The marketing approach of grouping customers and prospects by variables such as need, geography, product usage or price sensitivity has been used by larger brand marketers for decades. Brands with smaller marketing budgets have typically discounted segmentation as out of reach, because of limited resources.
But technology has made segmentation more affordable, and it’s now possible for smaller marketers to sharpen their marketing focus and do more with less. Online search engines, smarter databases and social marketing make it easier than ever to reach a market niche or motivate your customers to pass the word. Here are some easy do-it-yourself steps for starting out:
As a business owner, you choose which markets and customers to target and how to reach them. This is a big advantage. All markets and customers are not equal in terms of profitability, business health and potential, particularly in a challenging economic environment.
SunTrust Business Owner Research shows that the majority of business owners are not tracking profits by customer, market or product line. It is helpful to use Quickbooks® or other accounting software to easily categorize customers, markets and products so that you can easily track:
It is important to diligently manage and develop these highest value relationships. To get the most leverage from your customer list and fully identify your top tier, you need answers to these key questions:
Answering these questions will help you prioritize your current and prospective customer targets for marketing. SunTrust research shows that customers are the most important growth assets for many businesses. Growing “share of wallet” is better than growing “share of market.” Business owners tell us that most (56 percent) of their sales growth comes from the customers they already have. It is more than four times less expensive to sell to existing customers than it is to acquire new ones.
According to SunTrust research, 53 percent of businesses do not measure customer retention, and 40 percent do not track which customers refer them business. Even fewer, only six percent, actively ask existing customers to introduce them to people they know. It is important to remember when developing your marketing plan that your target market includes reaching existing customers for recurring or add-on business, as well as reaching prospects for new business.
Once you’ve identified your most important customers and prospects, you can more effectively target the highest value audience. Niche marketing can pay off for years with referrals, customer-driven innovation and stronger brand loyalty. Niche marketing also allows you to use new and less expensive ways to reach your market, such as:
About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.
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