AnalyticsActionable AnalysisCustomer Focus, Not Product Focus

Customer Focus, Not Product Focus

Use segmentation to build a sound online marketing strategy.

As a marketer or product manager, your goal is to sell your company’s product or service. Most approach this task by making their product visible to the largest number of people possible. This is often a flawed approach.

As more people purchase online and competition increases, you must rely on different methods. You must know exactly who your customers are and what segments they fit into. Are they students or seniors? What are their demographics? Are they price-sensitive? How much information do they seek before making a purchase? Do they buy the latest technology? What’s their past purchase behavior? You may ultimately find you have 5 to 10 different segments within your customer base.

You need to know what stage people are at with your company. Are they now discovering you or just browsing? Are they in the process of making a purchase? Or are they already informed, satisfied customers?

Send a unique message. Don’t concern yourself with pushing a particular product. Instead, make the best offer to customers based on their segment and stage. Then you’ll be customer-driven, not product-driven, like many of your competitors.

All this is easier said than done. Organizations must evolve to achieve this goal, and so must their internal processes. Should you have segment marketers or product marketers? From a business standpoint, a new approach may be practical. Many key products have small profit margins and can’t sustain their own P and L.

A customer focus affords the opportunity to achieve many results: increase the lifetime value of customers; maintain satisfactory levels of profitability; improve understanding of customers, and improve the marketing mix.

Take the telco industry. With increased competitiveness, the margins of a number of telco products have sunk dramatically. Meanwhile, new technologies and products have emerged with much higher levels of profitability. As a result, telcos struggle to market and sell their products.

A product focus results in unprofitable divisions, but products are important to retain customers. By building divisions based on products rather than customer segments, they can’t compete. Building their business around customer segments allows telcos to be innovative and maximize the value of each customer.

A product portfolio is an asset, just as customers are, but product focus won’t keep you in business forever. Customer focus increases customer satisfaction while allowing you to compete and thrive in your industry.

Once you know which segments customers are in, you’ll know what products to offer and how to tailor communications. This should allow you to answer such questions as: When do I offer certain products to specific customer segments? How profitable is a specific customer segment? How does a change in product offering affect the lifetime value of my customers?

If you want your online properties to be successful, now’s the time to build your company around a customer segment approach.


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