Needs-Based Segmentation is a Compelling Path to More Efficient Marketing

Needs-Based Segmentation: Groups of Customers or Prospects with Similar Needs

What do your customers receive from your company? The simple answer to this question is the product or service they purchase, but, as you likely know, it runs much deeper than that. Tangible benefits such as rapid turnaround times for the right items, available options suited to your customers' requirements, key flexibility in places where it is needed, and pricing options that are best for your client are all areas where you can provide a better solution than the companies with whom you compete.

These are powerful reasons to choose a particular vendor. In a perfect world, all of your prospects and customers would know about these differentiators that make you stand out as the better choice.

Unfortunately, the world is not ideal ("screws fall out" as Judd Nelson reminds us in The Breakfast Club), and it is extraordinarily expensive to tell everyone everything about your product or service. It just can't be done.

But what if you had groups of customers who had similar groups of needs? What if you could know that some customers who have "Need A" also commonly have "Need B" and "Need C"? Even better, what if there were a few combinations like these that would allow you to categorize a good percentage of your customer base in terms of these needs combinations?

To get a better sense of what is happening in this process, take a look at the table below. You will notice that there are a number of different needs identified, and an understanding of which customers or prospects have each particular need. Following that understanding, an analysis is performed on the data which enables a clearer view of which of these needs are also shared by other customers or prospects.

What Can I Do with Needs-Based Segmentation?

Understanding how customers and prospects can form needs groups has huge implications for a number of functional areas within any company that sells products and services. First and foremost, marketing understands how to package its messages, so they touch the individuals uniquely in each group. As with all segmentation types, understanding the relative sizes of the segments offers an opportunity to balance messaging mix in accordance with the size of each audience, increasing efficiency even further.

Beyond marketing, however there is both product development and operations, both of which benefit greatly from a needs-based segmentation. Product developers can use the unique pattern associated with each segment to focus product and service improvements and new product development.

Operations management is keen to understand how they can deliver loyalty through the customer needs they have the ability to control. Turnaround time, for example, is primarily in the realm of manufacturing and logistics, and a significant opportunity for closer tracking and improvement.

How Can I Embark on a Needs-Based Segmentation Effort?

In basic terms, the development of a needs-based segmentation involves two important steps: 1) the determination of customer needs and requirements, and 2) the analysis to determine which needs group together, and for which customers and prospects. Step one above can be performed through a voice of the customer/loyalty study, as well as through more advanced research methods such as conjoint analysis and others. Once again, after the base data is collected, the data reduction analysis is employed to discover the segments and sort the audience under test.

This way, your view of your market can go from gray to full color in a few straightforward steps:

Actionable Segmentation

PROOF Insights specializes in segmentation and excels, in particular, at needs-based segmentation. Our nearly two decades of experience, combined with our proven methodologies help our customers to gain the insights they need to take the next steps with their business. If you're considering a segmentation study, or find yourself curious about your potential audience, contact out to us today for a consultative call with our research team.