In earlier post entitled the Top Five Reasons to use Segmentation, I wrote about the importance of segmentation in B2B marketing.
Segmentation requires an in-depth understanding of customers generated through analysis and research. Many large organizations either buy research from consultants and analysts or commission their own research.
A relatively new source of research is the tracking of B2B buyers in their online searches (SEM). For example, the analysis of keyword searches can provide insight on pain points.
Unfortunately research on buyer behavior is neither affordable nor feasible for many businesses.
For those interested in segmentation, yet resource or budget challenged, I would like to share an alternative approach to segmentation that focuses on analysis:
Customer List – create a list of all of your customers, both active and dormant.
Win / Loss Report – compile a list of all lost customers.
Attributes & Metrics – list the metrics that define high value customers such as revenue, volume, profitability, frequency and recency of purchase. For example, lifetime value may be more appropriate for your business than yearly revenue. Create a list of the attributes that best describe your customers: size of organization, industry, geography, decision-maker’s department and seniority, structured buying process (e.g. RFP), displaced competitor, organizational needs etc.
Append Firmographic Information – Many demographic criteria are widely available on rental lists such as size, industry, contact title / department. For a modest fee, you can take your customer file and ask a list broker to append your chosen list criteria. Typically the broker will also cleanse and correct the customer list.
Add-in Key Metrics – for each customer, attach key metrics pertaining to revenue and profitability.
Ranking & Prioritization – then rank your customers based on key metrics and group the customers into five or ten segments.
Analysis – at this point your customers – won, dormant and lost – are grouped into segments, ranked from highest to lowest in terms of attractiveness and profiled according to important criteria. Do you see any patterns? Do your colleagues in sales and marketing validate the ranking and the segmentation criteria? Are these segments unique and actionable for your marketing programs?
The above process is simple and straightforward. By starting with analysis of your company data, you are pragmatically moving forward with your in-house data first.
As time and resources allow, your goal should be to start mixing in other sources of data. The risk of using only your data is that your company’s experience may be very different from general marketing conditions and your analysis may be skewed.
