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How do we choose a segment to target?

Choosing the right segment to target can make or break a new business venture or growth initiative. Learning from examples like Uber Eats and Cirque du Soleil, find out why it's important to segment well and how to avoid losing 30% of your revenues. This article offers theory and applications based on the perspective of a local car wash business. Let the work speak for itself: partner with the team at Profitworks to get your target segment laser-focused and cut through the noise.

We help choose a segment to target and reach them profitably

We've heard again and again how our business owners want advisors that take the time and care to manage their marketing as if it was their own. Work with the Profitworks team to help more great products and services get discovered.

Executive Summary

 - Choosing a segment to target is important because it can help you improve competitive positioning while avoiding unnecessary competition

 - Defining your current customer segment helps you ask tough questions that ultimately can enable you to better serve and retain your customers

 - Great companies create customer segments but better companies ask for feedback and validate their assumptions

 - Most companies need to overlay segmenting criterias (like geography, preferences, and personal aspirations) to orchestrate an effective customer profile

 - Ultimately, segmenting and reaching customers will help enterprises grow and remain focused on serving customers the way they would like to be served. Otherwise, middle platform brokers may take as much as 30% of your revenues, as seen in the restaurant industry

Why choosing a segment to target is important

Choosing the right market segment can help create an improved and sustainable market positioning for your team. It also helps you strategically choose a competitive arena to operate in, which has led Cirque du Soleil to create entirely new industries and failure to do so - led to the demise of household brands like Sears. Most industries like local enterprises may feel they are not affected by poor segment targetting because they have also had a referral network of business. Yet the greatest threat is not technology or a new startup -  the most prominent risk facing local businesses is losing touch with their core customer base or failing to recognize an upcoming demographic that they could serve. In this article, we explore the strategies that can help companies segment existing customers to better serve them and ways to position themselves to new segments.

Defining your market segment

Defining your market segment is a challenging task because it forces an enterprise to try and empathize and understand who they are serving. To define your market segment, an enterprise must answer these questions.

1. Why the customer works with our team
2. What is the customer trying to accomplish with our product and service
3. What about our product or service retains the customer
4. What are things that can make the customer leave

Once these 4 questions are answered, an enterprise can create a customer segment profile. In the case of a car wash business, here are examples to each of the segment dimensions:

1. Customers choose ABC car wash because we pay attention to small cleaning and detailing issues that can cause long-term issues in their motor vehicles.  Our customers know and experience our detailed care.
2. Customers want to keep their cars in top visual form to ensure the comfort and safety of family and their own clients.
3. We keep track of the weather and communicate optimal times for cleaning so that a customer's car looks better longer. We allow customers to clean their car right after a bad rain storm or flurry before a break of great weather.
4. Price can affect our customers and limited knowledge of cleaning products may cause them to assume that every car wash is equal. Further, location and changes in commute routes will affect our business.

Forward thinking companies will create a segment profile, but great companies will take their initial sketches of their segment and test it against actual customers. Market leaders would have a conversation about each of these areas and understand their customer base by asking them these questions that they themselves may not consider. The second benefit to this is that this is an opportunity to have customers be affirmed in their aspirations - as in this example, where a customer's aspiration is about client and family comfort.

Identifying a market segment

If you are considering a new business or expanding your sales efforts, identifying new market segments to target is a prudent way to plan and supplement business strategies and market entry initiatives. Business Dictionary expands on market segmentation by approaching the topic in 5 dimensions:

Approaches to subdivision of a market or population into segments with defined similar characteristics. Five major segmentation strategies are (1) behavior segmentation, (2) benefit segmentation, (3) demographic segmentation, (4) geographic segmentation, and (5) psychographic segmentation.

What does this all mean?

Behaviour segmentation is how a consumer intereacts with your product or service. For our car wash customers, either they are reactive or proactive in how they utilize a car wash services.

Benefit segmentation is defining pools of customers based on what advantages are afforded. For our car wash customers, people enjoy the convenience and clean experience of having someone else do their car detailing.

Demographic segmentation is a classification of a customer or prospect base by age or economic standing.  

Psychographic segmentation denotes how prospects/customers view or value the service based on their worldview or cultures. For some cultures, like the European and Asian cultures, having a nice clean car is a reflection of your societal stature. Others may simply see the upsides in having a clean and well-maintained car.

