3.2.1 Social media action options Business model – customer segments: Application

This section will give you an overview of the basics of customer segments and the resulting tasks for a social media strategy.

Learning objective: Understand customer segments as a component of the business model and be able to identify, assess, and apply the impact and use of social media for the customer segments of a business model.

Reading time of this learning unit approx. 23 minutes.

Exercises: The exercises are in the PDF of all exercises. Download it from here.

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Studying a company’s customer segments in advance of developing a social media strategy is, on the one hand, a relatively arduous and occasionally dry affair, but it is extremely valuable for aligning a company’s social media use. Via this step – the analysis of the customer segments for the use of social media and the strategy development – we recognize which fundamental requirements the business model (here in the segmentation of the market) places on social media use and the associated strategy(s). If this step is not taken, the company’s social media use will quickly run counter to the requirements of the business model.

Application

In the application, you will learn how to analyze customer segments for your social media strategy and develop specifications for your social media strategy. We work out the following contents

• Übersicht der Kundensegmente die über die Social Media Strategie unterstützt werden.
  • Business Model Customer Segments List Customer Segments Work Template
• Compatibility of customer segments. This allows us to check whether we can handle all customer segments with a social media strategy.
• Topics that we use to work on the customer segments.
  • Business Model Customer Segments Themes Work Template
• Changing customer segments through social media via transparency, relationship, value and distribution

In these processes, we take into account the change of customer segments (and their subject areas) through social media and through business objectives.

We work on the topic of social media impact via the value propositions. There, the social media impact can be placed closer to the needs such as the company performance and thus in its more direct impact closer to the company success.

Use of the results in the strategy process

Taken together, this content yields the social media courses of action available to our customer segments.

• The social media action options Customer segments flow into the strategy development with the other action options of the business model.
• All social media courses of action – from market, business model, competition, growth – map the opportunities we have with social media in our specific situation.
• From this, we develop the social media strategy that best suits the company’s goals, competitive situation, market opportunities and corporate resources.

Work templates and procedures

The following procedure and the templates used in it are examples. Please do not assume that the approach and templates can in every case one hundred percent meet the individual requirements of each company and its business model. It is important that you understand the method and can adapt it for the individual situation as much as necessary.

Selection of customer segments

Which customer segments of a company can and should be processed with the help of social media depends – in addition to the social media affinity of the customer segments – on company priorities (of the customer segments). The development of a social media strategy is oriented to both the present and the future. Customer segments that do not play a relevant role either in the present or in the future will probably not be included in a new social media strategy. The decision on which customer segments to target through social media is made by the company’s management, not the social media department.

Task

Deciding which customer segments to target through social media is up to the company’s management. Social Media Management supports this decision by preparing / contributing to decision templates.

Business objectives and priority of customer segments

Below are some company-internal influences on the selection of customer segments we target with social media:

• Social media strategies generally lead to social media infrastructures, which, as the term suggests, have a longer-term character. If it is clear that certain customer segments are no longer to be cultivated in the long term, it can make sense to no longer address these customer segments with social media and instead to work on them only with advertising via social media (social media marketing).
• Companies have limited resources. Among other things, this can lead us to focus our social media strategy/social media use on certain customer segments that are more commercially relevant, for example.

List of customer segments for social media

We start with an initial overview of the customer segments we want to target in social media. The decision on customer segments is an entrepreneurial one, and therefore falls to the management. Our task is to prepare this decision and implement it in the social media strategy development.

We note down “customer segments and their priorities” in a first worksheet (see Materials for an example).

• the company’s customer segments,
• the priority of the individual customer segments for support through social media: the decision as to which customer segment is supported through social media and which is not, or with lower priority, is a decision made by the company management due to its importance. When preparing this decision, it is essential to draw on the expertise of the functional areas responsible for market cultivation and corporate development. A low priority of a customer segment can lead to the fact that the possibilities of social media for this customer segment are not used to the full extent and resources are invested more in other customer segments.

Company customer segments: we create further analysis / worksheets for each customer segment to be supported in social media. So this content involves a fundamental decision.

Priority of the individual customer segments for support through social media: this content is important for deciding which of the possible usage formats are used for the customer segment and how comprehensively the individual components of the social media effect – in particular motivation and motivational structures or participation offers and user benefits are used.

Compatibility of customer segments

Customer segments are not per se homogeneous with other customer segments. This can lead to marketing and sales not working on individual customer segments together with other customer segments.

Insight: When developing a social media strategy, we take care not to target incompatible customer segments together.

Compatibility testing

We check the compatibility of the customer segments to be addressed by social media. Customer segments are compatible for a common social media strategy if

• they fit into the strategy in terms of content.
• there are no company-specific reasons to the contrary.

