Segmenting is one of the most powerful marketing tools there is. Why don't more firms do it?


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Segmenting is one of the most powerful tools in a company’s kit. But many early stage startups don't do this valuable exercise in earnest. They should

SEGMENTING IS ONE of the most powerful tools in a company’s kit.

  • Customer or audience segmentation is exactly what it sounds like: dividing your market (or audience) into smaller sub groups based on some sort of shared characteristics.

  • And this doesn't have to be super technical, or hard to do: the characteristics you use to segment your audience be anything: like, demographic (ie., age, relationship status, location) or psychographic/behavioral (ie., a personality type that is risk averse and loves to plan v “free spirited experimenters”).

  • I can not say enough good things about audience segmentation: it helps focus marketing efforts… and can uncover all sorts of growth, revenue, and even corporate strategy insights.

BUT. MANY EARLY stage startups don't do this valuable exercise in earnest.

  • In startupland, “growth” roles typically straddle marketing, sales, and product dev. Their aim is what it sounds like: grow revenue, and thus the company.

  • PMF, as most of you will know, stands for “product/market fit.” That refers to that oh-so-desirable scenario of operating in a healthy market, with a product or service that satisfies customer demand. (Sometimes only one half of that sentence is the case.)

  • In marketing, a “funnel” is a model or a system of blueprinting out your customer's ideal journey, from never having heard of you, to enthusiastic and loyal customer.

  • A “high touch funnel” would be one that relies on a lot of human involvement: picture junior sales people manually reaching out to hundreds of leads, and then sending the most promising ones to talented senior sales people, for them to demo the product and hopefully seal the deal.

  • A low touch funnel essentially tries to do the same set of actions, just without the humans: picture an engaging, well designed, well written, likeable survey that leads to an equally well-written series of likeable emails that push recipients to an engaging and enjoyable demo video… and then, of course, a compelling/high value sales offer.

PROBLEM: MANY EARLY stage startups struggle with all of this, especially that first part, segmentation.

  • They shouldn't.

  • According to Anna's great LinkedIn post: a lot of startups '“often think it doesn't pay off to’ segment.

  • “After all, they might not have identified meaningful user group characteristics yet,” probably making segmentation feel like a bit of random guessing game.

  • So? Her point: embrace that.

  • When startups are “not sure yet what makes a good customer,” they have to look “for some – literally any – meaningful patterns.”

  • Founders and startup marketers: don't fight the fact that “at this point, it's more art than science…” and recognize that you “might have to change your segmentation criteria multiple times.”

  • That's OK! Marketing is living, breathing thing that does and should always morph shapes and shift directions.

SO, WHERE TO start with all this… and what's the point here?

  • Start segmenting simply! Keep it as basic as location. Category sophistication. Or what they've purchased from you already.

  • Her edtech startup “started categorizing our users” by:

— Country

— Role/Grade level (e.g. preschool teacher/homeschooling parent)

— Plan (freemium/paid business yearly/paid individual yearly/paid individual monthly)

  • Doing so uncovered a few interesting country-by-country trends, including ones they couldn't explain.

  • That is not a bad thing, but rather an excellent “starting point for further (qualitative) investigation.”

  • Bottom line: a segmentation project is one of the most powerful levers a startup can use to achieve PMF.

  • It's also one of my marketing consultancy’s most recommended projects, and one we love talking about. Interested in more? Email [email protected] to let us know.


Anna Holopainen’s LinkedIn post »»

Written by Jon Kallus. Any feedback? Simply email [email protected]

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