The concept of market segmentation isn’t anything that novel, and you’re probably applying it to your business already. As with many differentiated approaches to reaching your customers, it really pays to be aware of what you are doing, so you can assess and improve. Segmentation is simply the identification of a smaller subset within a larger whole. For instance, if you are selling baseball hats, one segment of the market you are [hopefully] targeting is Major League Baseball hats. Other segments of the hat market would be kids hats, women’s hats, hunting hats, floppy hats, etc… The general idea is that by utilizing market segmentation, one is able to further target the interests of a consumer base. For example, a woman looking for an elegant sun hat would fall within the category of the hat market, but do you think she would have any interest in shopping at a Lids franchise? Ultimately segmentation is a method that can be used for helping discover and meet unique demand within your target market, and evolve your overall approach to be more beneficial for you and the consumer.
There are a ton of articles floating around the Internet regarding the theory of market segmentation, so I’ll skip trying to sound academic and simply discuss some practical examples. If you are looking for some theory, check here.
Website analytical data is one of the most crucial insights that any business owner can have—capable of offering tremendous insight into the behavior and interests of customers. In the era of Google, very complex data can be gathered by even the most green of beginners, and put to practical use. I’m going to assume you don’t care about the logistics of deploying this on your website, and that you’ll most likely just forward this to your IT department. If you want to add a note though, most of these concepts are applicable to very free analytical services such as Google Analytics.
Where does your traffic come from, and how does on site activity differ between traffic sources? On the surface this may seem like a pretty general question to some entrepreneurs that are new to the world of business. However, take my word for it that these two questions represent a collective rabbit hole that many have spent entire careers attempting to determine. The crux of it all; as soon as you start to have an elucidated mindfulness, your market may change drastically overnight. Even if it doesn’t, competition may drive you out of a market leaving you with a heap of useful information you can readily apply to your business life.
Lots and lots of website traffic is generated from social websites now, with Facebook being the obvious front runner having Twitter not far behind. However, with the rise in popularity of mobile devices and social networking, many other sources such as Pinterest, Linkedin, Stumbleupon, and many many more platforms are offering robust contributions to traffic reports. While these can seem very exciting on the surface, there are often many times when the numbers rain on the parade. For example, a site I recently audited was receiving roughly 3500 visitors a week from social sources, and only about 150 from organic Google searches. Of the nearly 3650 visitors each week, they were averaging only 12 sales. They had already changed marketing firms several times and had held off on shifting a handful of part-timers into full-time positions until they felt more confident. So, by the numbers, their website had a less-than one percent conversion rate—which is pretty dismal. They had a lot of time and investment in their website and had a very professional sales funnel in place to qualify buyers to a degree. Regardless of their investment though, they just couldn’t seem to convert.
To show you the power of market segmentation in providing insight; I took their Google Analytics data and with a few clicks separated the traffic from social networks from the traffic of organic Google results. The results? of the 3500 social network visitors, not a single one had bought a product. That sounds horrible until you consider the implication it gives towards the organic Google traffic. All 12 sales came from those 150 clicks originating from organic Google results—a whopping 8 percent conversion rate.
While the content they had invested in to get on their website certainly wasn’t free, it’s presence in the Google search results was pretty much. You don’t have to pay Google to put your site in search results, although you can utilize their AdWords service. Regardless, this company was spending roughly $1000/mo on Facebook and Twitter ads, combined with the time their part-timers were spending managing their social profiles. The company had seen the sudden spike in traffic to their website and assumed that their money was making an impact. Truth be told, their money was making an impact, just not one that was showing them a monetary return. This is a great example of how focusing on one segment of a market can help offer insights about the whole market, and help you make better holistic decisions to get you to where you want to be.