Customer segments in particular do not fit or fit less into a common social media strategy when

• their topics are not compatible with the other topics. For example, the topics are completely different from those of the other customer segments. This is the case with topics that come from a completely different content reference.

Example: a company produces linen and ropes. These lines and ropes are used for mountain sports as well as for water sports. These are very different subject areas. Even if we cannot exclude that there are sailors who also go climbing or climbers who also go sailing, a common social media strategy will be rather inadvisable.  

• the user benefits are not compatible. If we have to deviate a lot from the user benefits of the other customer segments for one customer segment, it may be advisable to work on this customer segment individually if the priority of this customer segment requires support by.
• the usage formats are not compatible. If, for example, we can only use an audience for one customer segment, but a community is possible for all other customer segments, we must decide – based on the priority of the customer segment – whether to process this segment with its own strategy or to remove it from the social media processing.

Note: we could try to integrate completely different topics, user benefits or usage formats in one social media strategy. This is not completely impossible, but it leads to a complexity that is better avoided. Focusing on strategies with clear content directions is much more advisable. Incompatible high-priority customer segments are therefore better dealt with independently. This does not necessarily have to be done in "one go".  

Company-specific reasons that speak against a common social media strategy for all customer segments can result from the separate or different processing of customer groups. For example, if customers pay differently for different areas of service or the customer relationship / type of processing differs greatly, a common social media strategy would not make sense.

Example: A company provides a comprehensive, high-value service to a customer segment that requires and pays for comprehensive individual advice and provides comparable simplified services at discount prices in a form of self-service to another customer segment. Addressing both customer segments together in a social media strategy can lead to irritation. This situation can be found in financial services but also in other services.

Pragmatic review: we review the list of customer segments for social media based on the criteria by which these customer segments were formed, to see which customer segments are less compatible based on their criteria.

Possible results of this test

• We are only dealing with completely compatible customer segments that can best be covered by a social media strategy. This is the best case.
• we have customer segments that are very important for the company but cannot be dealt with together with other customer segments in a social media strategy. Then the question of a separate social media strategy for these customer segments arises, which must be answered based on the priority of the customer segments.
• we have customer segments that cannot be grouped with other customer segments, but whose importance does not make them the company’s first priority. This raises the question of whether these customer segments should be supported with social media at all.

Core result of the compatibility check: number of social media strategies required.

Note: If we are dealing with more than 1 required social media strategy, you could try to develop multiple social media strategies in parallel. This is - since we work with strategy versions - quickly too confusing. In such a case, I think it is usually more advisable to clarify the priorities (of the strategies based on their customer segments) and then work out the strategies individually.  

Customer segments and criteria – change potential of social media

In this step, we take a look at the criteria we use to form customer segments in order to identify a potentially relevant change potential of social media. That is, we check whether there is an impact of social media (social media effect) on the criteria on the basis of which we have formed the customer segments.

How customer segments are formed in general was covered in the basics of this topic. As supplementary information on the topic of business models, “Business Model Generation” by Osterwalder & Pigneur is recommended, on whose business model structure the potential-based strategy model is based.

Examples of criteria and their potential for social media change

Independent needs that require an independent offer. Here is a social media change potential from two directions:

• Once a changing effect on the needs. This would mean that needs can be influenced by social media. So the question that arises in this case is: can social media fundamentally influence the needs that this customer segment has been built upon. If the answer is positive, we should not only understand this as a permanent social media risk but also examine how we recognize this influence in practice and how the company can deal with it, i.e. whether it can benefit from it or whether it is exclusively a risk.
• The second possibility of a social media change potential lies in a change in the evaluation of performance for these needs. The question here is whether social media can improve the evaluation of performance.

Both possibilities presuppose that the corresponding needs and / or the evaluation of the service are socialmedia affine, i.e. relevant and present in Socila Media. We can clarify this through appropriate analyses (presence of topics in social media).

different distribution channels: here we check whether social media can have an impact on these distribution channels. These effects can be very different in nature.

• For example, if our customer segments are based on different distribution channels because we market comparable services in different customer segments at different prices, we should check whether this can be made transparent through social media. This requires that users exchange information about needs and services on social media, i.e., that the needs and services have an affinity with social media. However, a lack of social media affinity is no guarantee that this transparency will not occur in social media. All it really takes is a small spark due to an individual exchange between two users.
• Here we should also take a look over the fence of our module and remember that distribution channels for themselves can be subject to a social media effect. Thus, this criterion for segmentation – like the distribution channels of our business model itself – may be subject to change as a result of social media.

own types of relationships: based on customer segments on different types of relationships, we test the social media change potential on this criterion by asking how far social media can impact these types of relationships – constructively as well as destructively. Social media is a “relationship medium” so it is not very unlikely that social media will have an impact here. One criterion we use to determine this impact is the social media affinity of this relationship. To do this, we use questions such as the following

• Can we build the relationships in social media that are the foundation of customer segments?
• Can third parties build relationships in social media that position themselves between relationships with our customer segments?

