3 Basic Marketing Segmentation Strategies for the Entrepreneur

In today’s digital world, your customers are being wooed by a multitude of offers for their attention. How do you stand out without spending your way into bankruptcy? One way to optimize your ad spend is by segmentation, or dividing your existing and potential customer base into sub-groups based on specific characteristics. By separating your prospects into segments by what makes them unique, you can market more effectively to those segments using the three strategies here.

1 Identify the segments

Your goal in segmenting your audience is to find those segments with the most potential for growth and/or profitability. Typically, you will segment based on demographics that are similar to those of your ideal or target customer. The most popular and useful demographic profiles include age, gender, occupation, marital status, family status, income, education, living situation and ethnicity, though you should use only those that are relevant to your product or service.

2 Select a focused or differentiated strategy

After creating your segments, decide if you will market to just one segment or to multiple ones. Pursuing only one narrow segment is a “focused” strategy that is excellent if you’re low on startup cash, because it allows you to really understand that market segment and maximize your precious marketing spend early on (when you need it). With the “differentiated” strategy, you target two or more market segments and develop separate offers for each segment. Personally, I prefer the differentiated approach because I can conduct A/B testing in order to gather more information and optimize spending, then use the results to revert to a focused strategy. Either works well, so it’s up to you to decide which is the best fit for your business.

3 Use social media tools to practice segmentation

One thing I’ve learned about social media platforms is that they can give you a wealth of detailed “segmentation bases,” or variables you can use to segment your market, together with a ton of instant feedback and real data — even if you don’t pay for it. These “bases” include demographic, geographic, lifestyle and behavioral information. For instance, I use Facebook Business Manager to experiment with target audiences, their demographics and their behaviors. After experimenting, I can run a small campaign to try out my theories.

Definitely experiment with your marketing segmentation. Worst case, you’ll have a lot better understanding of the people you sell to. Best case, you’ll find many more efficient ways to sell to them. And remember: solopreneurs don’t have to be solo. We can help fill out the roles you’d like to delegate.

What the 5 Components of Promotion Mean to Entrepreneurs

We previously talked about the 4 P’s of the Marketing Mix. One of the P’s, “Promotion,” is a fundamental prerequisite of your product or service offering: your prospective customer must find out about your offer. For most of us, that will happen by promoting ourselves or our offers using a variety of different avenues while giving customers a very consistent view of ourselves — consistency facilitates the credibility of the offer. Also providing credibility, as well as producing excellent results for entrepreneurs, is communicating your value proposition through these five components of the promotional mix.

Advertising

Advertising is the first place we tend to look for our promotion needs because of its potentially wide reach, but for that reason it’s also usually the most expensive option. This is especially true when advertising online and trying to win a keywords auction against large corporations with deep pockets and a high bid ceiling. The digital age has greatly expanded the number of advertising options and allows for nearly real-time testing and performance optimization, which are crucial to getting more bang for your advertising buck.

Personal selling

Personal selling is essentially selling directly to another person. It may incorporate elements of both marketing and sales and is very useful for large ticket items, but not so much so for low margin items. In my experience with personal selling, it helps to know and play into your own strengths, all while having needed knowledge of your prospect and your product. That’s why, before embarking on a personal selling campaign, it’s helpful to conduct research into your ideal prospect or a similar persona.

Sales promotion

Sales promotion is using a sense of urgency and enticement to let customers know about your offers. For small businesses, it’s important to build credibility before a sales promotion; otherwise, you’ll have to deal with that “too good to be true” feeling the prospect may have.

Public relations

Public relations is not normally associated with promotion, but the careful and consistent sculpting of your public image builds credibility, which is crucial for most small startups. Small, local news outlets and bloggers — who are always looking for new content — are great places to start executing your public relations strategy.

Direct marketing

Direct Marketing is often a four-letter word with your prospective customers, but businesses continue to use it because it works. Essentially an outbound channel, it includes direct mail, email and even phone sales, though the latter is objectionable for some. In my personal experience, I believe most small, underfunded startups should at least consider a direct marketing strategy, if the research bears it out.

You don’t have to use every possible manner of promotion, but definitely experiment to see what works best for you and your business. As a solopreneur, you don’t have to go solo. We can help fill out the roles you’d like to delegate.

