“There is only one winning strategy. It is to carefully define the target market and direct a superior offering to that market.”
– Philip Kotler
Many businesses waste thousands and even millions of dollars on marketing with little or no conversion, only to find themselves in the grave of no sales.
As an entrepreneur or manager, one of the most common mistakes is not targeting the right customers. According to Nielson, only 17% of targeted ads reach the intended demographic. This is based on those who are using targeted ads only, where you at least are forced to specify some kind of segmentation. There are still other businesses that don’t segment at all.
While you might have heard the basic marketing principle “Not everyone is your customer”, targeting the wrong people can be subtle. You might feel like you know who your customers are – until you start to notice that something isn’t quite right.
The following are red flags to look out for and common segmentation mistakes to avoid.
4 Signs You Are Marketing Your Business To The Wrong Customers
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1. People Don’t Care About What You Say Or Offer
When people interact with your content it usually means they resonate with it. Open rates, likes, shares, comments, and CTR (click-through rates) are just a few examples.
If your engagement levels are low, explore why. Dive into your insights. Who is engaging and who isn’t? Can you identify any patterns? Are you targeting the wrong customers or using a message that isn’t on point? If you recently changed your value proposition or content, it’s natural that your current audience might not resonate in the same way. Then it’s time to review your segmentation and make sure that you grow your network with relevant people.
Note that it takes time to build a community. If you’re just starting out, it’s natural that people don’t through themselves at you until you’ve established your brand. You should however be able to see some signs that you’re on the right track over time. Experiment until you get there!
2. Sales Go Through As Often As You Win The Lottery
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While patience and persistence are important in sales – if you always get turned down, it’s might be time to review your target groups. The timing isn’t always right and sales cycles can take time, but your ideal customers should at least be slightly interested in what you offer!
Even if you conclude that you’re targeting the right people, an important part of segmentation is to define how you should communicate with them. Do many prospects inquire about your product or services without buying? Try to understand why. What are the most common rejections? How can you address them? Go through the buyer journey, look at your data, talk to your sales team and to potential customers to better understand their needs.
3. The Return Isn’t Worth The Effort
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Do you put in a lot of energy, without results matching the effort? Just as with any relationship, walking away from leads and customers that aren’t a fit for your business is key to creating space for those who are. If you prefer creative freedom, kicking off a collaboration with a client that micro-manages everything will likely only take you down frustration-lane. Even if they pay you well, you will still have trouble trying to satisfy their wants and often end up wasting time.
Avoid this by pre-screening clients. Ask the right questions! Get a good understanding of expectations, scope, operation style, and budget. If you can’t deliver what they expect, don’t take them on. This can be hard in the beginning, especially if you need sales, but you will thank yourself later. Sometimes things might start off well, however over time you start to re-consider the collaboration. That’s fine, too! You might both be great, just not the right fit. While it’s fine to have ups and downs in projects, it shouldn’t be a constant struggle. Trust is key!
4. You Keep On Getting “Unfair” Critical Reviews
Positive reviews are all about customer satisfaction and the quality of your offering plays a big part in this. However, even if the quality is awesome, customers who aren’t the right fit might still not appreciate it. It’s like serving coffee to people who prefer tea. Even if the coffee is of premium quality, it’s just not… tea. Review feedback and pay attention to what your past customers are saying. Consider what warrants it and ensure it is not because of poor targeting.
6 Common Market Segmentation Mistakes That May Cost Your Business
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Ready to get your targeting right? Then avoid the following common segmentation mistakes.
1. Trying To Reach Everyone, While Being Relevant To No One
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Targeting too broad is one of the most common segmentation mistakes. While it might feel good to have a big list of “leads”, a small well-segmented list usually performs better. When you’re trying to reach everyone, you are often relevant to no one.
● Do you have various customer groups? Map out the differences between them. Such as lifestyles, challenges, channels and times they prefer for commnication. Even if they are interested in the same product, are they buying it for the same reasons?
● Not sure where to start? Ask: Should I communicate with these people in different ways? If yes, divide them into subsegments and experiment with diverse content and CTAs Don’t overcomplicate it! Start small, expand over time if needed. 1-3 segments is often enough for SMBs.