Finding new ways to target existing customers

The 5 dimensions previously mentioned can be further multiplied based on any number of these common factors. For businesses that are confined to specific locations like a local car wash, this makes things simpler. Yet because industries continue to change, businesses should consider taking on a new venture mindset so as to not fail to capture opportunities or lose marketing positioning. One example that highlights this challenge is the fact that most restaurants are increasingly facing a sloping competitive position because of delivery services like Uber Eats and Foodora. Restaurant owners have lost the ability to better understand their customer's preferences. Now, dining revenues are reduced by 3rd-party platforms by as much as 30% on a delivered order, while also losing direct communication with their customers. This occurred because restaurants didn't take the time to segment and better understand their customers when they wanted more simple and immediate delivery options.

Focus on ways to add value to your existing customers by orchestraing and sequencing segmentation dimensions.

Identifying a segment is tough but well worth the sweat and trials because finding profitble target segments helps a company define a competitive advantage. Continuing on with our car wash example, if the local business previously was only able to conduct car washes on site, it may want to consider other channels to service.  Most local car washes work with residential and personal vehicle owners, yet understanding a commercial fleet owner would provide an opportunity for car washes to service large volumes of customers on a predictable basis. Logistically, a company should also weigh the increased challenges in operational complexity by offering on-site vehicle maintenance and after hours staff shifts.

Another segmentation approach is to understand how these segmentation dimensions play off one another. The behaviour of customers as they wait for a car to be detailed is idling or thumbing through magazines, while the location/geography of conventional car washes are based in the car wash's location/facility. In the traditonal flow of events, a customer has to intentionally come to a car wash, perhaps while driving to or from an errand or work. Yet if our business-savvy car wash owners enabled access to the detailing service at destinations customers visit, that would certainly increase access to customers while offering patrons the ability to do other things while they wait. One such example is offering a car wash at mall parking lots. Customers can have the convenience of dedicated and predictable parking while receiving the added benefit of a car wash.

Finding new customers to target

A common approach to innovation marketing or segmentation is utilizing existing resources in new applications. During the introduction, Cirque du Soleil was mentioned as an example of why effective segment targetting is helpful. Cirque du Soleil used something called blue ocean strategy to target a completely new segment that was previously not interested in the typical carnival circus routines. They combined theatrical drama, sound design, stage design, and did away with a star performer. This led to the reinvention of the circus for modern viewers as a premium experience unlike a music concert or live stage performance. Instead of competing with existing circuses they invented a new market. This led to them being the undisputed market leader in the market they created.

Finding new customers to target with your existing resources and equipment can be a great alternative to edge a crowded market. This is particularly impactful for our car wash owner who is finding that his market is highly competitive and also cyclical, which makes growing his business tough during the off seasons. Here are the steps to looking at how to market services to new customers:

1. Inventory the different resources on hand
   -Fixed and mobile cleaning equipment to maintain vehicles or polycarbonate surfaces.                                                                                         ---  --Staff that are knowledgable about cleaning practices and different types of odours or moulds in an enclosed space.
2. Other customers who may need property or surfaces cleaned
   -Car owners who have multiple cars and want a reason to drive their exotic vehicles. Car washes may offer a subscription plan for multi-vehicle owners.
   -Snow boarders typically go on weekend trips together. One new segment that can be targeted are groups of snow boarders returning from their trip.
   -Food truck owners may also find value in having a car wash focus on their needs as their exterior appeal often has an impact on their business.
3. Determine the profitability of this segment
   -Car owners who have multiple cars are profitable and in fact less costly to acquire repeat business since they already utilize the car wash's services.
   -Snow boarders are a seasonal crowd and may not provide the adaquate profitability as a large volume of snow boards may need to be cleaned while the alternative of self cleaning is always an option for boarders.
   -Food truck owners rely on aesthetics and apperance to win trust and customers. This is a value that could be offered by car washes and provide significant revenue.

Based on this brief analysis, food truck owners may be a profitable segment to select and target for future marketing promotions. The subtlely in marketing to this demographic is not simply providing a service but helping their business be more successfull by always presenting them in the best light as they meet with customers during lunch hour. This will allow your company to compete on best serving intangible and aspirational values that are often times more valuable than absolute cost competition. Most luxury brands appeal to this kind of mentality and can be helpful in supporting a sustainble business model rather than competiing on low cost provider services.

