Today we have a guest blog post by Henry McNeill. Henry graduated with an honours degree in Computer Science way back when and has remained in the technology sector ever since. He provides advisory, non-exec and consultancy services to start-ups and growing technology businesses. He is a Community Advisor at Geovation, feel free to bounce a few ideas with him.
So you think you know your customers?
Try this. Ask anyone who runs an emerging business – how well do you know the different types of customers that should be attracted to your products and services? Most early stage businesses will usually respond with two scenarios: either they know one or two of their customer types (or segments) very well; or they have built their business around those contacts known to them who just ‘happened’ to like or influence their proposition. But many companies (including mature ones!) have not considered all the different types of customers that could benefit from their service, tending to be comfortable with the ones they know and love.
I have had the luxury of completing market segmentation for a wide range of situations – from pre-revenue tech start-ups to the £100bn NHS. Some of the most absorbing workshops I have run have focused on market segmentation, where you categorise your potential customers into similar groups. This improves your market and customer understanding providing you with the ability to target your sales efforts with more precision.
With this aim, I ran a workshop with four of the new businesses joining Geovation, namely GoJauntly, Pedals, Podaris and Signalbox. We wanted to develop our thinking on:
- Explaining your customers wants and needs
- The desired outcomes of your customers when using your products or services
- Who buys your products and services; and when?
- Who are your competitors and what threats do they pose?
- Are your services profitable and fundable?
I know, you can boil the ocean carrying out this type of analysis, time which any small business does not have. The trick is to collate enough, dare I say pragmatic, information to allow you to make decisions on which (current or new) customer segments to target, or as importantly, those not to target.
Because we gave the entrepreneurs time and space to think this through, after a short introduction, they all rose to the challenge and created their own market segmentations that made valuable sense within a few hours. By the end of the day, I reviewed their first drafts and make some (hopefully useful) comments on their customer segments. But, most importantly, the entrepreneurs gained an increased insight into the customers they plan to service and some initial thoughts on how about to approach and acquire them.
Toby Webb, Signalbox Director said: “Henry’s workshop was exactly what we needed to identify the pros and cons of the various market segments. The work we did allowed us to optimise our route to market, which will allow us to bring our product to market quicker and more cost-effectively. allow. Henry is without doubt an expert in market segmentation and business strategy and we have no hesitation in recommending him.”