George was having a terrible day at work. The deal he was sent to conclude had irrecoverably broken down, with key terms rejected and feelings hurt.

He had done everything by the book and followed best practice methods. However, he left without anything to show for his months of advanced negotiations. But unlike many business leaders, he did not take the red-eye home, reviewing the evident failures along the way. No, he in fact had months to muse over his unsuccessful negotiations as it was 1793, and George Macartney was returning home following the failure of the first British diplomatic mission to China.

Macartney faced a number of challenges that have strong similarities with the contemporary plight of marketers today. While he faced unique obstacles, such as showing the appropriate level of submission to Chinese emperor Qianlong, the British call for greater trade ultimately failed due to different perspectives of the world.

The two groups of people, the British on one side and the Chinese on the other, stemmed from very different cultures and started from fundamentally different points-of-view. As such, each had very different objectives and methods for achieving them. The scenario is very similar to the environment marketers find themselves in: Trying to understand customers and consumers, who may have very different perspectives of a brand.

Knowing the customer: Segmenting your markets

In today’s world, understanding customers is essential, from sales to customer service and everything in between.

How many executives simply say: “There are 30 million customers and all we need is 1 per cent market share”?

Rather than help, such an approach glosses over the nuances and differences in the consumer base, risking failure similar to that experienced by George.

So how to avoid similar issues?

Clever market segmentation is the answer.

Traditionally, segmentation occurred by creating homogeneous groups of customers based on demographic characteristics such as age, location and ethnicity.

While it’s a simple idea, market segmentation can throw a number of curve balls to even the most experienced business leaders. However, if they can segment their markets in a meaningful way, the organisation can create marketing messages that are relevant to real customers who have real needs.

I believe that today traditional methods of segmentation are not good enough to deliver satisfactory results. So the question remains: How should market segmentation be approached?

Looking deeper, getting involved

In today’s world, characterised by fragmented perspectives, novel needs and nuanced wants, market segmentation can offer organisations a number of benefits. From risk reduction to enhanced resource use, the technique can offer organisations a way into the diverse world of consumers – if done right. On line marketers talk about a segment of one given the emerging abilities online.

While market research has value, there are a number of limitations. Take a normal qualitative research project. From the offset there are problems to deal with: You have people who are paid to be in the focus group and who may not be representative of the consumer base. You will also need a facilitator who tend to have their own biases, which can influence the direction the group takes and thus the results at the end.

Rather than relying on market research data, I think business leaders need to sit down in one-on-one interviews with 20 to 50 customers. By doing this, researchers can find the common factors that link them and allow real information sharing with the marketing team.

Only by investing the time to sit down with customers can a truly deep and intimate understanding be fostered. However, this is not a task for some intern- it really needs to be conducted by an individual high-up the organisation, someone who is across the business from head to toe and really knows the big issues that the organisation is seeking to solve.

There is no doubt that attracting customers requires a very good and deep  understanding who your customers are and finding clever ways to break them into manageable groups that will respond positively to what you have to offer is the goal of segmentation. Taking traditional methods step further and taking the time of senior leader to actually talk and observe real customers will deliver the gold.

 

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By: TEC Chair, CEO mentor and coach Ian Neal