How To Do Strategic Segmentation – Step 2: Understand Customer Motivations

This is the second in a three-part series explaining how to perform a strategic segmentation of your market/audience. If you haven’t yet you should read the introduction to strategic segmentation and the first post on segmenting the market.

We’ve covered how strategic segmentation can help you develop effective strategies for appealing to specific customer groups in a way that is both profitable and sustainable. At this point you’ve identified key audience characteristics that allow you to both classify subgroups of your audience and inform ways that you can relate to those groups with your products and services.

The next step in the strategic segmentation process is to understand the different motivations that lie behind their decisions and behaviors.

Understanding Customer Motivations

In Strategic Market Management (affliliate link), David Aaker suggests there are four basic steps for analyzing customer segments’ motivations:

1. Identify Motivations
2. Group Motivations
3. Assess Importance
4. Assign Strategic Roles

Identify Motivations

The first step is to think critically about the factors that influence a customer segment’s behaviors and decisions in relationship to your offering. You (and your co-leaders) can probably generate a pretty thorough list of customer motivations based on your experiences. However, it is better to engage customers directly through research to systematically identify their motivations.

The goal is to understand why a customer uses a product? What is their motivation? What determines a good or bad experience for them? Through the effort you should identify a whole gamut of motivations: strategic, tactical and in between.

Group Motivations

The process of identifying motivations will probably generate a long list of motivations. The next step is to group the motivations together in order to assess relationships between them. This process will help you to organize the motivations to see commonalities and linkages between motivations that might contribute to the importance of the different categories of motivations.

There are a number of way to categorize the customer motivations. A simple one is to write each motivation on a card and systematically go though assigning each one to a pile of similar motivations. After that the piles can be arranged in a way that shows their strategic relationship to each other.

Assess Importance

Once you’ve identified and categorized the customer’s motivations, the next step is determine the relative importance of each one to the customer. This exercise involves determining the prioritization of different motivations. You can do this on your own, drawing upon your own experiences and insight to make a determination. However, it is often more effective to ask the customers to assess the importance of motivations.

The process I employ when doing customer analysis incorporates three approaches:

• ask the customer directly to identify how important a motivation is;
• ask the customer trade off questions that force them to judge the relative importance;
• observing actual purchase decision to validate their actual behavior matches what they’ve identified as important.

The end result is knowledge of the strategic importance of the customer’s motivations.

Assign Strategic Roles

The final step in analyzing customer motivations is to identify which customer motivations should be incorporated into your business strategy. This steps will give you a complete picture of how to proceed given the different factors related to the strategically important motivations. It takes into account not only the strategic importance of different things that motivate your customers but also what the rest of your market is doing to capitalize on those things as well as your own ability to capitalize on them.

Conclusion

The result is of these steps is a comprehensive understanding of the different factors that motivate your customers, the level of influence that each has on your customers’ behavior, and a prioritization based on the value of and your ability to respond to each motivation.

The final step in the strategic segmentation process is to identify any unmet needs within your customer segments that represent an opportunity for your business. I will cover that in a future post.

If your organization needs help understanding your customers’ motivations, I offer a number of strategic customer research and analysis services that can help. Feel free to contact me here.

Question: Is your business or ministry oriented towards your audience and do you feel like you do a good job in understanding what motivates them? Why or why not?