Customer Segmentation Quotes

The golden rule here is to stop assuming what your customers are going to like and what they won’t. Instead, start putting yourself in their shoes to familiarize yourself with their needs and wants. That way you will never go wrong.

You should look for your niche: all those people who will love your product because their needs and your product benefits match. we should try to reach a stage where our potential customer base is just perfect in size for us - not too big and not too little.

A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).

Six Strategy Traps 1) The do-it-all strategy: failing to make choices, and making everything a priority. Remember, strategy is choice. 2) The Don Quixote strategy: attacking competitive "walled cities" or taking on the strongest competitor first, head-to-head. Remember, where to play is your choice. Pick somewhere you can have a choice to win. 3) The Waterloo Strategy: starting wars on multiple fronts with multiple competitors at the same time. No company can do everything well. If you try to do so, you will do everything weakly. 4) The something-for-everyone strategy: attempting to capture all consumer or channel or geographic or category segments at once. Remember, to create value, you have to choose to serve some constituents really well and not worry about the others. 5) The dreams-that-never-come-true strategy: developing high-level aspirations and mission statements that never get translated into concrete where-to-play and how-to-win choices, core capabilities, and management systems. Remember that aspirations are not strategy. Strategy is the answer to all five questions in the choice cascade. 6) The program-of-the-month strategy: settling for generic industry strategies, in which all competitors are chasing the same customers, geographies, and segments in the same way. The choice cascade and activity system that supports these choices should be distinctive. The more your choices look like those of your competitors, the less likely you will ever win.

We just go where we want to go, do what we want to do, and become who we want to become. We want to be unique, but we want to be unique in groups. We want to stand out, but we want to stand out together. In the age of easy group-forming, the basic unit of measurement is not the segment but the tribe.

CS Business models with a multi-sided platform pattern have a distinct structure. They have two or more customer segments, each of which has its own Value Proposition and associated Revenue Stream. Moreover, one Customer Segment cannot exist without the others.

The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle, of benefits that a company offers customers.

The natural strategic orientation of many companies is toward retaining existing customers and seeking further segmentation opportunities.

As companies compete to embrace customer preferences through finer segmentation, they often risk creating too-small target markets.

A business model describes the flow between key components of the company: •  value proposition, which the company offers (product/service, benefits) •  customer segments, such as users, and payers, or moms or teens •  distribution channels to reach customers and offer them the value proposition •  customer relationships to create demand •  revenue streams generated by the value proposition(s) •  resources needed to make the business model possible •  activities necessary to implement the business model •  partners who participate in the business and their motivations for doing so •  cost structure resulting from the business model The

One way multi-sided platforms solve this problem is by subsidizing a Customer Segment. Though a platform operator incurs costs by serving all customer groups, it often decides to lure one segment to the platform with an inexpensive or free Value Proposition in order to subsequently attract users of the platform’s “other side.” One difficulty multi-sided platform operators face is understanding which side to subsidize and how to price correctly to attract customers.

Where-to-play choices occur across a number of domains, notably these: Geography. In what countries or regions will you seek to compete? Product type. What kinds of products and services will you offer? Consumer segment. What groups of consumers will you target? In which price tier? Meeting which consumer needs? Distribution channel. How will you reach your customers? What channels will you use? Vertical stage of production. In what stages of production will you engage? Where along the value chain? How broadly or narrowly?

choose one segment with which you establish a “beachhead on the shores” of the early majority. Attempting to scale a business when forced to customize products, tailor marketing activities and execute sales processes for multiple segments is a difficult proposition. While

Every pregnancy results in roughly two years of lost menstruation. If you are a manufacturer of menstrual pads, this is bad for business. So you ought to know about, and be so happy about, the drop in babies per woman across the world. You ought to know and be happy too about the growth in the number of educated women working away from home. Because these developments have created an exploding market for your products over the last few decades among billions of menstruating women now living on Levels 2 and 3. But, as I realized when I attended an internal meeting at one of the world’s biggest manufacturers of sanitary wear, most Western manufacturers have completely missed this. Instead, when hunting for new customers they are often stuck dreaming up new needs among the 300 million menstruating women on Level 4. “What if we market an even thinner pad for bikinis? What about pads that are invisible, to wear under Lycra? How about one pad for each kind of outfit, each situation, each sport? Special pads for mountain climbers!” Ideally, all the pads are so small they need to be replaced several times a day. But like most rich consumer markets, the basic needs are already met, and producers fight in vain to create demand in ever-smaller segments. Meanwhile, on Levels 2 and 3, roughly 2 billion menstruating women have few alternatives to choose from. These women don’t wear Lycra and won’t spend money on ultrathin pads. They demand a low-cost pad that will be reliable throughout the day so they don’t have to change it when they are out at work. And when they find a product they like, they will probably stick to that brand for their whole lives and recommend it to their daughters.

Focus is a crucial winning attribute. Attempting to be all things to all customers tends to result in underserving everyone. Even the strongest company or brand will be positioned to serve some customers better than others. If your customer segment is “everyone” or your geographic choice is “everywhere,” you haven’t truly come to grips with the need to choose.

The natural strategic orientation of many companies is toward retaining existing customers and seeking further segmentation opportunities. This is especially true in the face of competitive pressure. Although this might be a good way to gain a focused competitive advantage and increase share of the existing market space, it is not likely to produce a blue ocean that expands the market and creates new demand.