Based on these two exemplary questions, you will recognize the potential for change that social media can bring to relationship-based customer segmentation. Companies that fail to recognize these opportunities and risks in time can experience very unpleasant times. These risks are only apparent when the performance potential of social media is applied to customer segmentation. The competence to apply this is unfortunately still extremely rare.

different value: if our customer segments are based on different value, that their customers pay for different aspects of the service, we check if the cause of this willingness can be influenced or changed by social media. For example, if customers in one customer segment are paying for an aspect of a service that is provided more cheaply or for free in other customer segments, social media can make this transparent and problematic. Again, the first criterion for checking for potential risks is the social media affinity of needs and services. Even if this is not positive, it does not mean that this risk is non-existent. The worst case would be, for example, a social media strategy of the company that creates unwanted transparency.

Work template: We summarize the customer segments in an overview / list and note – in addition to the priority of the individual customer segments – the criteria according to which these customer segments were formed and whether we can identify a Socia Media change potential for these criteria.

Use of the findings and contents

We use the customer segmentation criteria to identify the impact of social media on the customer segmentation of the business model.

The influence of social media on customer segmentation is on the one hand an important input for strategy development for social media but at the same time also an important insight for securing the company’s business model.

We let the insights from the influence of social media

• about the options for action from the customer segments of the business model into the development process of the social media strategy.
• on customer segmentation to those responsible for the business model.

not only to focus on the risks, but above all to find and exploit the opportunities they present.

Customer segments and topics

We work out the topics of the customer segments we want to address in our social media strategy. We will again encounter the topics from the customer segments in the value propositions, among others.

We find the topics that define our customer segments through the criteria that are relevant to users – such as needs and services. Internal company criteria – such as production-specific or revenue-based criteria – are not relevant to the topics.

We summarize the topics from our customer segments. We will encounter some of these issues again from other sources – such as value propositions or customer relationships – because they become relevant again via customer needs, for example.

In the next step, we summarize the topics of our customer segment.

• Customer segment: here we note which customer segment it is.
• Priority: we note the priority of the customer segment for support with social media.
• Topic areas: here we note which topic areas are important for this customer segment.

Priority of a topic: this is the importance of the topic for the economic success in the customer segment. If an issue – such as a product characteristic or the price of a service – is of central importance for economic success, it has a very high priority. It is recommended to define a scale for the priority of the topics according to their economic relevance and to record their justification. The priority of a topic as well as the scaling of the priority should be supported by all affected departments.

Benefit and use of this content

• Topics and content: the topic areas are incorporated into the strategy component Topics and content as part of strategy development.
• Options for action: the topic areas flow into the social media options for action and are of central importance for the development of draft strategies.

Customer segment and usage formats

In this step, we determine the social media usage formats suitable for the customer segment.

Task: We work out the possible social media usage formats for our customer segments.

• We create a working template for each customer segment and for each independent subject area.
• We classify the possible social media usage formats according to the description. We mark unsuitable usage formats with an X or a 0, depending on your preference.

The criterion of the presence of the respective usage format helps to better assess the suitability of a topic.

• If a topic hasn’t yet translated into a social media presence, that’s not a sign of sustained interest in that topic from social media users.
• Depending on how important the exchange among users on this topic is, there are also social media presences that enable the exchange. Often we find this topic in forums, which are known to be precursors of communities and which we should therefore also rather hand over to the communities than to the audiences.

The first two points concern usage formats that we consider suitable for the subject area, but which are not yet found on the market for this subject area.

If usage formats are suitable for a subject area and are available on the market, we are dealing with a competitive situation with other providers. Then the question is how far we are able to win this competition. Depending on the type of competitor, this can be very difficult due to the system.

• Competition with media competitors at the content level (audience) is very difficult to win for a company that is neither experienced in the media nor organized in the media.
• A media competitor does not have a decisive advantage at the level of structures (communities). Content there is user generated. The decisive factor is professional competence and performance for communities.
• For all usage issues, competition with direct competitors is ultimately a question of the competence and resources of the individual competitors. If there are large differences in resources, the only way for the smaller competitor to compete is through innovation and greater competence.
• If the competitor is a social media company (other competitors) or even a community, it is extremely difficult or unlikely for companies without comparable competence and experience to survive such a competition.

Options for action in social media for our customer segments

Our social media courses of action are based on themes / topics. These topics may be relevant to one part of our business model or different modules of our business model. Through the themes / topics, we not only support the business model more precisely, we also recognize the competitive situation and our options for shaping it in a much more concrete and detailed way.

