Customer and audience segmentations are powerful internal tools for helping your teams to design product, marketing and experiences around your target groups. They are an effective strategy for helping orient a business around the customer, and ensuring this customer-led approach is something that all your teams can get behind. A few colourful segments are easier for everyone to digest than vast reports of customer data. But, as with anything, it is not without its challenges. The main one being: the balance between accuracy and usability.
The most accurate segmentation would be far too overcomplicated for the business to find usable. It would reflect the complex reality of humans and their refusal to sit neatly in defined segment boxes as much as we want them to. The most usable segmentation would be far too oversimplified to generate enough value for customers. The business could get behind them easily but customers might feel that something is missing in the experience of your brand.
In this article we explain why needs-based segmentations are gaining popularity in a digital age, how they achieve this balance and overcome some of the challenges faced by other forms of segmentation.
Here are the main types of segmentations we’ve seen over the years and the common struggles that organisations face when implementing them:
At this point we need to scrutinise the thinking behind these approaches from the perspective of your business. All segmentations should be tailored to your business and the reality of customer buying behaviour in your market. It should never be applied off-the-shelf.
If you’re a tech brand for example:
Needs-based segmentation takes a step back from the above methods and asks: what is the main reason a customer buys your product?
The main reason a customer buys your product is because it serves a Job to Be Done.
A Job to Be Done is a need a customer has to make progress:
In each of the above examples, the customer is preoccupied with finding a solution to their need. They are on a mission to solve this and are looking for solutions that speak to this need.
It is true that this might be reflected in their demographics, attitudes and behaviours.
But ultimately, the main objective for this customer is their Job to Be Done. Now you know what this group of customers cares about you can better target them with relevant ads, understand their mindset in the buying moment and gear your products, marketing and experiences towards creating brilliant end-to-end journeys that solves their exact need.
It is also possible to cross a needs-based segmentation with key demographic data. Let’s say you are targeting different types of business: e-commerce, retail and consultancy are very different business models. So you can look at needs within each of these groups. This will give you a rich picture of your customers, without being too overwhelming to use for your teams.
If you’d like to learn more about needs-based segmentation schedule a call with us to learn more.
Untold Insights helps brands adopt a customer-led strategy to launch, grow and scale winning digital products. We offer strategic customer advisory JTBD identification, segmentation, competitive mapping and buyer’s journey analysis.
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