Market research articles often focus on very specific customer types. "Suppose you're a restaurant serving mid-to-high-end Italian food," a post might begin, or else, "imagine you just built an iOS game for boys 7-12 years old." The reality, however, is that many of today's new businesses must serve multiple customer segments, and each segment requires new market research. Let's take a look at a few of the more common customer segment splits and discuss strategies for researching each separate market.
Consumers vs. Business Customers
Perhaps the most common customer segmentation of all is consumers versus businesses. Data storage providers like Box and Dropbox provide a familiar example; they each offer personal plans right next to business plans. Glancing at Box's pricing schemes and offerings, you might reason that the company is just targeting one type of customer, simply offering more space for a little more money as required by the user.
Look a little more closely, however, and you'll see some distinct differences between their "Personal" plan and the three subsequent business plans. For starters, only the personal plan prompts the buyer to "Sign Up Now." The next two read "Start Free Trial" while the last says only "Get in Touch." This messaging is very deliberate, and it's the result of careful market research. Beyond the obvious factors (a Personal account is free; the others are not), Box uses "Start Free Trial" because it knows that the motivations between individuals and businesses are very different.
Consider the individual consumer first. He has very little to lose by trying out Box. The cost is free, and he'll only be storing his personal data. No one—besides maybe his own family—needs to approve of, evaluate, or sign off on his decision. He can sign up on a whim, and cancel tomorrow if he so chooses.
Now, consider the same man, researching data storage services for his company. As he reads up on the various providers and clicks through the plans, he knows his ultimate choice will be evaluated. He thinks very analytically. How can he explain the costs and benefits to his superiors? Which plan is best, given his company's goals and bottom line? He won't be able to cancel on a whim, because this uncertainty will reflect poorly on his job performance. In addition, suppose something goes wrong with the data storage a month down the road, such as a data leak. He'll be held partially responsible, as it was his decision to select the plan, even if the responsibility truly lies with Box.
Having thoroughly evaluated their separate markets, Box knows all of this. For their service, they know that an average consumer will simply need a nudge, but that a business customer will need a risk-free trial, clear numbers, and peace of mind. Despite how their pricing page looks, they've done exhaustive analysis of both consumer and business segments. Make sure to consider the deeper implications of your B2B and B2C markets before assuming the two are largely the same.
Different Income Levels
Some companies have the luxury of focusing on customers with a fairly homogenous income level. Wealth management firms can target high-income, high-net-worth individuals, while second-hand retail stores can focus on a lower income bracket. These businesses can tailor promotions, sales, and deals to the relevant segment, and assume that the majority of their customers will be happy with a certain type of offer.
However, many businesses have a whole range of incomes represented among their customers. Take travel sites. Anyone from a penny-pincher to a big-spender will invariably book flights, hotels, and rental cars from time to time. These sites could focus exclusively on super cheap travel deals, but they'd be missing the opportunity to up-sell more wealthy users.
So naturally, sites like Kayak, Expedia, and Hipmunk will attempt to appeal to just about every traveler. The trick is to make the experience feel personalized, even if behind-the-scenes, these sites are really targeting everyone.
As such, top travel sites will do all sorts of careful market research to determine which customers want what deals. There's a reason they want you to sign up for an account. Sure, it's for your convenience when booking a new flight, but it's also to track your behavior and determine which group of users you be identified as. Are you the sort that will upgrade to a presidential suite? Will you agree to three additional layovers to save $8 on a flight?
Over time, these careful customer segmentations will pay off. The more you can provide your users with clever, well-matched offers, the more loyalty you'll develop, trust you'll gain, and money you'll make. As always: the key is to start researching these opportunities early—only then will you understand whether your business has a chance to serve a variety of income levels.
Different Product Categories
Finally, and possibly most challenging of all, is targeting customers from a variety of different product categories. Comparison shopping sites provide the most obvious example here, as they might sell an electric guitar to one customer before selling a bouquet of flowers to another.
Consistent user experience and customer service department tend to outweigh specific deals and marketing language. If you're Amazon, it's just not practical to change up your tone and attempt to take on a "musical vibe" in the music section and "romantic vibe" in the flowers section, despite what generic marketing materials will tell you.
The key market research principle here is to follow your users' behavior. Are users willing to buy multiple items across several categories? If yes, consider segmenting by average dollar amount of recent purchases. If a customer likes inexpensive products, why not show her more of the same? Alternatively, are customers only buying within specific categories? In other words, are the flower people only buying flowers and the guitar people only buying guitars? Here, you will be wise to track which categories make the most money. If it turns out that three of your 12 product categories do 90% of your business, you may want to consider consolidating your offerings to maximize what you do well.
Poll your users to determine what they like about your site, and why they use it. At my company, FindTheBest, we've discovered that people love the site primarily as a research tool (as opposed to a snappy, 1-click buying site like Amazon). As such, we've designed the site to facilitate quality product research, with smart tools and visualizations. Generic market research guides might have told us to maximize purchases with bigger buy now buttons, but by adjusting to our customers' reported site use; we are building trust and familiarity for the future.
So next time you read a post focused on a very specific customer type (guilty: I've written several myself), keep in mind that your customer base might be better split into multiple segments, and that each segment requires its own market research. You—and your company's bottom line—will be happy you did.
Thanks for reading!
Ben Taylor is a marketing manager at FindTheBest, a research hub that helps people think like experts.