To make good choices, you need to make sense of the complexity of your environment. The strategy logic flow can point you to the key areas of analysis necessary to generate sustainable competitive advantage. First, look to understand the industry in which you play (or will play), its distinct segments and their relative attractiveness. Without this step, it is all too easy to assume that your map of the world is the only possible map, that the world is unchanging, and that no better possibilities exist. Next, turn to customers. What do channel and end consumers truly want, need, and value-and how do those needs fit with your current or potential offerings? To answer this question, you will have to dig deep-engaging in joint value creation with channel partners and seeking a new understanding of end consumers. After customers, the lens turns inward: what are your capabilities and costs relative to the competition? Can you be a differentiator or a cost leader? If not, you will need to rethink your choices. Finally, consider competition; what will your competitors do in the face of your actions? Throughout the thinking process, be open to recasting previous analyses in light of what you learn in a subsequent box. The basic direction of the process is from left to right, but it also has interdependencies that require a more flexible path through it.

The Entrepreneurial Model What does The Entrepreneur see off in the distance that The Technician finds so difficult to see? What exactly is the Entrepreneurial Model? It’s a model of a business that fulfills the perceived needs of a specific segment of customers in an innovative way. The Entrepreneurial Model looks at a business as if it were a product, sitting on a shelf and competing for the customer’s attention against a whole shelf of competing products (or businesses). Said another way, the Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done. The commodity isn’t what’s important—the way it’s delivered is. When The Entrepreneur creates the model, he surveys the world and asks: “Where is the opportunity?” Having identified it, he then goes back to the drawing board and constructs a solution to the frustrations he finds among a certain group of customers. A solution in the form of a business that looks and acts in a very specific way, the way the customer needs it to look and act, not The Entrepreneur. “How will my business look to the customer?” The Entrepreneur asks. “How will my business stand out from all the rest?” Thus, the Entrepreneurial Model does not start with a picture of the business to be created but of the customer for whom the business is to be created. It understands that without a clear picture of that customer, no business can succeed. The Technician, on the other hand, looks inwardly, to

Scaling is good if it brings in incremental revenue, but you have to watch for a decrease in engagement, a gradual saturation of the initial market, or a rising cost of customer acquisition. Changes in churn, segmented by channels, show whether you’re growing your most important asset — your customers — or hemorrhaging attention as you scale.

Despite the “R” in CRM and the $11 billion spent on CRM software annually, many companies don’t understand customer relationships at all. They lack relational intelligence —that is, they aren’t aware of the variety of relationships customers can have with a firm and don’t know how to reinforce or change those connections. They may be very good at capturing simple demographic data—gender, age, income, and education—and matching them with purchasing information to segment customers into profitability tiers. But this is an industrial view of customer relationships, a sign that many firms still think of customers as resources to be harvested for the next up-sell or cross-sell opportunity rather than as individuals looking for certain kinds of interactions.

Using flawed segmentation schemes, they often introduce products that customers don’t want, because they aim at a target that is irrelevant to what customers are trying to get done.

It was tricky to navigate this uncharted terrain with undefined customers, but we were lucky to sell to a segment that hadn't been defined up front. There was no obvious way to target this underserved market, but we met this challenge by going very broad.

These tactics are often informed by market research, which involves a set of consultants slicing and dicing the company’s prospective customer base into narrowly defined segments—digital millennials here, Generation X there, tweens, bleens, spleens—leading the product designers to end up creating 31 flavors of mediocrity

Segmentation: Consumers’ purchasing behavior and attitudes towards brands differ from one market sector to another, depending largely on product-, market- and distribution-related factors. For this reason, the value of a brand can only be determined precisely through the separate assessment of individual segments that represent a homogenous customer group. Apart from this, brand management can only obtain the insights it needs to increase the brand’s value systematically if the brand has been evaluated in all its segments.

The big problem is that the messages, while they can be and sometimes are personalized, are seldom filled with dynamic content based on what we know about each customer. We have these rich databases, but we do not use the rich data that they hold. To use it requires many creative staff members who dream up the dynamic content. The thought is, “Subscribers who are over 65 have certain interests, while other subscribers are college students who have different interests. We will vary our messages based on this knowledge, and also do that for about a half-dozen other subscriber segments to make our relationships richer for them and more profitable for us.” This makes a lot of sense, but few marketers today are doing anything like that. They are blasting identical content to every subscriber or customer whose e-mail or address they can get their hands on.

To become a going concern, a persistent entity in the market, you need a market segment that will commit to you as its de facto standard for enabling a critical business process. To become that de facto standard, you need to win at least half, and preferably a lot more, of the new orders in the segment over the next year. That is the sort of vendor performance that causes pragmatist customers to sit up and take notice. At the same time, you will still be taking orders from other segments. So do the math.

For ecommerce data derived from digital experiences, such as the keywords and phrases from search engines to the frequency of purchases of various customer segments, data is most often not normally distributed. Thus, much of the classic and Bayesian statistical methods taught in schools are not immediately applicable to digital ecommerce data. That does not mean that the classic methods you learned in college or business school do not apply to digital data; it means that the best analysts understand this fact.