Growing your business one market a time

Determining which segment to target is great way to begin the process of growing your business. Yet, without experience and proven results, business owners can often be discouraged from venturing beyond their current markets or sales channels. As we've learned, however, from the restaurant industry, one cannot hide from innovation but rather should be open to experimenting and growing their sales through keen understanding of their customers and offering new ways to provide value to them.

Profitworks helps organizations succeed with targetted marketing

"I've found Profitworks to be tenacious and adaptable to the challenges our industry possesses."

-Blair - Business Owner & Customer

Read More About What Our Customers Say

We've helped companies across Canada and the US succeed with growth, because we believe in the beauty and meaning of every article written, email sent, and social media post crafted. Our team endeavours to create unique competitive advantages for all of our customers and would be thrilled to learn more about your mission and plans for your team. Profitworks provides marketing strategy, content marketing, branding, and social media management for great companies with a stellar product or service.

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How to fire my marketing agency

Sometimes marketing agencies will struggle with understanding a client's business or prove not to be accountable in the results they provide. While trying to amicably resolve gaps in performance, companies, charities, and professional organizations may sometimes need to terminate their marketing agency. Here are general strategies for how to cancel services with a marketing agency along with a transition plan. Don't settle for average growth - work with our team of dedicated growth professionals, and challenge your team to become the market leader in your industry today.

Work with a team that cares just as much about your business

We've heard time and again how our business owners want advisors that take the time and care to manage their marketing as if it was their own.

Executive Summary

 - Organizations should work to ensure an existing relationship isn't salvageable before terminating an agency

 - One of the biggest mistakes in terminating with an agency is failing to reclaim owned media assets (social media, website, stock photos, and other user accounts)

 - World class brands like Nike, Samsung, and Coca Cola work with marketing agencies and the focus is working with the right partner

Signs that it may be time to terminate a marketing agency 

Here are some common challenges or symptoms that arise when it may be time to terminate your existing marketing service agency.

• Regular quality issues in content
• Lack of accountability to performance metrics
• Inconsistent response times
• Disregard for professionalism when communicating with you and the team
• Similar work being created for other clients
• Lack of innovation and new ideas to drive results

Pending contractual arrangements, clients may not be bound to provide any reasons for service terminations. Typical agreements will only state 14-30 days notice prior to termination. Organizational leaders should aim to provide a professional termination based on documentation and regular communication. This will help ensure that in the future when your organization is ready to work with a new agency that there won't be any misinterpretation concerning the reputation of your team. For other reasons it may be time to fire your marketing agency see this article by Hub Spot: which emphasize digital marketing issues that can be red flags for your company.

6 Steps to fire your marketing agency

Though there may be difficulty in terminating a service with a vendor, especially when vendors may have some degree of personal relationship with the business owners. As part of their role, leaders may sometimes be required to make difficult decisions that are best for the organization.

1- Reiterate the goals that you want the agency to achieve

Identify with your marketing agency prior to signing an arrangement what key performance measures that you are looking for them to deliver. This will help clarify differences in objectives and value delivered. Make it clear what you are looking for the vendor to achieve and whether progress toward this objective can be tested. For example, a performance measure that can be established is a 30% increase in website traffic or growing social media followers by 1000 people by year-end. Ensure that the vendor has understood this and be open to input as to the performance indicator they feel most impactful to your business.

If this step hasn't been taken already it would be worthwhile trying it to ensure that an agency that has experience, industry insights, and creative capital isn't needlessly removed. There is plenty of value in salvaging a troubled business partnership. 

2-Set up recurring checkpoints to review progress and challenges

There is an optimal balance of checking in and reviewing the progress made by your marketing agency. This helps to ensure that they are getting the necessary input to serve well in their advisory or hands-on roles. Predetermine and schedule times to meet with your vendor to review goals, progress, opportunities, and challenges every 3-6 months. This ensures that there is accountability for both parties to bring the right input and perspectives while remaining focused on the right goals.

