If you’re a fan of HubSpot inbound marketing methodyou probably understand the importance of customer success, In fact, 70% business Prioritize customer success as “very important” with growing revenue. So, if you want your business to be successful, you have to make sure that your customers are successful too.
By doing so, you can stack the odds in your favor, ensuring that the leads you are passing on to your sales team are a good fit for your business through profit sharing. In this post, we’ll explore what profit segmentation is, why you should use it, and where it can be seen in the real world.
What is profit sharing?
Benefit segmentation is the classification of your target audience based on the value they receive from your product or service. Different customers often seek different value propositions from the same product or service. For this reason, companies use profit segmentation to tailor their messaging to each specific customer segment, improving lead acquisition and customer success.
How does profit sharing work?
Since different customers want different benefits from your product, marketers need to place them in specified categories. To begin with, marketers list all the benefits that a customer can get from using the product. This could be something like distinctive features, product quality, price, or Top notch customer support, From there, they can categorize customers based on the value and benefits they seek, placing customers into multiple categories.
Segmentation can also be based on other criteria, such as customer behavior or demographics. For example, you can categorize people who are brand loyal, and those who are more value-conscious.
Why Should You Do Profit Splitting?
Profit segmentation will help you gain a better understanding of the different needs of your customer base in addition to the following:
1. Profit splitting makes it easier for sales representatives to convert leads into customers.
That’s because your marketing campaigns will attract customers who are better suited for your product or service. Since campaigns are targeted at the people who most need your business, your sales team should have an easier time closing deals.
2. Marketers and salespeople can use profit segmentation to engage customers.
By identifying the key value your business provides, your team will create more compelling marketing campaigns and sales pitches. They will know how to differentiate your product or service to make it attractive to your target audience.
3. Profit sharing improves customer retention,
Converting leads that are a good fit for your organization will lower your churn rate over time. Customers will be happy that your product or service is meeting their needs and will be less likely to shop with your competitors.
Now that we understand what profit segmentation is and why you should be using it, let’s look at some real examples of where this marketing technique helped businesses attract and close leads.
4. Profit segmentation helps in brand positioning.
The data benefit segmentation provides, marketers can use this information to their advantage when it comes to brand positioning. Once each customer segment is identified with associated benefits, marketers can create a brand positioning that aligns with the data findings. Profit segmentation can also help you identify gaps in your product offering versus what customers want, which can serve as an incentive to create new products.
profit sharing example
Cell phones have become one of the most basic products of modern technology. Almost everyone has a cell phone to carry out their day to day tasks. But, depending on who you are, how old you are, and where you’re from, your cell phone needs may be dramatically different from the next customer’s. Most of us need a cell phone, but often for a different reason. So, how do phone companies manage to meet the needs of these customers?
Samsung uses profit segmentation to personalize ads for different target audiences. In the cell phone industry, age is a major determining factor in customer needs. As customers get older, what they want from their cell phones changes. This goes from fun features like the camera and apps to more practical benefits like battery life and security.
We can see this play out in the two advertisements featured. The first is aimed at a younger audience and inspires them to “do big things”. The phone comes with two cameras and lets the user draw on images using the included stylist.
Compare this to the next ad where Samsung focuses on the practicality of the phone. Its tagline, “Designed for humans,” lets the reader know that the phone is user-friendly and easy to set up. The phone is designed for optimum performance so that it never slows down no matter how many apps are running at the same time. This is especially useful for viewers who may have a busy professional schedule and are working on multiple tasks at once.
- Samsung used its “Do Big Things” campaign to attract a younger audience with exciting new camera features.
- In contrast, the company was able to attract older users who may not be as tech or gear savvy with the tagline “Designed for humans”, meaning the phone is user-friendly for everyone.
Car companies often use profit splitting to position different types of vehicles. For example, we can look to Ford to see the difference in advertising between its Ford Fusion and F-150 models.