3 Marketing Strategy and Mix Questions Entrepreneurs Should be Able to Answer

I’ll try not to put you to sleep too quickly with this one, but Marketing Strategy and Marketing Mix — and how they are related — are very important concepts that entrepreneurs need to understand when building startups.

Marketing Strategy is your long-term approach to how you plan to achieve and sustain your competitive advantage. It includes definitions of your ideal or target customer, your value proposition, and your key brand and marketing messages. Marketing Mix is also known as the 4 P’s (Price, Product, Place and Promotion) and is the foundation of marketing. They are related in that you will use the tactics in the marketing mix to implement and achieve your marketing strategy, adjusting as needed for different situations. Answering the three questions below will help ensure you’ve covered all necessary points in both your marketing strategy and marketing mix.

1. Do you have a set of long-term, high-level marketing strategy goals and a direction you’re committed to?

Don’t worry if you don’t have your complete marketing strategy in place yet, as it can change and evolve. But as long as you have the overall strategy in mind, you can more easily share it with teammates, partners and investors, for example. It helps to transfer our long-term entrepreneurial vision from our brain to others’.

If you need help formulating the strategy, you don’t need an MBA; a simple SWOT analysis will do. See our article on SWOT analysis if you need to know more.

2. Have you identified the 4 P’s for your business?

For example:

•    Price: What price point are you targeting and why?

•    Product: How is your product best described using common attributes?

•    Place: Where can your product be found? How easy is it to get to?

•    Promotion: How will your customers find out about your product or service?

Again, no one is holding your feet to the fire here if you don’t follow through, but the goal is to show intent and to focus your vision.

3. Can you connect your long-term marketing strategy from question one to the operating decisions in question two to come up with a seamless marketing plan?

Personally, I find this is a great question to answer if you’re unsure about your next marketing steps, or if you need to share with third parties such as partners or investors.

Understanding these basic terms and answering these questions can really help you focus and communicate your vision as an entrepreneur. Marketing and sales are crucial components of any startup, so it helps to use this structure to think about your marketing strategy early on. As a solopreneur, you don’t have to go solo. We can help fill out the roles you’d like to delegate.

3 Inexpensive Types of Market Research for Budget-Conscious Startups

As a startup, when you’re trying to determine the best market segment or niche to pursue, market research can be invaluable. Unfortunately, on a limited marketing budget, primary market data and research can be expensive to purchase, and even more expensive to undertake. Secondary research, which stems from available data, is also very useful and can be less expensive and more accessible. However, I have found that sometimes it’s worth it to just go out there and collect the data myself, especially if I need a very specific piece of information about a very specific demographic or behavioral segment, and third-party bids are prohibitively expensive. Here, then, are three types of inexpensive market research that you can conduct on a limited budget.

Surveys

Depending on how they are done, surveys can be inexpensive. You can use a free online survey service, such as Google or Office 365 forms, and use qualifying questions to filter out unfit respondents. If you haven’t collected your own customer contact data, the majority of your expenses may result from using clean, third-party or verifiable data to target your survey to the correct audience. Always include an incentive, but to be more cost effective, offer one large incentive via a drawing rather than a small incentive to everyone who participates. The downside to surveys is that the responses can be very subjective, since you’re often asking the respondent for their opinions or recollections of their behaviors, which can be biased. But you will still end up with more information than you had before.

Product/Service Testing or “Anchor Contracts”

Another option is to select a smaller target audience than a survey but conduct much more in-depth research. By offering your product or service to a select client or audience for free or at a discount, you can track customer demographics and behaviors against market conditions — and your own metrics — over an entire customer life cycle. This will provide real-time data which you can then apply when marketing to other potential customers.

Advertising Testing via Local Offers

Admittedly, while online advertising can start out as inexpensive, costs can quickly escalate, since it is often auction-based and costs-per-click skyrocket as soon as advertisers begin to see return on their investment. However, valuable awareness research can be done with a small testing budget on the appropriate platform. For example, ad testing on LinkedIn has been historically pricey, but you may be able to afford light testing of offers on Facebook or your local business paper. For this kind of research and testing to be inexpensive, it’s important to find an advertising platform that’s the right mix of effective targeting, available metrics for experiment design and cost.

