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:
Identify Your Highest-Value Niche(s)
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:
Who are my most and least profitable customers?
Which are my most and least profitable markets?
What are my most and least profitable products?
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:
Which customers are “net promoters” of my business?
Which customers have additional needs or up-sell potential?
Which customers are most resilient in challenging economic climates?
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.
Market More for Less
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:
Word-of-Mouth Referrals. A customer referral is the least expensive marketing tool, and is an effective way to grow your business, but the vast majority of businesses today fail to fully exploit the potential of word-of-mouth. The growth of social media sites like Facebook and LinkedIn make it easier for both consumer products and business-to-business products to motivate recommendations or sharing of special events and new product information.
Satisfaction Surveys. Rated by business owners as a top free marketing tactic, informal customer polling lets you learn more about your customers’ unmet needs, helps you identify the customers most willing to refer you business, reinforces your value in the eyes of your customer and allows you to cross-sell other products.
E-mail Communications. Requiring only the creativity to come up with something relevant or compelling to say, email newsletters can be a powerful tool for encouraging “Share with a friend discounts or special offers.”
Search Engine Optimization and Blogging. The ability to target niche markets is greatly enhanced with search engine optimization and the use of key words on your website, in news releases or blogs that you post online. Most major online providers offer classes on how to optimize their tools for search and online engagement.
Marketing Partnerships. By partnering with other businesses that share your “niche” market, you can share advertising expenses, sponsor relevant customer events or bundle products in creative ways.
Business Development. How you invest your time as an owner is extremely important. Owners are the best salespeople for their companies and are particularly well-suited for prospecting and new business development. SunTrust Business Owner Research shows that companies whose owners spend more time knocking on doors looking for new business grow faster than those who spend more time on customer service or other important activities. If lagging customer demand or a weakened market have become primary issues to you, considering going on more sales calls personally.
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.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
Most financial professionals are more comfortable delivering services than promoting them. At the end of the day, demand generation — your ability to generate interest, inquiries, new leads and proposals — is a good thing for your practice and your reputation.