The Ford Fusion is a practical, four-door sedan that has been described as “sophisticated” and “cool”. Ford believes that people who are interested in this car will value its style in addition to its performance and price. The company highlighted this in its advertising by using vibrant colors to compliment the attractive design of the car.
Now, compare that image to the Ford F-150 image below. The F-150 is a work truck designed for people who need a powerful, durable vehicle. Customers who are interested in the F-150 will value the truck’s impressive towing capacity and ability to navigate difficult terrain. That’s why the image below shows the truck with the tagline “Built Ford tough” pulling a massive piece of equipment.
- Ford marketed the Fusion sedan to users who were more interested in having a practical, but stylish car for getting around town.
- For the F-150, Ford used its “Built Ford Tough” campaign, featuring rugged off-road terrain to attract buyers looking for a durable, all-terrain truck that could handle the toughest jobs. could handle
Airbnb’s market segmentation is interesting because it takes into account two main target audiences: hosts and guests. Not only does the company have to find customers to book rooms, but they must also attract welcoming hosts with desirable accommodations. This forces Airbnb to split profits in order to create ads that appeal to both guests and hosts.
In the example above, we can see how Airbnb uses profit sharing to attract hosts to New York City. New Yorkers take great pride in their city and value the companies that share this passion. So, Airbnb created these subway ads to educate New Yorkers about why Airbnb is good for local business owners as well as community development.
We can compare that educational message with the inspirational message below. This ad is targeted to potential guests who are planning future travel but haven’t made concrete travel plans. Airbnb capitalizes on this opportunity by creating a message that embraces uncertainty. Instead of pointing to a specific location, Airbnb makes the destination irrelevant and instead focuses on how the company will help you, wherever you go. This makes Airbnb more relatable for customers who may be nervous about making a major financial decision.
- To attract NYC hosts to use their service, Airbnb launched a campaign that taps into the pride New Yorkers have for their city and local businesses.
- For guests, Airbnb established itself as a dependable accommodation option by using the uncertainty of visitors’ destinations to its advantage — no matter where they decided to crash.
Nike offers a wide range of products for a variety of target audiences. This requires using profit segmentation to develop different marketing campaigns that appeal to each group of customers. The most notable example we can get from Nike is its commercials featuring tennis superstar Serena Williams.
These ads are aimed at Nike’s female target audience, specifically its youth demographic. Nike understands that these customers value the athletic confidence they experience when wearing Nike products. This is because Nike apparel is not only stylish but also designed for specific performance. The company uses tennis phenom, Serena Williams, as an icon to demonstrate how that extra bit of confidence can improve your athletic ability.
- Nike skillfully leveraged her reputation using tennis star Serena Williams to create high-performance gear.
- Additionally, the brand was able to tap into youth nostalgia and appeal to female buyers by using images of Williams as a youth to inspire its audience to greatness.
among “umbilical cord cutting“Eventually, Hulu has been able to position itself as a viable alternative to cable TV. Users of Hulu value convenience and efficiency and do not want to spend money for television channels they never watch. So, the company has created an advertising campaign that explains how Hulu users can save money while maintaining access to their favorite content.
In the ad above, we see how the profit split affected Hulu’s marketing campaign. For example, the copy highlights how users can watch “current episodes” and “hit movies.” Since many cord-cutters worry about losing access to new content, this lets users know Hulu’s content is updated so they’ll never miss a recent episode. This is incredibly important to anyone who follows a series like this game of ThronesWhere it is important to watch the episode as soon as it airs.
- Hulu’s advertising campaign assures potential cord-cutters they won’t miss current episodes of their favorite shows.
- Hulu found what was most important to their customers (missing their favorite shows) and then tailored their messaging to meet those needs.
advantage of using profit segmentation
With profit segmentation, you can organize your customers and leads based on the value you provide. This ensures that you are attracting customers who will develop a strong relationship with your business over time. By pursuing these customers, your organization will improve lead acquisition and ensure customer success.
This article was originally published June 3, 2019 and has been updated for comprehensiveness.