The options for action flow with

• the options for action from the other components of the business model,
• the social media affinity
• the competitive situation
• the desired business benefit

into strategy development, where they form the basis for the development of draft strategies.

CompanyBenefits for the customer segments of the business model

By determining the business benefits we can achieve with social media in our customer segments (performance potential), we define an important input for our social media strategy. When we define the strategy, we decide which corporate benefits we want to implement for which customer segments with our social media strategy.

Note for practical application: The business benefit(s) we want to realize with a social media strategy is an important source for strategy versions in which we work out the performance of the respective strategy version for the business model.

The individual corporate benefits of social media for a business model can be found in various categories. Here as a reminder the main categories

• Market access to customer segments via social media
• Market cultivation of customer segments by means of social media
• Market information of customer segments through social media

We define which of these business benefits through social media are relevant to our customer segments and their issues. Below are some key corporate benefits from social media that are particularly relevant for the Customer Segments module.

Market access

Here, we use social media to design a specific market approach to this customer segment. Social media is per se a market access. However, many companies fail here on two levels:

• the establishment of social media as a market access and its integration into corporate processes. This is due on the one hand to the understanding with which social media is used and on the other hand to the social media infrastructure, which does not always facilitate integration in corporate processes.
• the understanding of social media as a tool. Social media enables and requires different orientations, both on the content and structural level. If we act analogously to marketing, for example, our effect on marketing remains limited. If we act in the social media context and actively involve users, we can achieve an impact that goes far beyond this.

We define whether and why we see social media as a suitable market access – for individual or all customer segments – and want to have this corporate benefit realized in our social media strategy.

Market cultivation

For market cultivation, the same note applies to understanding social media and its impact on potential success in and through social media.

Note for practical use: Using social media as a pure marketing channel may also lead to successful results, but falls well short of the possibilities of social media. This is due not least to

In order to exploit the full potential of social media, the technical and conceptual prerequisites are indispensable in addition to the corresponding understanding. Last but not least, we need to master the appropriate usage format and also be able to use it in our channels.

For a corporate benefit for customer segments from market cultivation in social media, the question arises as to which specific forms of market cultivation based on social media we can use and which prerequisites we must create for this in our social media strategy.

Market information

Keeping the market informed is a permanent task, and we have to do it just as permanently in social media. Unlike marketing, in social media

• the participation of social users is not only possible and desirable – special successes are rather less likely without this participation. However, we can only achieve this effect if our information is appropriately designed and technically implemented for the market.
• permanent activity required. We can’t run social media in the form of campaigns, even though this impression comes up again and again. In most cases, these types of “campaigns” are not activities that only take place for a limited period of time, but rather focus on content within a permanent social media use.

Market knowledge

Information about the market is increasingly valuable, not least because it allows us to deploy our resources more successfully. In no other field can market knowledge be generated so comprehensively and permanently about the market itself and about market participants as in social media. This results in potential competitive advantages for companies, which can obtain more comprehensive, faster and more precise information in their markets and use this information more systematically.

• For the corporate benefit Market Knowledge, the questions here are about the information we can obtain and use from our customer segments with the help of social media. In other words, we have to generally define which market knowledge we want to develop in social media in order to create the technical and conceptual prerequisites for this. Market knowledge can be drawn from the behavior of users or from dialog with users. In both cases, corresponding functions (dialog / analysis of behavior) are required in the platform / in the respective social media channel.

Participation / Engagement (User/Market)

The active participation of social media users in the market is indispensable as a success factor in social media. The ability to generate and maintain this involvement is thus a fundamental success factor.

Motivation and participation are the approaches with which we “produce” participation, provided that the prerequisites (in particular, a clearly recognizable user benefit from participation) are met.

The better our topics invite engagement from social media users on their own, the more likely our users are to engage. The more systematically we enable and encourage this engagement, the more steadily and comprehensively it will have an impact. Structures that enable engagement in a diverse and attractive way are a permanent competitive advantage over companies that neglect these success factors.

• To this end, we examine whether our topics are suitable for motivational and participatory offerings and structures, and which technical and conceptual prerequisites must be met.

Relationships

Relationships are not only the cement in social media, they are also suitable as a basis for the formation of customer segments.

• To do this, we check whether the topics that our customer segments represent in social media are “suitable for relationships,” i.e., whether users exchange information within these topics sporadically, frequently, or even regularly, or whether an organized community approach that goes beyond this is promising.

Objectives: We record which company benefits (market access, market information, market knowledge; relationships, participation) are to be fulfilled for the customer segments in the strategy. These tasks are at the same time input for the development of strategy versions and in the final form input for the strategy component EnterpriseBenefits.

Exercises

The individual exercises for these topics can be found under Tasks linked between the heading of this section and the Table of Contents.