The same year we also acquired Financial Network Services (FNS), an Australian company with a retail banking software package called Bancs24. We needed them because some of our competitors had begun to target that market segment with their own IP. Bancs24 was a very comprehensive package and we were able to successfully win the systems integration contract for the State Bank of India (SBI) Group for implementation of core banking. Since we had invested considerable effort in customizing and strengthening it we felt acquiring FNS would be strategic for our products business. During our initial dealings with FNS and its feisty owner Tony Ward we learned to our surprise that when the product was being developed in the early 1980s TCS had deputed its programmers to Sydney to work with Tony and his team to help develop the product. Since the acquisition we have been able to deploy the FNS software package, rechristened ‘Bancs’, extensively with a number of domestic clients. Today close to 50 per cent of the banking transactions in India are processed by Bancs, thereby justifying the acquisition we made.

Don't force a one-size-fits-all solution. Whether you like it or not, your customers are different, so customer segmentation is crucial. But segmentation based on demographics—the primary way companies group their customers—is misleading. You should build segments based on differences in your customers' willingness to pay for your new product.

It’s a model of a business that fulfills the perceived needs of a specific segment of customers in an innovative way.

Using a trend is perhaps the best way to build high-growth businesses. More fortunes are made with a trend than without one, and it is easier for more to grow with a trend than without. If you are an entrepreneur or a corporate business developer, track trends in your industry, in related industries where you can easily expand, in technologies that can affect your industry, and in customer segments that you serve or can serve.

Find the entry wedge where value exceeds price. Every market segment has its own buying influencers—the benefits and rewards of buying compared with the costs and risks. These are the hot buttons that influence buying and the barriers that may keep buyers away, assuming they know enough about your product. To find the right entry wedge, you need to know your customers’ motivations and why they will buy from you. Different customers may have varied motivations.

what if you have a new technology (B) that is worse on today’s key performance variable that is valued by customers but is better on a second variable that may not be highly valued by today’s key markets? This is often the issue with revolutionary technologies. In such a case, the new technology may have to find a new market that may be today’s fringe market but is more open to your uniqueness. The venture can get a foothold in this fringe market, while continuously improving the technology to become more competitive in the key performance variable. When it does, the venture may be able to dominate other market segments.

A segment is a group of potential customers with similar characteristics, ability, and motivation to buy the product and at a high price. Successful entrepreneurs focus on the one right customer segment. Trying to market a new product to all potential customer segments is likely to result in a lack of focus and create competitive weakness. An entrepreneur seeking to dominate two segments is likely to be at a disadvantage against others who focus on one segment, all other things being equal. Even Walmart focuses on its key target segment and does not try to be all things to all people. That is because each segment is likely to need a unique combination of product, service, pricing, marketing strategy, and positioning, and it is extremely difficult and expensive to reach and convince different types of segments.

Billion-dollar entrepreneurs focus on the segment that they can dominate. Successful companies know their best segment—the best group of customers, who have the motivation to buy the product (or service), the purchasing power to pay a higher price, and the potential loyalty to help the company dominate. If the group is also a high-growth, high-potential segment, that is an added advantage. Focusing on the right group of customers makes it easier to dominate with capital-efficiency

By focusing on your best customer segments, you can target your resources to satisfy their needs better than your competitors, dominate these segments, and sustain your competitive advantage.

at the basic level, a business strategy includes the “three legs of the stool” for any business opportunity— What you sell: your product or service Whom will you sell to: your target customer segment Who will keep you from selling: your competitors

I want to help people survey and segment their customers using software.

I discovered the biggest challenge entrepreneurs faced was having the right technology and tools to not only survey their customers to better understand them, but to segment them into different “buckets” so they could customize their messaging in such a way that allowed them to create that warm, personal touch.

segment customers by need or behavior. If you can find a group of customers with similar needs—irrespective of where they are or what they sell—those customers will likely all react in a similar fashion to a common set of insights.

As a solopreneur and small business owner, you don’t have the capacity to target so many different customer segments. It’s ideal to focus on 1–2 segments at most so that you can focus on speaking the right language to the right customer because each segment will have different triggers that make them buy.

Shoes, apparel, groceries: these are big segments where we have the right skills to invent and grow large-scale, high-return businesses that genuinely improve customer experience.

we typically segment the customer base, so we know what set of problems each faces.

They say that startups don’t starve, they drown. You never have too few options, too few leads, or too few ideas; you have too many. You get overwhelmed. You do a little bit of everything. When it comes to getting above water and making faster progress, good customer segmentation is your best friend.

Creating change requires innovation: developing new products, creating new sales channels, reducing product development time, customizing products for increasingly smaller market segments. In addition, your company must be able to respond quickly to both anticipated and unanticipated changes created by your competitors and customers.

(Unlike differentiation, segmentation forges a distinct spot in customers’ minds that is unique, valuable, and in demand.) Low-cost

Internet marketing, especially social media, is that it may allow you to pick up neighboring segments opportunistically, while you remain dedicated to building value for your core constituency.

you must build your business or prove the traction to investors by dominating a specific niche market segment. In the latter case, you are essentially in a “segmented new market” that acts in a similar way to a re-segmented existing market.

