How can you determine where to focus business growth? Consider a few levels of strategic decision-making and corresponding frameworks. Level 3 of the customer demand framework is the domain of upstream marketing. It directs where to focus precisely—which customers, needs, and offerings—drawing on a proprietary customer demand framework.
The Beginnings of a Level 3 Framework
There are a variety of ways to create customer management frameworks, ranging from simple, qualitatively developed frameworks to highly sophisticated, quantitatively based methods.
Level 3 frameworks often start as a hypothetical sketch on a whiteboard. Then they are validated through the computational power of statistical modeling and data analytics. To illustrate this concept:
Picture a large room, like an auditorium, filled with 100 potential consumers of your category. Now, segment the 100 consumers into five to seven smaller breakout rooms, based on how they buy products and services, including their attitudes, needs, and behaviors—not based on demographics.
Identify Different Consumer Groups
For example, consider 100 potential consumers within the automotive insurance category. You might see several different consumer groups:
- One may value a personal, community association with their insurance agent.
- Another may prefer to handle the insurance experience entirely online—sans human interaction.
- A third is all about the price, seeking out the absolute lowest cost provider.
- A fourth is made up of people with poor driving records who are concerned they might not qualify for coverage.
After the segments are identified, build out the Level 3 framework and fully profile individual customer groups, including their attitudes, motivations, and benefits sought.
Create Segment Profiles & Bring Them to Life
Use insight from actual customer interactions and available research to populate the framework and create segment profiles. Paint a picture of each consumer group. Use stock photos, illustrations, and other tools to bring the segments to life visually:
- Who are they?
- What defines them?
- What are their needs?
- How do they buy?
Quantitative Surveys Can Find Patterns in Buying Behavior
Quantitative surveys can then be used to numerically validate and size opportunities. Finding patterns in actual buying behavior among current and potential customers can help identify where the largest sources of demand, revenue, and profit exist.
To pinpoint growth areas, word survey questions with “I wish” statements. You may even uncover uncontested white space opportunities (where no other competitor has a strong presence).
Plan and choose wisely: Ultimately, to-whom and for-what decision making will shape your entire business model and go-to-market approach.
The Key to a Robust Level 3 Framework Is…
The key to a robust to-whom, for-what level 3 framework is when clear, clustered preferences emerge across potential customer segments.
Want to make it easy to uncover untapped market spaces, and align potential offerings with customer needs? Use a demand- or needs-based rather than a competitor- or product-based view of the category.
In most cases, customers have clustered preferences like these shown in the figure below.
Marketing Benefits to Finding & Delivering on Clustered Preferences
There are several advantages to uncovering and delivering on clustered preferences, including:
- Customer clarity helps precisely define what makes one group tick versus others. New products can be laser-focused, which improves business success rates.
- Resources can be targeted – instead of trying to be all things to all people. Most organizations are resource-constrained; segmentation lets them “place their bets,” focusing rather than diffusing resources.
- A needs- or attitudinal-based view helps identify unmet needs and tap uncontested upstream opportunities.
What comes next, after you have created the customer framework? It’s time to prioritize targets and immerse yourself in the target customer experience.
To begin, we invite you to read our best-selling book, Upstream Marketing. Enjoy a free download of the third chapter – access your download here.
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