2.6. ABCDX Segmentation

While being in the process of developing a product or services you already think about the huge lines of customers waiting to buy your product or use your services. You imagine how you will surpass your competitors or how future customers will pay the needed amount of money for YOUR product without asking any questions or showing hesitation. Reality, unfortunately, is not that sweet.

What is Customer Segmentation?

The main thing that you have to understand is that all your potential customers are very different. Each and all of them have their own needs, wishes and desires. Some customers may be more price sensitive, others may place more importance on the quality of the product or services, while the third group of customers may be the ones who are always disgruntled, highly unreasonable and don’t even know what they want. Accordingly, customer segmentation is the process of dividing or grouping your customers into certain segments that share specific characteristics.

Why Do We Need Customer Segmentation?

As it has been already mentioned all your customers are very different. They differ not only in terms of age, gender, marital status, location, etc., but they also have different problems and issues that they want your product to solve or handle, they have different financial backgrounds, and some of them might require more attention compared to others. You cannot deal with all customers in the same way. Accordingly, customer segmentation helps better identify and understand customers’ mutual needs and find the most effective and the best possible personal approach that would help to satisfy those needs.

ABCDX Segmentation in Details

Customers can be divided into 5 segments:
To start with, Segment A is the group of customers who desperately need your products or services, pay a lot, pay on time, don’t have any objections, and are usually very satisfied with the product or services provided.
Segment B also needs your product or services, though expresses some objections or doubts. It takes more time for B customers to decide whether they need your product or services or not, but when they finally make their decision, they pay a lot and do that on a regular basis.
Segment C do needs your product or services, but they constantly create problems, express objections, and always need your support. They are not willing to pay more, if at all, they usually pay only after 3-5 reminders and always search for ways of how to avoid paying. They also use the products or services provided by your competitors and tend to compare you to them. Finally, if you competitor offers any features that are better than those offered by you, don’t get surprised that this type of customers will let you know about that the next day.
Segment D is the least favourite group of customers. They express a lot of objections, they have a lot of questions, and are dissatisfied with everything. In case you do satisfy their needs, most frequently they won’t use your services nor will they buy your product.
Segment X is the last group of customers. It is a group of specific customers who require specific products, specific services or specific features and are willing to pay a lot if you satisfy their specific needs.

Conclusion

All your customers are very different. You can’t be good in everyone’s story. Nonetheless, you can choose the segment(s) of customers you like to spend time on and work with. Regardless of the time of formation of your business, whether you’re a freshly baked startup or a mature established company, it is advisable to focus on the A and B segments that will pay and are ready to pay a lot. In most cases paying attention to the needs of C and D segments turn out to be a waste of time: they often provide all the inquiries and objections, are dissatisfied with everything that you do, and bring less or even no money at all compared to the customers of the first two segments. Accordingly, choose wisely and invest your time and resources in the right direction for your business to grow and flourish.