Thirty thousand new consumer products hit store shelves each year. Ninety percent of them fail. Why? We’re using misguided market-segmentation practices. For instance, we slice markets based on customer type and define the needs of representative customers in those segments. But actual human beings don’t behave like statistically average customers. The

One company that manufactured resins used in exterior paints discovered this firsthand. By researching the needs of commercial painting contractors—a key customer segment—the company learned that labor constituted the lion’s share of contractors’ costs, while paint made up just 15% of costs. Armed with this insight, the resin maker emphasized that its product dried so fast that contractors could apply two coats in one day—substantially lowering labor costs. Customers snapped up the product—and happily shelled out a 40% price premium for it. Three

There was a new trend for agencies to hire and parade before their clients “strategic planners,” an ideal originally imported from the UK; but these were not strategists in the same way that management consultants were strategists. Instead, agency strategic planners were experts in customer segmentation and behavior, excellent at designing market research and reading the results of market research reports. The planners were called, in some quarters, “the conscience of the consumer” – they upheld long-term brand values on behalf of consumers and helped to resist any attempts by the creative department to go “off brand” in the pursuit of cute ideas that would dilute “brand values.” In short, the strategic planners were consumer experts, brand developers and brand policemen. They were an important innovation, but they hardly signaled new strategic directions for ad agencies, and their efforts did not have the slightest impact on their clients’ concerns about achieving improved shareholder value. Ironically,

Compare net-promoter scores from specific regions, branches, service or sales reps, and customer segments. This often reveals root causes of differences as well as best practices that can be shared. What really counts, of course, is how your company compares with direct competitors. Have your market researchers survey your competitors’ customers using the same method. You can then determine how your company stacks up within your industry and whether your current net-promoter number is a competitive asset or a liability. Improve

2. Core purpose is an organization’s most fundamental reason for being. It should not be confused with the company’s current product lines or customer segments. Rather, it reflects people’s idealistic motivations for doing the company’s work. Disney’s core purpose is to make people happy—not to build theme parks and make cartoons. An

Tesco’s Clubcard, which we shall discuss in more detail later, enabled Tesco to identify over 5000 customer needs segments with each receiving individually tailored price coupons via email. We

We select our target customer segments, we design our value propositions to best serve these customer segments, we choose which type of relationships we will have with our customers and we choose which channels we will use to find, win, make, keep and grow our happy customers. We call this part of the business model the “Front Office.” Our front office activities will generate customers and revenue. In the “Back Office” of our business model we need to employ certain key resources that can execute certain key activities delivering our value propositions to our customers. The back office often builds relationships with key partners5 and the back office generates cost.

Value-based segmentation combined with event-driven marketing, to give customers the right product marketing at the right time, can increase performance by another five times or more.

and it gets its content, similar to Google, from its users. In other words, more than a billion customers labor for Facebook without compensation. By comparison, the big entertainment companies must spend billions to create original content. Netflix is shelling out more than $100 million for each season of The Crown and will spend $6 billion on content in 2017 (50 percent more than either NBC or CBS).26 Yet Facebook competes for our attention, and wins it, with pictures of fourteen-month-old Max curled up with his new Vizsla puppy. This is fascinating to a small audience, maybe two hundred or three hundred friends, but that’s enough. It’s easy for the machine to aggregate, segment, and target.

Candidate: Because digital advertising is the only segment that’s growing, we need to understand more about what’s going on with customers, so I’m going to switch gears and analyze customers next. Interviewer: That sounds like a reasonable plan. Why don’t you go ahead and do that. Candidate: I’d like to know who these customers are. What are the key customer segments? What’s the growth rate of each segment? Interviewer: Well, the customers are Fortune 500 brand managers such as Procter & Gamble, midmarket-size clients, and small-business clients.

Below are some of these initial questions: Who is the customer? What are the customer’s segment needs? What is each segment’s price sensitivity? What are each segment’s distribution channel preferences? What is the customer concentration in each segment?

Sometimes there’s more than one type of customer, so you need to identify not only the customer but also the key customer segments. Once you know this information, you need to quantify it. If there are three customer segments, how big is each segment? Which ones are growing or shrinking?

For example, does one customer segment care a lot about speed of delivery but another cares about order customization? Or does one prefer a premium service while the other prefers better financing terms?

What Are Each Segment’s Distribution Channel Preferences? A distribution channel, or sales channel, is a company’s means of reaching and selling to customers. For example, websites and mail-order catalogs are distribution channels. Selling through a reseller such as Walmart is another, as is having a sales force that visits clients in person. Different segments of customers prefer to buy through different distribution channels. A client sometimes wants to serve a particular customer segment, but the client’s primary distribution channel is one that customers in that segment refuse to use. This conflict needs to be resolved in order for the client to have an effective strategy.

Competitor behaviors (customer segments, products, pricing strategy, distribution strategy, brand loyalty)

need‐based segmentation is to understand the needs of customers and why they choose a company, whereas value‐based segmentation has to do with which specific customers a company must focus on to retain their earnings.

Horizon 2: Areas of focus and accountability—The segments of our life and work that we need to maintain, to ensure stability and health of ourselves and our enterprises (e.g., health, finances, customer service, strategic planning, family, career) Horizon 3: Goals and objectives—The mid- to longer-term outcomes to accomplish (usually within three to twenty-four months); e.g., “Finalize acquisition of Acme Consulting,” “Establish profitable online version of our leadership training course,” “Get Maria’s college plans finalized” Horizon 4: Vision—Long-term desired outcomes; ideal scenarios of wild success (e.g., “Publish my memoir,” “Take the company public,” “Have a vacation home in Provence”) Horizon 5: Purpose, principles—Ultimate intention, raison d’être, and core values of a person or enterprise (e.g., “To serve the growth of our community in ways that sustainably provide the greatest good for the greatest number of our citizens”)

