Customer categories

- Too many companies define their target market too broadly – “consumers” is a common description, as is “SMEs” or even (slightly better) “the construction industry”

- You need to divide that market down further into particular types of customer, for example

o “Owner-managed businesses in the RG postcode with between 5 and 50 employees” or

o “Builders on the local council suppliers list who do not have an internal H&S manager” or

o “Women between 25 and 35 who are fashion-conscious but on a budget.”

- It helps to give them a name – for instance a supermarket chain might categorise some of its customers as “Northern Brand Loyalists” and others as “Sausage-and-mashers”

- A customer category is another way of describing a market niche

Why have customer categories?

- It will help you make decisions about which customers you want – and which you don’t want

o Which customers are more profitable – and which are a nightmare to deal with?

- It will help you understand why those customers choose your product or service – or that of your competitor

o Which benefits are more important to them – and which less?

o How well do you match those desires – and how do you compare with the competition?

- It will help you develop propositions which are tuned to the customers’ requirements – even if the base product or service is the same

- It will help you quickly and easily communicate the type of customer you are looking for

- You should strive to be number 1 or 2 in your market. If you are not big enough to achieve this in the whole market you can focus on a niche (a customer category) where you can be number 1 or 2 and so dominate.

How do you identify customer categories?

- Think through the benefits that your customers are seeking – what is important to them and how does it differ for different customers?

- Think about the different ways they buy – where, when, how often?

- Think about different attributes – age, sex, where they live

- Think about the different things your product or service does for different customers

o What need does it fulfil?

o What does it allow them to deliver to their customers?

o What barriers does it remove?

o How many different uses is it put to?

o Ask them!

- Take the differences that you find most useful and group them into customer categories.

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