● Always make sure the extra effort you put in to personalize your marketing is worth it by looking at the return you get.
2. Segmenting Based On Personal Opinions Alone
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Business owner and teams frequently assume they know who their customers are and therefore segment based on personal estimates only. While it’s important to get input from the team (especially those who work directly with the customers), always complement with data. If no or limited data is available, such as during new product launches, run experiments via ads/landing pages and hold interviews with potential target groups.
Moreover, it’s common to view our personal opinions as “the right way”. Ever experienced fiery discussions within a team when developing content for a marketing campaign? You surely sit on a lot of valuable insights. Just acknowledge that we’re all shaped by bias, and that things might not be as we thought. Exciting, right? ? Set up hypothesesis, run tests, and combine your knowledge with data to truly enjoy powerful insights. Which brings us to the next point…
3. Incorrect Use Of Data
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With all the data available these days, the challenge lies in using it correctly and effectively.
For example, if you’re running Facebook ads, Facebook may present a number of conversions you’re likely to generate. But the data isn’t always accurate. Same goes for you making sense of your overall analytics. If you’re looking at the wrong numbers or don’t understand them, the data won’t do much for you.
We also have a tendency to look for data that supports an opinion we already have. Avoid confirmation bias by asking neutral questions and challenging your views when researching.
Your insights and decisions are only as good as your data quality!
4. Not Updating Your Target Groups Regularly
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Another common segmentation mistake is to base decisions on old insights, forgetting that a customer doesn’t stay the same forever. Some people who used to be a great match might not be anymore due to changes in their life or your business. Tech trends could also affect how your product or service is being used.
Where is the market going? Who will be your customers in the future? You might miss out on opportunities by not paying attention to emerging micro-segments or new trends. Make updating your segmentation a part of your routine!
Extra tips: This also goes for the people you’re looking to hire. Airbnb’s recent announcement of allowing people to work from anywhere is a great example of brands adjusting to market changes.
5. Stopping at Segmentation
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Segmentation is the foundation of your strategy. Now that you’ve established who you’re aiming to target, it’s time to start building out the rest. Including finding new ways to interact with your audience and creating content that will appeal to them.
Segmenting your audience is only the first step. Next comes the testing and fine-tuning. Without strategies aligned with your overall business goals and new initiatives (such as personalization, specific offers, etc) you won’t experience much of a change! For segmentation to work effectively, your entire team must also get on board.
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6. Targeting People Who Don’t Have The Budget
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If you’re selling luxury watches but attracting customers who have no business with wristwatches, not to talk of luxury… Your sales representative will likely have exhausted all the Dan Lock and Ogilvy marketing strategies they know but to no success.
“Affordable luxury – these are two words that don’t go together.”
– Bernard Arnaul
Even if you get a customer on board who doesn’t really have the budget, be careful. If they see you more as as a “high cost” rather than an investment, they might never fully appreciate the value you provide. If you are targeting the right customers but keep hearing that your offering is “too expensive”, review how you better can communicate your value.
While it can make sense to have followers to increase brand awareness (most luxury brands have many fans that likely never will buy), be clear on who your actual customers are. It’s fine to develop a relationship with them before they “get there” (such as with students who later on likely will work for the businesses you’re marketing to), but there is a fine line. Make sure your strategy takes this into consideration to avoid wasting time and resources. Is your marketing targeted to the people who need what you offer and also can afford it?
Segmentation Takes Time But Is Always Worth It
Defining the right audience is key to differentiating your brand and boost growth. Your insights are essential but should always be accompanied by data.
Sometimes it’s all about tweaking to get it right. The overall customer group could be right, but you might have to segment further and communicate to different subsegments in different ways.
Segmentation is not a one-time-job but a continuous process. Things change and it’s key to keep your data updated. While it takes time to ensure you get the targeting right it’s always worth it. It helps save costs, boost revenue, loyalty, and develop lasting customer relationships.
More inspiration on how to grow your business? Check out the marketing section on the blog!
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