Identify some of the actual individuals who are your best customers. Evaluate those with the highest customer lifetime value (CLV) and develop hypotheses about their shared traits. Although demographics and psychographics might be the most obvious, you’ll find additional insights if you examine their behavior. What channels did they come through? What messages resonated? How did they onboard? How recently, frequently, and deeply have they engaged? Compare best customers and worst customers—those you acquired who weren’t ultimately profitable or who weren’t satisfied with your offering. Notice people who exhaust your free trial but don’t convert to paid, or who join but cancel within the first few months. The best customers have the greatest customer lifetime value (CLV); they will spend more with you over time than anyone else. Produce either a qualitative write-up of your best customer or use regression analysis to prioritize characteristics. Share these conclusions with your frontline team—retail workers, customer support, sales—to accrue early insights. With a concrete conception of your best customer, you can discern if the customer segment is sufficiently large to justify addressing. Test and adjust as needed. Then make these best customers and their forever promise as “real” as possible to the team. If you have actual customers who fit the profile, talk about them, invite them in, or have their pictures on your wall. You’re going to feel their pain, share their objectives, and design experiences for them. It’s important to know them well.

They say that startups don’t starve, they drown. You never have too few options, too few leads, or too few ideas. You have too many. You get overwhelmed. You do a little bit of everything.  When it comes to avoiding drowning and making faster progress, good customer segmentation is your best friend.

Six key themes The real reset has gone much deeper and encompasses six key themes, all of which are linked: 1) The shift from a push system, based on producer dominance, oligopolistic competition, limited supply and restricted access, to a pull system driven by consumer dominance, near-perfect competition, perfect knowledge and ubiquitous access to goods. 2) The change from mass marketing, based on a few research and segmentation studies, to personalized marketing, based on individual customer data. 3) The realization that the e-commerce revolution and the communications revolution (social media, user reviews, influencers, etc.) has broken the traditional supply chain, with its multiple players – manufacturers, branded wholesalers and retailers – all supping from the margin cup and adding their mark-ups to prices, and replaced it with a shorter and more direct route to market. 5) The realization that the stores channel was not the only, or even best, way of moving goods from factories to consumers. Indeed, that it was inferior to the e-commerce channel in many respects as a pure goods-transmission mechanism. 6) That putting the consumer at the heart of the business model required seeing the different channels as the consumer saw them – not competing, but complementary to each other. 7) That based on this, the traditional model of the store, as a ‘warehouse’ piled high with stock and with just a narrow fringe of branding and customer service on top, was obsolete and that only a ruthless attention to the remaining added value of physical stores could ensure their continued relevance and survival.

If you find yourself in that situation, we recommend doing an analytics audit and reassessing what data points you’re recording—removing the irrelevant ones—before using the data to make decisions. The next part is how we group metrics together so that we can spot trends and opportunities. There are three key ways: segmentation, cohort analysis, and funnels. Analytics track every customer equally and report the average behavior. For example, a new customer will use an app’s first-use tutorial—some might skip it—but a returning customer won’t even see the first-use tutorial. If you simply looked at how often a customer views the tutorial out of how many times people use the app, it’d look like very few people use the tutorial overall. It’s up to you to segment your data, which means grouping it by common characteristics.

The 5C structure is generic—useful to product, marketing, and more—whereas the way we presented the sections in this chapter is very focused on product management. It’s good to know what the “C”s stand for because you’ll likely hear 5C mentioned. Plus if you need to do a situational analysis on your feet in a meeting or interview, it’s relatively easy to remember. Company: This refers to the company’s experience, technology, culture, goals, and more. It’s similar to the material we covered in the “Why Does the Company Exist?,” “How Do We Know If Our Product’s Good?,” and “What Else Has Been, Is Being, and Will Be Built?” sections. Customers: Who are the people buying this product? What are the market segments? How big are they? What are people’s goals with buying this product? How do they make buying decisions? Where do they buy this type or product? This is similar to what we covered in the “Customers and Personas” and “Use Cases” sections. Collaborators: Who are the external people who make the product possible, including distributors, suppliers, logistical operators, groundwork support personnel, and so on? Competitors: Who is competing for your customers’ money? This includes actual and potential competitors. You should look at how they position their product, the market size they address, their strengths and weaknesses, and more. Climate: These are the macro-environmental factors, like cultural, regulatory, or technological trends and innovations.

Ultimately, there are four dimensions you need to think about to choose where to play and how to win: The industry. What is the structure of your industry and the attractiveness of its segments? Customers. What do your channel and end customers value? Relative position. How does your company fare, and how could it fare, relative to the competition? Competition. What will your competition do in reaction to your chosen course of action?

Good customer segments are a who-where pair. If you don’t know where to go to find your customers, keep slicing your segment into smaller pieces until you do.

So we’d look at those quantitative metrics, and then we’d have more qualitative ones, which included: ​● ​ The NPS of that customer segment for that product type ​● ​ Feedback that we were getting in-app and outside of that app ​● ​ Features and functions they were asking for / ideas that they were submitting and voting up ​● ​ There were many others that we looked at but this gives you an idea of the metrics we were (and still are) interested in.

A fundamental problem with industry analysis is that it presumes what constitutes an “industry.” The notion of an industry turns out to be incredibly fuzzy. It relies on some shared sense among participants regarding where the activities begin and end; a common understanding of which customers rivals are competing over and how those customers segment; and a consistent view of what is central and what is peripheral.

An actionable segmentation captures a list of a person’s or company’s easily identifiable characteristics that make them really care about what you do. For consumers, a segmentation could include combinations of things such as other brands they own or like, stores they buy from, the job they hold or their music or entertainment preferences. For businesses, it could be the way they sell, other products they have invested in or the skills they have or don’t have inside their company.

