Rule 9

Slice and Dice Your Market

Use segment characteristics to determine your go-to-market approach

I once worked with a manufacturing manager whose “hobby” was chemistry. A chemical engineer by training, Mike had set up a lab in his garage where he used common household chemicals to develop better cleaners, polishers, and glue and label removers. Buying the inexpensive chemical mixes in bulk, Mike targeted his cleaners for very specific applications. There was a “bicycle cleaner,” packaged in small four oz. bottles that Mike sold to biking enthusiasts through specialty bicycle shops. A motorcycle cleaner had different packaging, different distribution, and, of course, a different buyer. Cleaners for cars and shop tools each had an audience. In other words, Mike used the classic consumer goods approach of focusing on audiences and how they bought and used the product—not on the product itself.

Despite the seeming importance of segmentation to marketing, the amount of segmentation done by most B2B vendors is surprisingly small. Company size and geography are often the only criteria for segmentation, with industry being a distant third. Even when the segmentation is used for organizing the sales channel, or for making packaging and pricing decisions, customer characteristics rarely drive decisions in other areas.

Reveal new revenue opportunities by segmenting your target customer base in new ways. Some possible segmentation criteria are:

1. Customer attitudes - These relate to how companies do business and make decisions and might include tolerance for risk or speed of technology adoption.
2. Experience with you - Familiarity and experience with your company and product are key segmentation criteria. The next rule has more ideas on segmenting relationships.
3. Objectives or use cases - Customers with similar business models might face similar problems and may look to you for similar reasons. Identify specific situations, business processes, or goals that delineate a segment (see rule 34.)
4. Audiences - Define audiences based on their roles and responsibilities within an organization or the decision making process. Use segment characteristics to determine your go-to-market approach. Having defined groups of companies with similar characteristics, and identified specific audiences within these target accounts, set specific objectives for each segment.

Your objectives in each segment can drive vastly different positioning, marketing programs, and sales strategy. The possibilities are endless, but understanding exactly what you’re trying to accomplish with each group of customers will help guide efficient marketing, sales, and support efforts.

Ideally, to segment customers and measure the effectiveness of segment-specific strategies, you need to be able to measure by segment. Chances are, however, your systems are not set up to do so. Don’t let the difficulty of IT changes and incomplete data become excuses for inaction. One industry marketing team at a multibillion-dollar technology company was struggling to report on revenue and customer satisfaction scores by industry. The group of experts was extracting satisfaction and revenue numbers manually from sales data. While this was cumbersome, the team was producing an estimated $120 million in net new business by focusing attention on specific segments. In truth, even back-of-the-envelope analysis can guide successful segment-based efforts.