The challenge with accounts that don't need regular reviews is that the work is probably not too difficult to do in reality, which means organizations should consider bringing the contracted services in-house if a regular check-in meeting isn't required. This is because if a marketing service doesn't require a leader's industry input it most likely is turn key and can be run with little effort. This is an ongoing challenge faced by business leaders as marketing agencies may sometimes be distant. True creative work is done when technical marketing aptitude meets industry insights, even if the touch point happens only 2-3 times a year.

3 - Communicate issues and work to resolve systemic issues rather than one-off problems

When vendors begin to miss targets or objectives, determine what the root cause of the issue is. There can be existing legacy applications, collateral, or media assets that could exist which your agency had little to do with. When there is strong evidence that a marketing agency is underperforming, the company should inform and communicate these gaps to the agency. Unfortunately, businesses will often only react to issues rather than take the next step to request a diagnosis or a change in process to prevent the one-off from becoming a recurring problem. If the agency continues to underperform or remains delinquent it will be up to the organizational leader to make the difficult to choice to terminate the agency.

4 - Get an audit from another agency to make a termination decision

Having the opinion of another agency could also help diagnose issues or confirm suspicions that a marketing firm is underperforming. This step may require additional time but it's worthwhile to ensure that there weren't extenuating circumstances before parting ways with a marketing agency that has a grasp on your business and industry.

Request an audit from a marketing agency to determine whether remedial action can be taken or termination is warranted.

5 - Create a transition plan

In the event that the final decision is to terminate an existing marketing agency, the creation of a transition plan is paramount to ensuring business continuity. Determine the scope of the marketing agency's work and identify internal team resources that can cover for the work. Often times this means having to hire or extend the hours of certain team members while a more permenant arrangement can be made. A transition plan seeks to ensure that your team or clients are not impacted by the transition, while ensuring timely reallocation of on-going marketing work.

6 - Reclaim all digital and physical media assets

Ensure that the agency you work with returns all passwords from social media accounts, website log-ins, hosting log-ins, and access to marketing collateral. This is important as there have been times where a previous agency was terminated and left with a number of different social media passwords that were later unrecoverable. This meant not only having outdated information that could not be changed and further complicating future customer interactions.

7 - Draft a termination letter to your agency

A vendor termination letter is a formal communication to your marketing agency that you wish to end the service agreement. It is typically one page and delivered prior to the next billing cycle. Ensure that your signing officer completes the letter and delivers it to your marketing agency.

Here is a sample template to terminate the incumbent vendor.

Sample template:

Dear John Smith of [marketing agency],

We wish to inform you immediately that [your company name] will no longer be requiring your services effective [date]. For the reasons stated here we are concluding our service arrangement:

Reason 1

Reason 2

Reason 3

The team at [your company name] thanks you for your continued efforts and wishes [marketing agency] ongoing success.

Sincerely,

[Signing officer]

Recovering from marketing agency flops

Creative agencies can be expensive to employ or a significant drain on resources like time and team member morale. Yet despite these challenges, world leading brands like Coca-Cola, Apple, and Samsung continue to rely on marketing agencies to help augment and shape their brand with cutting-edge concepts and themes. The key to successful marketing isn't whether an agency should be used but rather working with the right partner. 

Profitworks helps organizations succeed with marketing

"I've found Profitworks to be tenacious and adaptable to the challenges our industry possesses."

-Blair - Business Owner & Customer

Read More About What Our Customers Say

We've helped companies across Canada and the US succeed with growth, because we believe in the beauty and meaning of every article written, email sent, and social media post crafted. Our team endeavours to create unique competitive advantages for all of our customers and would be thrilled to learn more about your mission and plans for your team. Profitworks provides marketing strategy, content marketing, branding, and social media management for great companies with a stellar product or service.

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5 Important Things Marketing Does For Organizational Success

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Develop your competitive edge with Profitworks

Companies work with agencies and marketing teams to develop a unique sales engine and brand to reach and retain clients. Create your marketing competitive advantage today by looking at your competitor's marketing and creating a brand strategy. Work with Profitworks to become the market leader in your industry today.

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Marketing Return on Investment: What is a Benchmark Average and What Marketing Methods Have the Best ROI?

In this blog article and podcast we are going to talk the return on investment from different marketing methods. We will discuss the industry ROI averages for different methods and give a conclusion on which method has the best ROI. At the bottom of this blog post, we point out what marketing method has the best average return on investment. 

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