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The science of segmentation: How to cut clients to make a profit

The real power of segmentation is in designing a proposition that meets the needs of clients and makes a profit for your business

Every single human being on this planet is different. Yes, we may have similarities, we may even have an identical twin, but there is not another you. You are unique.

If only this was true in business, then we could really have a competitive advantage. But no matter how clever or innovative your proposition or idea, competition will always exist, copy and catch up.

The challenge is to be clear about what makes us different and why clients should do business with us.

It is not easy but a great starting point is to take a step back and write down in your own words the problems your business solves for people. When you define what you do in writing and have a clear idea of the issues you address, then you can start to work out which current and potential clients are most likely to suffer from these issues and need the proposition you have developed. This is true customer segmentation.

A comprehensive segmentation exercise can also give you the elevator pitch you require when meeting new clients or those that are perhaps less clear about the value you add to their lives.

If done correctly, this description can be shared on your website, through social media and with colleagues, so the business delivers a consistent impression.

The next stage is to paint a picture of the clients you have identified as having the problems your proposition solves. Start to list all the different types of clients you have that suffer from the issues you know you can help with.

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You can group them by socio economic background (e.g. high net worth or low income) or occupation (e.g. business owners, self-employed or even retired), and be sure to ask lots of relevant questions. Are they married, single, divorced? Do they have children? What lifestyle do they have and aspire to attain? What are their goals?

Define them in as many relevant ways as possible. Writing this down will help you refine your proposition and how you communicate with these clients in the future.

Now you have identified the types of client most likely to match your proposition, it is time to clarify who your key target markets are.

Is your proposition suitable for certain types of individuals rather than the mass market? Do you want to work with only certain occupations or clients from a certain economic background?

Do you want to only work in certain geographical areas or will you use technology to ensure you can provide a proposition and service nationwide or even to clients living abroad? You may even wish to specialise in certain sectors of industry.

Once you have the answers to all of these questions, you have a clearer picture of your most attractive clients. It is then just a matter of deciding the following:

  • How can you communicate your proposition to clients?
  • What are the key messages that clients will respond to (this should be based on their lifestyle and life problems)?
  • What media (e.g. email, face to face and social) will they best respond to?
  • How can you do all this at a profit?

This is the real power of segmentation, allowing you to design, implement and charge for a proposition that meets the needs of the clients you deal with now and will do in the future.

John Joe McGinley is founder of Glassagh Consulting

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