Demographic Segmentation Demographics are quantifiable statistics of a group of people, such as age, gender, marital status, income, and education level. Say you were developing an app for moms to easily share photos of their babies with friends and family. You could describe your target customers demographically as women 20 to 40 years old who have one or more children under the age of three. If you are targeting businesses, you'll use firmographics instead; these are to organizations what demographics are to people, and include traits such as company size and industry.

Zach Nies suggests going even further, segmenting customers into three groups. “‘A customers’ are your really big customers who negotiated a big discount and expect the world from you. ‘B customers’ are customers who are fairly low maintenance, didn’t get a big discount, see themselves as partners with you, and provide useful insights. ‘C customers’ cause trouble, are a pain to deal with, and demand things from you that you feel will damage your business,” he explains. “Don’t spend too much time on the A’s—they sound good but aren’t the best for your business. Bring as many Bs on as customers as possible. And try to get your ‘C customers’ to be customers of your competitors.

As we continued to meet with Jeff, we tried various kinds of spreadsheets and PowerPoint slides to present and explore our ideas, none of which seemed to be particularly effective. At some point, I don’t remember exactly when, Jeff suggested a different approach for the next meeting. Forget the spreadsheets and slides, he said. Instead, each team member would write a narrative document. In it, they would describe their best idea for a device or service for the digital media business. The next meeting arrived, and we all showed up with our narratives. (As mentioned, ours was one of several teams involved in the early experimentation with narratives at the company. They were not yet official Amazon policy.) We distributed them and read them to ourselves and then discussed them, one after another. One proposed an e-book reader that would use new E Ink screen technology. Another described a new take on the MP3 player. Jeff wrote his own narrative about a device he called the Amazon Puck. It would sit on your countertop and could respond to voice commands like, “Puck. Please order a gallon of milk.” Puck would then place the order with Amazon. The great revelation of this process was not any one of the product ideas. As we’ve described in chapter four, the breakthrough was the document itself. We had freed ourselves of the quantitative demands of Excel, the visual seduction of PowerPoint, and the distracting effect of personal performance. The idea had to be in the writing. Writing up our ideas was hard work. It required us to be thorough and precise. We had to describe features, pricing, how the service would work, why consumers would want it. Half-baked thinking was harder to disguise on the written page than in PowerPoint slides. It could not be glossed over through personal charm in the presentation. After we started using the documents, our meetings changed. There was more meat and more detail to discuss, so the sessions were livelier and longer. We weren’t so focused on the pro forma P&L and projected market segment share. We talked at length about the service itself, the experience, and which products and services we thought would appeal most to the customer.

Target a Single Customer Segment?

CRM (Customer Relationship Management) is a marketing strategy that focuses on managing interactions and relationships with customers. CRM enables businesses to improve customer satisfaction, loyalty, and retention by providing personalized experiences that meet their needs. CRM is an essential aspect of modern marketing as it enables businesses to understand their customers' behavior, preferences, and needs and develop targeted marketing campaigns that resonate with them. In Go High Level, CRM (Customer Relationship Management) is a core component of the platform. The CRM functionality in Go High Level enables businesses to manage their customer interactions and relationships more effectively, improving customer satisfaction, loyalty, and retention. The CRM functionality in Go High Level includes a range of features and tools designed to help businesses automate and streamline their customer-facing processes, as well as provide them with insights into their customers' behavior, preferences, and needs. In essence, CRM is a set of practices, technologies, and strategies that businesses use to manage their customer interactions and relationships. The goal of CRM is to build stronger, more meaningful relationships with customers by providing them with personalized experiences and tailored solutions. CRM in marketing can be divided into three main categories: operational CRM, analytical CRM, and collaborative CRM. Operational CRM focuses on automating and streamlining customer-facing processes, such as sales, marketing, and customer service. This type of CRM is designed to improve efficiency and productivity by automating repetitive tasks and providing a centralized database of customer information. Operational CRM includes features such as sales pipeline management, lead nurturing, and customer service management. Analytical CRM focuses on analyzing customer data to gain insights into their behavior, preferences, and needs. This type of CRM enables businesses to make data-driven decisions by providing them with a better understanding of their customers' needs and preferences. Analytical CRM includes features such as customer segmentation, data mining, and predictive analytics. Collaborative CRM focuses on enabling businesses to collaborate and share customer information across different departments and functions. This type of CRM helps to break down silos within organizations and improve communication and collaboration between different teams. Collaborative CRM includes features such as customer feedback management, social media monitoring, and knowledge management. CRM is important for marketing because it enables businesses to build stronger, more meaningful relationships with customers. By understanding their customers' behavior, preferences, and needs, businesses can develop targeted marketing campaigns that resonate with them. This results in higher customer satisfaction, loyalty, and retention. CRM can also help businesses to improve their sales and marketing processes by providing them with better visibility into their sales pipeline and enabling them to track and analyze their marketing campaigns' effectiveness. This enables businesses to make data-driven decisions to improve their sales and marketing strategies, resulting in increased revenue and growth. Another benefit of CRM in marketing is that it enables businesses to personalize their marketing campaigns. Personalization is essential in modern marketing as it enables businesses to tailor their marketing messages and solutions to meet their customers' specific needs and preferences. This results in higher engagement and conversion rates, as customers are more likely to respond to marketing messages that resonate with them. Lead Generation: Go High Level provides businesses with a range of tools to generate leads, including customizable landing pages, web forms, and social media integrations.