Whatever primary research methods you choose, stick with them if you believe they will return long-term gains to your business. Research does get easier as you become more experienced, and we are always available to help. To continue the conversation, contact us for more information.

3 Data-Driven Ways to Find Your Marketing Niche

Ever heard the term “A jack of all trades is a master of none”? I learned the hard way a while ago that this is especially true with small business marketing. I spent a lot of money advertising to market segments that were clearly dominated by large corporate competitors — my complete investment was a drop in the bucket for them. I was especially de-motivated when marketing firms told me that my entire advertising budget was almost a reasonable “testing” budget! The better strategy would have been to focus my limited resources on a more specific market niche.

The first question, then, is: What is a market niche? It’s simply a subset or segment of a product or service’s market, taking into account the product or service’s features, quality, demographics and price range. For example, most attorneys don’t practice all types of law; they choose a niche such as family law or criminal defense. This reduces competition and allow the attorney to become an expert in a particular segment.

The second question is: How do I find my marketing niche? This question can be answered in two ways. One is to rely on your feelings and instincts, informed by your personal style and your goals for yourself and business. Another is to use more objective or data-driven approaches to find evidence of the market niche that best suits you. Here are three data-driven ways to find your marketing niche.

Market Segmentation

When you segment your market, you divide your existing and potential customers into sub-groups (segments) based on shared characteristics. You can use free advertising tools such as Facebook Business Manager to segment your market, which allows you to see the sizes of the segments and adjust them if they are too small or too large, or determine how many segments you need. This also allows you to see useful features of your demographics that you may not have previously taken into consideration, such as what locations will do well, or if location is more important than industry, for example.

Market Surveys

Once you have segmented your market, you can use demographic data and attributes from advertising platforms such as Facebook to reach out to a cross-section of potential customers and gauge their interest in your product or services. Surveys let you talk directly to prospective clients, getting valuable one-on-one time with prospects, and offering a small token such as a gift card is a popular incentive for participation.

Trial and Error or “Testing”

Another method is to review your demographic and behavorial market segments in order to identify an “anchor contract” to pursue for testing purposes. You may offer heavily discounted or free products or services to this anchor customer in order to track core demographic data and build marketing “personas” to use in future marketing. Be careful, though, because free may not be considered “credible” in your target market. Partner marketing or referrals are very effective here if you can get them.

Niche marketing is a powerful tool for small, underfunded or bootstrapped startups, and using data helps focus your limited resources in the most suitable areas. Whatever your niche, let us help you succeed within it.

What’s a Value Proposition? And 4 Ways to Strengthen Yours

“Value proposition” may sound complicated, but it is actually quite simple: it’s the benefit – or value – that your customers will get, or believe they will get, from your product or service. An example of a good value prop is that of Dollar Shave Club: “A great shave for a few bucks a month.” That’s what they promise to their prospective customers, and that’s what they deliver.

It’s crucial that you lock down your value prop before you launch your startup. It provides you with a consistent message around which to focus your marketing efforts, adds credibility to your offering, and should eventually result in sales. Here are four considerations to help you craft an effective value proposition.

Current benefits

Start by identifying the clear benefit that your prospective customers may be looking for and that your product or service provides. Try to use the term “benefits” as opposed to “services” (although both seem to be popular). Examples might be “Easy to use accounting” or “Reliable financials.”

The customer’s problem or “pain point”

Second, focus less on your company and more on your customers. Think about what problem or “pain point” customers have that your product or service can solve, then use language that reminds them that you exist to help them resolve that issue.

What sets you apart from the competition

Next, concentrate on what makes your company unique – your “fingerprint” or “special sauce” that the customers can connect to. Maybe it’s a specific feature of your product or service, or how you do things, or your mission – for example, if you solve the customer’s problem in an environmentally responsible way that the competition doesn’t, make that a centerpiece of your value prop.

Positivity and clarity

Finally, stay positive. A value prop is too short to veer into negativity, and it may work against you. And be clear. Though it’s not a slogan, it’s important to be concise and use accessible words. Your prospective customers will read this for a second or two, if you’re lucky, so make that time count.

