In the previous post we discussed how you can find the “right” customers for your business. By segmenting your customers based on their needs you can not only identify the customers that best fit the value your business provides, but also it provides you the action plan to target those customers. This is one, and most important, reason why we prefer to segment and target customer based on their needs. Once you have identified the “right” customer base you don’t need to spend extra effort to attract them to your business.
So, how do you go about finding the customer needs? While there are several approaches you can take to find out what customers are looking for, you can start with a set of attributes that are universally valued by various customer segments. These attributes give you a good starting point towards the path of finding right customer base.
- Price – Everyone loves bargain! However, some customers like it more than others. They will go to any length to pay lower price – whether it is standing in line overnight for Thanksgiving Day sale or driving 5 extra miles to save on gas. Wal-Mart targets these types of customers with their “Everyday Low Price”.
- Quality – Some people are willing to pay extra for product quality and the peace of mind it brings with it. Toyota was able to grow significantly in the last 10 years by promoting quality of their cars. They were also able to charge higher price compared to Ford and GM. However, the problems they have run into lately due to recalls have damaged their reputation for quality. As a result they paid high price in terms of lower sales and profit.
- Convenience – If customers can watch movies by getting their DVDs in the mail rather than having to drive several miles to the store, and do not have to pay penalty when they forget to return the DVD on time, they will flock to the business providing this convenience. You know what company we are talking about, right? Netflix upended the entire movie rental market and drove the biggest Gorilla to bankruptcy by focusing on convenience.
- Service – There are customers who will pay extra for advice, handholding and great service. They want the expert opinion and attention from sales reps. Companies in return are able to charge higher price for providing this higher level of customer service. Look at these examples of the companies with great reputation for customer service in earlier post.
- Security / Safety – Customers looking for peace of mind with the safety and security of products will pay higher price for it. Just talk to any new parents, who are looking for items for their new born kids. They will not compromise on these items even if it means stretching their budget.
- Prestige – Finally, there are customers who want the bragging rights of owning an Ashton Martin or shopping at Tiffany. Do you think the price they pay for these products are truly worth it? Probably not, but the bragging rights and extra attention that come with it are definitely something they are willing to pay for.
Before we conclude we should mention that you cannot be all of these to everyone. You have to pick where you want to play and align all aspects of your business to it. Once you have identified the need to focus on it is imperative to understand what your business needs to do to meet those needs. After that you should be able to reap the benefits of this homework for a long time.
Are there any other attributes not covered above?
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