Customer segmentation is typically part of any good industry analysis, and choosing the customer(s) you will serve can be an important anchor in your positioning vis-à-vis the five forces. In the examples that follow, note how each reflects a different basis for segmentation: Walmart’s segmentation was based on geography, Progressive’s on demographics, and Edward Jones’s on psychographics.

Finally, if you look at the wealth management business, you’ll find just about everyone chasing the same demographic segment: the high-net-worth individual. Not Edward Jones, one of the consistently most successful U.S. brokerage firms. For thirty years, it has focused on customers defined not by how much money they have, but on their attitude toward investing. Jones serves conservative investors who delegate financial decisions to a trusted advisor. In terms of the five forces, this customer segment has been less price sensitive and more loyal.

In insurance, for example, USAA has been a stellar performer with a value proposition aimed at low-risk customers. Here’s what is essential: finding a unique way to serve your chosen segment profitably.

Strategic partnerships offer several benefits to businesses, including increased market reach, access to new customer segments, enhanced brand recognition, and cost savings. By working together, businesses can leverage each other's strengths and resources to achieve shared objectives and create value for their customers.

Knowledge in the abstract is merely a titillation of the intellect, an inconsequential stimulation of a segment of our total humanness. To fulfill itself, knowledge must find expression in the body. More than that, it must transmute the body by the power of its truth. And it is truth, not knowledge, which is replete with power. The power associated with knowledge is manipulative power, such as political leverage or overpowering influence. The power inherent in truth, however, is transformative in the deepest sense. It is capable of remaking the person in the light of truth. What truth? Or should we be speaking of truths? To hold true, truth must be singular. Always. A multiplicity of truths is a contradiction in terms. The custom of speaking of many truths arose out of the loss of truth and its substitution by countless facts. But facts are not truth. Only wisdom (prajnā) is truth-bearing (ritambharā) and therefore liberating. Truth is Reality without conceptual blinders. To the degree that the path of science is illumined by the ideal of truth, it has the capacity of guiding the scientist, step by step, to the discovery of truth—not merely factual truth but the kind of truth that sees everything in context and also preserves that context. A consideration of the larger context of human life must include reference to humanity’s evolutionary potential, including its possible spiritual destiny. Thus science can serve as a stepping-stone to the “evolutionary science” of Yoga, that is, to spiritual discipline through which our full potential is revealed. Yoga’s techniques of concentration and meditation, if mastered, disclose the transcendental possibilities of the mind, which allows us to experience truth at the highest level, as “ultimate Truth” (paramārtha-satya).

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Before you set your own outcome, ask your product leader for more business context. Try these questions: What’s most important to the business right now? Try to frame this conversation in terms of business outcomes. Is there a customer segment that is more important than other customer segments? Are there strategic initiatives we should know about? Use the information you gain to map out the most important business outcomes and what product outcomes might drive those business outcomes. Get feedback from your leader. Choose a product outcome that your team has the most influence over.

Depending on the competitive landscape, some opportunities might be table stakes, while others might be strategic differentiators. Choosing one over the other will depend on your current position in the market. A missing table stake could torpedo sales, while a strategic differentiator could open up new customer segments. The key is to consider how addressing each opportunity positions you against your competitors. With market factors, we also want to consider any external trends (both opportunities and threats) that might impact which opportunity we might choose.

Tips on Web Design and Site Marketing Web content is king, which is why we have devoted an entire chapter to it later in this book. It is what draws visitors and ultimately what converts them to customers. So, try to make your web content as engaging as possible. Make sure the content is interactive, unique and educational. Ensure that visitors have the option of plugins while encouraging them to visit as many pages on your site as possible if they want to obtain vital information. The images you use on your website should be both enticing and descriptive in nature. In today’s world, social media is all pervasive. In order to encourage visitors to share your web content, you can include icons of social media platforms on your website. In some select cases, consider integrating social media feeds, like Facebook or Instagram, onto your website so that they can automatically show the latest postings. A "Call-to-Action" can help convert visitors to your site into customers. Always try using a very clear and concise "Call-to-Action" language. Understand what type of conversion you are looking for, and try to provide multiple levels of conversion. For example, a plastic surgeon may provide Schedule an Appointment as a call to action, which will attract only the segment of web visitors who have reached their decision stage. By adding conversion points for visitors who are at earlier stages of their decision making, like signing up for a webcast or your newsletter can help you widen your conversion points and provide inputs to your email marketing. To raise the average amount of time a visitor spends on your website and to minimize the bounce rate, ensure that your website offers a user-friendly and attractive design. This way you will increase the number of links you have on your website and boost its SEO ranking (Tip: While Google’s algorithm is not public, our iterative testing shows that sites with good usability analytics metrics like time on site and bounce rate play favorably in Google’s algorithm, other things remaining constant). Ensure you observe due diligence when designing a website that will enable visitors to navigate in different languages. For example, you may need a lot more space for your menu, as there are languages that use up more space than the English language.

My recommendation is to begin your value curve analyses by employing a fine-grained customer segmentation. Create separate value curves for many different groups of customers. If the data show that two segments have nearly identical value drivers, you can treat the two groups as one segment. If you begin with a broad grouping, however, subtle differences that might influence your strategy will remain hidden.

This is also what you’re trying to do with products: Find people (a market segment); Understand their goals (the Job they’re trying to get done); Identify gaps you could deliver value on (differentiation); Provide the services (the product); Iterate until clients are satisfied with your work (PMF); Productize the offering (scale).