A value proposition can appear to be a combination of a slogan and a mission statement, if properly crafted. You’re giving prospective customers a quick, hopefully effective pitch that will convince them to purchase your product or service. Try writing a few value propositions for your business idea and test them with potential customers to see how they do. If you need assistance, reach out to learn more.

3 Reasons You Should Define Your Target Market

When you start a business and open your doors, you’re probably willing to accept any customer who will write you a check or give you their credit card number. But getting someone to hand over a hard-earned dollar is harder than you think. To find prospects out there who are willing to part with their money for your services and products, you need to define and segment your target market.

Researched correctly, you will know what your customers look like and what they want, rather than simply guessing. This is the measurement, or empirical, approach to marketing with which many startups find success. So why spend precious time and energy formally defining your target market? Here are three good reasons why.

1. It saves you boatloads of cash.

This is a lesson I learned the hard way. Going for the biggest market segment possible is NOT free — you’ll spend a lot more money to get the reach and retargeting you may need. Instead, sending a targeted message to a smaller, well-defined audience via the most effective channel(s) is a much smarter use of your marketing budget.

2. You’re more likely to connect with customers as individuals.

In addition to saving on costs, targeting in general — and developing and using well-defined personas specifically — all help you connect with potential clients as you learn more about them. A persona is simply a representation of the type of customer most likely to buy your product or service, and the more detailed the persona, the better you will understand them. This in-depth knowledge will help you make connections and allow you to “get” them as individuals, rather than as a faceless member of an aggregate group of “customers.”

3. It improves internal organizational clarity.

As a founder, you have a wealth of knowledge that your employees, contractors, partners and investors might not have. We often take that knowledge for granted, assuming that everyone else shares our experiences. But when everyone is not on the same page, an understanding of the core purpose of the business and what you are trying to achieve can get lost. Formally defining your target market, then, is a great way to document and share this information with your team, as well as serve as a gentle reminder to yourself.

Defining and segmenting your target audience, and researching and creating personas inside that audience, can be tedious and time-consuming, and you may not want to take on such theoretical-type tasks. But in the long term, defining your target market keeps you and your team on track, saves you money and helps you connect to your customers as individuals. Whatever your market, we can help you reach them more efficiently. Contact us for more information today.

3 Reasons you Need an Email Service Provider for your Startup

Bulk email has a bad reputation because of some bad actors, but it is very effective customer engagement strategy for your business if done right.  But make sure that you use the correct tools, collect your own opt-in mailing lists, etc.  It’s important to not cut corners. 

Many startups use a “consumer” email provider like Gmail or Office 365 as their bulk or marketing email service.  But I wouldn’t recommend that practice, but instead use a designated business bulk email provider for the following reasons below… 

Email Throttling  

Consumer email is designed for low volume email sending.  These consumer email providers are sensitive to potential misuse by businesses and if they suspect problems, they may suddenly limit your outgoing email. 

But on the other hand, bulk providers like SendGrid.com specialize in bulk emailing.  Therefore they are much less likely to throttle your email campaign.  Sendgrid is also known in the industry and work with end-user email services to ensure that your mail keeps flowing. 

Deliverability 

Your customers’ email providers use your email server’s identity to decide whether to deliver your emails. Bulk email service providers can provide you dedicated IP addresses for a solid reputation. 

Bulk email providers also automatically manage your mailing-lists via “Suppression Lists”.  Which means they remove users who would like to be removed from your mailings.  That’s a great thing because this protects your reputation and is a legal requirement at times. 

Another advantage bulk email providers have that relates to deliverability is that they use networks and servers which expand to handle large volumes, even 100k or more emails in one blast.  

Build service providers also track your campaigns. This includes your email open rates, message throughput, reputation numbers, and more. 

Ensure compliance 

Bulk email providers would know about the CAN-SPAM act and its requirements, the new European GDPR regulations, and email marketing best practices in general. Avoid legal headaches. 

Offer simple unsubscribing and suppression. Use SPF, DKIM, and DMARC validation to help keep you off email blacklists.  

Here at LaunchMyStartup we help startup entrepreneurs choose the right IT options.  Contact us to find out more about how we can help you reach out to your customers.