traditional media, you are buying into that "numbers game" where you might hope for a 2% customer response.

Small business owners often times try to design individual ads on their own or they pay the media outlet to design it for them. These ads are usually designed to appeal to a broad audience, but they generally lack any "call to action." Simply stated, a call to action is when you say "do this now." People who have specific needs are looking for answers, and it's those people who wish they could look up at a billboard that simply says "hey, I can help you right now if you call me or come to my store."

If only marketing were that simple. If only you could get the right message in front of the right people exactly when they need it... If and only... two small words.

At this point, as an internet marketing guy I'm supposed to tell you that you actually can get the right message in front of the right person exactly when their need arises. As an internet marketing guy, this would be the perfect time for me to sell you my fine tuned internet marketing services... because that's how a typical internet marketing guy would convince you that they can do a better job than traditional media marketing.

But I don't want to sell you services; I want you to learn about advertising segmentation so you can eventually do this on your own.

When you hire a marketing company they are supposed to figure out who your target audience is and then come up with some ads that will resonate with that audience. Your sales can increase drastically if you resonate well with your audience. I submit that any ad response greater than 3% is probably because you fortuitously resonated that ad with a segmented audience.

A common topic I hear during marketing conversations is that "sex sells," and it's true. Sprinkle a little innuendo into your ads and you can immediately resonate with a very broad audience because, well, sexual topics resonate with everyone. But those innuendos only help to attract more conscious awareness of your broadly placed ad, and then it's still a numbers game.

Are you placing an ad in the newspaper that matches the billboard, TV, and radio ad that you have? If so then you've probably bought into the idea of "branding" your store in hopes of achieving "top of mind awareness." Branding has been a hot topic for the last 10 years and it has a time and a place. But for small businesses I don't believe that money should be spent on trying to establish top of mind awareness if you are not already highly profitable.

I've seen some business metrics that say you need to spend 20% of your gross income on marketing. The first 10% is used to attain new business and the second 10% is used to retain existing customers. It's that second 10% that you could think of as your "branding" money. Keep this in mind when you talk to a marketing person who wants you to get involved with a branding campaign.

Remember, branding campaigns try to create top of mind awareness, but I say that the call to action is more important... A branding example would be a sign with your store name on it, but a resonating call to action would be a sign that says "I can do that for you, call me."

Sadly, most advertising that I see is generic for a specific store, or a specific season, or event.

Over the next few Nuggets I'll explain how you can, and should, segment your audience into different groups. Then I'll explain how you can use this segmentation to improve the response rates for traditional media advertising, direct mail, and internet marketing.

By the way, segmenting your audience is a similar concept to what Seth Godin refers to as a "tribe." Seth is a popular speaker, blogger, and author who has recently popularized the idea that we all fit into different "tribes" of interests. I'm a cat person, so that mean's I belong to the very large tribe of people who like cats. I also fit into a much smaller tribe of people who have their Amateur Radio License. I also fit into the tribe of people who has a dedicated room in their house for a gym with a padded floor. Seth explains that each of us will gravitate towards activities that pertain to our tribes. Do you have a product or service that you can sell to that tribe? Then you need to figure out where those tribes spend their time and place your ads there.

Segmenting your ads to specific tribes is a more granular activity that what I'll explain this week's set of Nuggets. I'll stick to the basics for now.

AT: 06/17/2013 01:53:42 AM   LINK TO THIS GOLD NUGGET
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