Go Deep For Better B2B Market Segmentation
Before positioning, before targeting, there is segmentation. Segmentation establishes the marketing and selling approach you will use. So, for the best segmentation, go deep within your customers' needs.
There are many ways to segment (or group) your market. Unfortunately, it sometimes too easy to not give this vital task the attention it deserves. Often, it's easier to fall back on readily available demographic data such as revenue or number of employees. Trouble is, everyone else uses this information and 'data' is not insight.
Good Grouping Creates Focus
Think of segmentation as 'grouping'. Quite simply, grouping involves analysis that leads to focus. It guides you to research and organize your potential market based on customer needs, instead of what you sell.
Which customer needs do you fulfill?
Targeting is how your firm says, "we're not all things to all people." Based on the customer needs identified for each segment (and some financial analysis), your firm can select, design, deliver and communicate the superior customer experience to those segment(s) with highest value.
Grouping That Makes You Say "Hmmm"...
There are many approaches to B2B grouping. For simplicity, commonly used variables are placed in three levels, each with increasing value in the strategic process:
- Level 1 Demographic – Grouping by the basics, such as location, company size, revenue growth and industry.
- Level 2 Customer application and usage – Volume used, complexity of product/service usage, importance of product/service to core business, one-time or ongoing usage, order size, frequency of use, specific horizontal vs. multi-functional usage, sense of urgency, training requirements, level of service required and place of use.
- Level 3 Purchase approach – (True 1:1) This is your understanding of how a specific firm makes decisions and answers questions such as: are they centralized or decentralized; what is their general approach with partners or vendors; are they loyal to suppliers; what function is most powerful; are their values aligned with your company values; how political is decision-making; how do they deal with risk; which management level must authorize the purchase; or what is the pace of change.
Keep At It
In reviewing these levels, information for levels two and three may seem hard to pin down, (or perhaps level one, depending on your situation). Don't give up. You can find it. By making the effort to line up content from industry publications, dialogue-driven marketing, customer surveys, web site functionality, sales information and market research, you can get to a needs-based grouping that is capable of producing competitive advantage for you firm. (Note: your sales team will tell you that information on levels two and three can be gathered during the sales process.)
Now, use your segmentation insights! For example, if your analysis identifies six segments, you decide to focus on the two most promising segments. Each will have distinct needs, want a different customer experience, and respond to different communication programs and promotions. Start small, test, learn and refine.
All that said, you can't simply claim to provide a superior customer experience -- you must prove it. Effective grouping forces you to undercover and understand underlying customer needs. Take the time. Ask the tough questions. Involve representatives from your entire company. And, work feverishly to deliver the winning experience that gets more customers! Be ready for applause. Your sales team will value the focus and simplicity that comes from your firm not being everything to everyone.
