Today’s business environment is fast-paced and to compete, small and medium enterprises (SMEs) must keep up. This can be challenging, because money and resources are limited. The key is to learn how to get better results from marketing so that you can increase your sales and profits.
This requires a deep understanding of your Most Profitable Customer segments and tailoring your marketing efforts accordingly.
So how do you do this?
1. Know your Most Profitable Customers
Many of the businesses that I work with make the same mistake. They focus on a broad, generic audience. The idea behind this is that if you address all possible buyers, then you will attract at least some of them.
And yes, that is true.
But your marketing will not be effective. It will be like casting a wide net into the ocean and accepting that it will contain some fish, but also many other things. Or worse, you cast the net in the wrong place and get nothing.
The foundation of effective marketing lies in knowing who your Most Profitable Customers are.
Successful marketing requires precision.
By analysing data such as purchase history, customer lifetime value, preferences, and demographics, you can identify the customers that contribute the most to your profitability.
These insights then form the cornerstone of your targeted marketing efforts. It also ensures that your limited resources are allocated toward the segments that are most likely to yield high returns.
2. Tailor your messaging to specific customer segments
Once you have identified your Most Profitable Customers, the next step is to tailor your marketing messages to these specific group or groups of customers.
Generic, one-size-fits-all messaging is ineffective because it fails to speak directly to the unique needs and preferences of different customer groups.
If you want better results from your marketing, you will need to create personalised marketing messages that resonate with each identified customer segment.
Tailored messaging can address the specific pain points and desires of your target audience. It will also be helpful to understand more about what makes customers buy in the first place.
Example
Killa Natural Ancestral, a company I worked with, is a Peruvian small business that sells sustainable fashion using traditional dyeing techniques handed down from generation to generation.
Killa targets environmentally conscious consumers and fashion-forward buyers in Peru and the US. They have taken the time to analyse their customers in each market and understand the differences between them.
For example, in Peru, their Most Profitable Customer is aged 40+ while in the US, their Most Profitable Customer is aged 20 - 35.
The approach
Killa's social media highlights benefits that align with the values of each customer group.
They create separate messages for their Peruvian market and for their US market.
This helps them to strengthen their connection with their most Profitable Customers and drive meaningful interactions.
3. Leverage personalisation for customer engagement
Personalisation is one of the most powerful tools in a marketer's toolkit. Consumers today expect brands to understand and cater to their individual preferences. According to a 2018 study by Epsilon, 80% of consumers are more likely to make a purchase when brands offer personalised experiences.
You too can create personalised marketing campaigns. The key is to leverage the customer data that you have to make your customers feel valued. This, in turn, leads to stronger engagement and higher conversion rates..
In time, it also leads to higher profits because customers who like you purchase from you more often.
4. Optimise marketing channels based on customer behaviour
Focusing on the right channels ensures that businesses get the most out of their marketing investments.
The key question here is: Where do your Most Profitable Customers spend their time?
Example
Servicios Profesionales is a Venezuelan company that offers legal services to the agricultural sector. I worked with them for two years.
We started out by refining their value proposition and testing the market response. After that, we looked at their marketing strategy.
The company targeted customers through 5 social media channels but was getting limited results.
When we analysed their customers, we discovered that their Most Profitable Customers mainly wanted to engage through WhatsApp.
Today, the business has re-allocated their resources to this channel to ensure that their marketing efforts are more efficient and yield better results.
5. Focus on customer retention
Acquiring new customers is important, but retaining your existing customers - especially your most profitable ones - is even more important.
Customer retention helps your business maximise the lifetime value of your customers. This leads to increased profitability and also creates brand advocates who bring in new customers through word-of-mouth referrals.
Smart business owners therefore allocate a significant portion of their marketing budget to customer retention strategies.
There are many different customer retention strategies. Some of these strategies are easy to implement, while others are a little more complicated.
Which one is best for your business depends on your customer. (And we're back to why it is so important to know your customer! 😄)
6. Implement data-driven marketing strategies
If you want effective marketing strategies that help you achieve profitable growth, data is key.
It means that you should continuously analyse data about how your customers behave, what their purchase patterns are and how they respond to marketing activities. Doing so will help you make better marketing decisions and save money.
Or, analyse the purchase patterns of your Most Profitable Customers. What characteristics do they share? If you see a 'wave pattern' (periods of higer purchases followed by periods of lower/no purchases), is there a way to level it out? Maybe you can offer additional services that will encourage them to buy more.
Here again, you will need to understand why customers buy and know their pain points so that you can respond adequately. Note that the pain points for B2C are different from the pain points for B2B. This will also help you stop wasting time on customers who are not ready to buy.
In short, data-driven insights help businesses allocate resources more effectively, optimise campaign performance, and ensure that every marketing dollar is spent wisely.
7. Encourage customer advocacy
Word-of-mouth marketing can have a substantial impact because community ties and recommendations are often highly trusted.
This is particularly the case in emerging economies because there are less independent third-party organisations to assess businesses. Or, if they exist, they might not be fully trusted either.
Profitable customer segments are revenue generators. They can also become your most powerful brand advocates because satisfied customers are more likely to share their positive experiences with others.
One way to encourage them is to offer incentives, like referral discounts or rewards.
8. Iterative approach and continuous improvement
If you want to achieve profitable growth, continuous learning and continuous improvement are a necessary part of doing business.
There is no way you can just set your marketing strategy once and forget about it.
You need to keep paying attention to what the data is telling you.
If you have a website, use Google Analytics (free) or, if your budget permits, buy a more advanced analytics solution.
Maybe you see that certain campaigns are doing really well. Why is that? What do they have in common? Is it the type of image, what you said (the copy), the time of day that you launched the campaign? Etc etc.
Then use that information to improve your next campaign.
If you got it right, the result will be better than before. If not, start over. Study the data again and test something else.
Conclusion
For small and medium businesses in developing and emerging economies, achieving better results from your marketing efforts is about precision and alignment with your Most Profitable Customer segments.
My advice to you is the same as I give to businesses that I work with on a 1-on-1 basis: invest time and resources to identify your most profitable customers and then build your marketing efforts around them.