At the bare minimum, this plan should cover the following aspects that are fundamental to the success of any business: value propositions, key resources, key activities, key partners, cost structure, targeted customer segments, customer relationships, channels, and revenue streams.

Data sources All these components give you feedback and insight into how best to configure your campaigns, although the data sources are often spread around in different places and sometimes difficult to find and interpret. Campaign types Search & Partner Dynamic Search Display Network Remarketing & Dynamic Remarketing Google Shopping for eCommerce Google Merchant Center Data feeds Google Shopping Campaigns Device selection PC / Tablets Mobiles & Smartphones Location Targets & Exclusions Country Metro State City Custom and Radius Daily Budgets Manual CPC Enhanced CPC Flexible Bidding strategies Conversion Optimizer (CPA) Return on Ad Spend (ROAS) Conversion Tracking Setup and configuration Transaction-Specific Conversion Tracking Offline Conversion import Phone call tracking - website call conversions Conversion Rates Conversion Costs Conversion Values Ad Groups Default Bids Keyword Themes Ads Ad Messaging & Demographics Creative Text & Formatting Images* Display Ad Builder* Ad Preview and Diagnosis Account, Campaign and Ad Group Ad Extensions Sitelinks Locations Calls Reviews Apps Callouts Ad Rotation & Frequency Capping Rotate Optimise for Clicks Optimise for Conversions Keywords Bids Broad Modified Broad Phrase Exact Destination urls Keyword Diagnosis User Search Queries Keyword Opportunities Negative Keywords & Match Types Shared Library Shared Budgets* Automated Rules Flexible Bid Strategies Audiences & Exclusions* Campaign Negative Keywords Display Campaign Placement Exclusions* NEW! Business Data and Ad Customizers Advanced Delivery Methods Standard Accelerated Impression Share Lost IS (Budget) Lost IS (Rank) Search Funnels Assisted Impressions & Clicks Assisted Conversions Segmentation Analysis Device performance Network performance Top vs Other position performance Dimension Analysis Days & Times Shopping Geographic User Locations & Distance Search Terms Automatic Placements* Call Details (Call Extensions) Tools Change history Keyword Planner* Display Planner* Opportunities* Scheduling & Day Parting Automated Rules Competitor Ad Auction Insights Reporting* AdWords Campaign Experiments* Browser Languages* *indicates an item not covered in this version of the book

Iteration should stop only when you’re confident you have formulated a compelling customer value proposition—also known as a positioning statement—that includes answers to all of the blanks listed below: For [INSERT: target customer segments] dissatisfied with [INSERT: existing solution] due to [INSERT: unmet needs], [INSERT: venture name] offers a [INSERT: product category] that provides [INSERT: key benefits of your defensible, differentiated solution].

It’s generally best to create three to five personas, with one or two being “primary,” that is, representative of your target customer segments. Having too many primary personas can result in a product that tries to be all things to all people.

These arrows represent an initial focus on divergent thinking—generating lots of ideas—followed by an emphasis on convergent thinking—deciding which ideas are best. For the problem definition phase, divergent thinking means exploring the full range of customer segments you might plausibly serve and, for each segment, identifying the full set of unmet needs you could conceivably address. Next, convergent thinking allows you to home in on which customer segments you will target and which needs you will focus on. The same “diverge then converge” rhythm applies to solution development. You generate lots of possible solutions to customers’ problems and then select the most promising one.

Entrepreneurs who lead late-stage startups must maintain balance while pursuing opportunity, which requires them to set goals for speed and scope that are sufficiently ambitious yet achievable. By “speed,” I mean the pace of expansion of the venture’s core business—that is, its original product offered solely in its home market. “Scope” is a broader concept that encompasses four dimensions. The first three—geographic reach, product line breadth, and innovation—collectively define the range of the startup’s product market: How many additional customer segments will be targeted, and which of their needs will be addressed? The fourth dimension, vertical integration, refers to the range of activities that the startup will perform in-house rather than outsourcing to third parties.

For a bank right now, it’s about full service and getting the digital engagement and personalization right. We need to talk to each and every customer as an individual, not a number, not a segment. We are here to help you achieve your life objectives, your business objectives.” 1 - Pranav Seth, Chief Digital Officer, Techcombank

Here are descriptions of the five customer segments: Innovators are technology enthusiasts who pride themselves on being familiar with the latest and greatest innovation. They enjoy fiddling with new products and exploring their intricacies. They are more willing to use an unpolished product that may have some shortcomings or tradeoffs, and are fine with the fact that many of these products will ultimately fail. Early Adopters are visionaries who want to exploit new innovations to gain an advantage over the status quo. Unlike innovators, their interest in being first is not driven by an intrinsic love of technology but rather the opportunity to gain an edge. The Early Majority are pragmatists that have no interest in technology for its own sake. These individuals adopt new products only after a proven track record of delivering value. Because they are more risk averse than the first two segments, they feel more comfortable having strong references from trusted sources and tend to buy from the leading company in the product category. The Late Majority are risk-averse conservatives who are doubtful that innovations will deliver value and only adopt them when pressured to do so, for example, for financial reasons, due to competitive threats, or for fear of being reliant on an older, dying technology that will no longer be supported. Laggards are skeptics who are very wary of innovation. They hate change and have a bias for criticizing new technologies even after they have become mainstream.

Prepare, Persuade, Segment, Prescribe, Profit, Pivot