Segmentation
Drilling Down and getting the big picture
Recently we talked about getting the marketing strategy right. That is, stopping to think through the segmentation and differentiation of a product or service before rushing in to do the “marketing” things – emails, direct mail, advertising and all the other tactical bits of marketing.
I wanted to spend a little more time on both of these ideas before we examine marketing from a more operational and tactical perspective. What is segmentation and what can it do for us in marketing? Why should we spend time trying to segment our customers? What are the potential pit-falls along the way?
Segmentation is simply trying to break the entire potential market into smaller, more discrete units. This can be done in a variety of ways, but the method that is usually recommended is to approach the market from a needs perspective. That is – who needs the product the most? The wrong answer at this stage of the game is “everyone”.
I recently did some consulting for a business intelligence software firm. They have a great product. Their product can very quickly assimilate data from a number of different data sources and present the data on a website or a user’s PC in an easy to understand dashboard format. The power and flexibility of the product is amazing. The blessing and the curse of that product and others like it is understanding who NEEDS the product – everyone we spoke to about the product WANTED it. The challenge was moving beyond the recognition that lots of decision makers want better insight to their enterprise data. While many of those decision makers wanted more insight, many were not prepared to purchase a new application to fix a problem. In other words, while they had problems or challenges, the pain was not enough to cause them to fix the problem. So, like any good strategic marketer, we began to segment the market by industry vertical and by functional buyer, to attempt to find people with significant business challenges who would benefit from better insight and analysis of their enterprise data.
First, we eliminated firms in industries that were not spending money on information technology. Then we removed firms that we felt were not as likely to implement a business intelligence solution. Then we evaluated the remaining verticals to prioritize those firms we felt would be the most likely adopters of business intelligence. We rank ordered these firms by their dependence on information to run and manage their business. We also placed greater weight on information and service based businesses – where information was the lifeblood of the business. Once we’d finished evaluating the industries and verticals and choosing three or four verticals as primary targets, we turned our attention to the buyers. We wanted to know who in the organization was most impacted by a lack of access to information in the system. If we could reach only one person, who would be the most likely to respond to our message of improved information access and analysis? We decided that person would be the controller – who is often the information manager and report director for many facets of the business, especially financials. Our secondary target was the VP of Sales, whom we felt needed more information about margin, profit, sales activities and other information.
From the universe of firms operating in the United States, we pared our targets down to three well-defined verticals. From the entire management structure in those firms, we identified two main targets for our message. This segmentation helped us identify our key messages, the features and benefits we’d need to communicate to be most effective, and the marketing channels we should use to reach these decision makers. The business intelligence product we were offering would work for any firm in any industry, and could provide analysis and reporting for any decision maker in any of those firms, but to attempt to reach all the market was to reach none of the market with any kind of a message. We attempted to reach those industries that valued what we did, and to communicate with executives in those chosen industries we felt were most likely to want and need our products. This segmentation led us to package our offerings and target our marketing more effectively.
The drill down is complete – we’ve done our segmentation. We’ve identified the key needs within the verticals or industries or geographies we’ve chosen to target. What’s next? Probably the most counter-intuitive step – getting the big picture.
Recently we talked about getting the marketing strategy right. That is, stopping to think through the segmentation and differentiation of a product or service before rushing in to do the “marketing” things – emails, direct mail, advertising and all the other tactical bits of marketing.
I wanted to spend a little more time on both of these ideas before we examine marketing from a more operational and tactical perspective. What is segmentation and what can it do for us in marketing? Why should we spend time trying to segment our customers? What are the potential pit-falls along the way?
Segmentation is simply trying to break the entire potential market into smaller, more discrete units. This can be done in a variety of ways, but the method that is usually recommended is to approach the market from a needs perspective. That is – who needs the product the most? The wrong answer at this stage of the game is “everyone”.
I recently did some consulting for a business intelligence software firm. They have a great product. Their product can very quickly assimilate data from a number of different data sources and present the data on a website or a user’s PC in an easy to understand dashboard format. The power and flexibility of the product is amazing. The blessing and the curse of that product and others like it is understanding who NEEDS the product – everyone we spoke to about the product WANTED it. The challenge was moving beyond the recognition that lots of decision makers want better insight to their enterprise data. While many of those decision makers wanted more insight, many were not prepared to purchase a new application to fix a problem. In other words, while they had problems or challenges, the pain was not enough to cause them to fix the problem. So, like any good strategic marketer, we began to segment the market by industry vertical and by functional buyer, to attempt to find people with significant business challenges who would benefit from better insight and analysis of their enterprise data.
First, we eliminated firms in industries that were not spending money on information technology. Then we removed firms that we felt were not as likely to implement a business intelligence solution. Then we evaluated the remaining verticals to prioritize those firms we felt would be the most likely adopters of business intelligence. We rank ordered these firms by their dependence on information to run and manage their business. We also placed greater weight on information and service based businesses – where information was the lifeblood of the business. Once we’d finished evaluating the industries and verticals and choosing three or four verticals as primary targets, we turned our attention to the buyers. We wanted to know who in the organization was most impacted by a lack of access to information in the system. If we could reach only one person, who would be the most likely to respond to our message of improved information access and analysis? We decided that person would be the controller – who is often the information manager and report director for many facets of the business, especially financials. Our secondary target was the VP of Sales, whom we felt needed more information about margin, profit, sales activities and other information.
From the universe of firms operating in the United States, we pared our targets down to three well-defined verticals. From the entire management structure in those firms, we identified two main targets for our message. This segmentation helped us identify our key messages, the features and benefits we’d need to communicate to be most effective, and the marketing channels we should use to reach these decision makers. The business intelligence product we were offering would work for any firm in any industry, and could provide analysis and reporting for any decision maker in any of those firms, but to attempt to reach all the market was to reach none of the market with any kind of a message. We attempted to reach those industries that valued what we did, and to communicate with executives in those chosen industries we felt were most likely to want and need our products. This segmentation led us to package our offerings and target our marketing more effectively.
The drill down is complete – we’ve done our segmentation. We’ve identified the key needs within the verticals or industries or geographies we’ve chosen to target. What’s next? Probably the most counter-intuitive step – getting the big picture.
posted by Jeffrey Phillips at 7:42 AM
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