Four steps to better B2B segmentation
Last week I was invited to join The Network of Aspiring Woman, Birmingham Group. Tempting. After all, “it’s where networking feels like a party”. However, I declined for two reasons. I live in London. I’m a man.
Clearly the Network’s execution fell short, but their strategy is smart. Rather than trying to be all things to all people, they’ve segmented the market and targeted a niche group.
Contrast this with another experience.
The call was from a data centre “specialising in the SME segment”. This struck me as the B2B equivalent of targeting a FMCG product at everybody under the age of 70. It’s far too broad and essentially meaningless.
SMEs, especially in relation to IT, are not one homogeneous mass. Some are luddites; others are at the cutting edge. Some have a dedicated IT function; others rely on third party expertise. Some view IT as mission critical; others could temporarily survive without.
There is no such thing as the SME segment. Rather, the data centre should have followed four principles to create a more valuable model: narrow, segment, profile then apply.
“SME” is a useful starting point but only to narrow the focus. Having set this broad parameter, the next step is to identify meaningful sub-groups by contrasting customers:
-Do they have different behaviour and consumption patterns?
-Do they have different motivations, needs and preferences?
-Do they have different supplier selection criteria?
-Do they have different attitudes and personalities?
Answering these questions reveals real segments - groups containing individuals similar to each other on dimensions that can be used to create a more resonant proposition.
At this point, firmographic variables like company size and industry sector become relevant again as each segment can then be profiled on this basis to support targeting.
Finally, apply. Commercially attractive segments should be chosen as a focus. Offer, message and channel strategy should be tailored. Segments should be brought to life so those on the front line, especially sales teams, can easily grasp and apply them. Here, models are better replaced with engaging illustrations such as memorable segment labels, pen portraits and video vox pops.
That’s the theory, but how does it work in practice? I’ve shared a case study from another B2B IT player in a fuller version of this post here – http://tinyurl.com/68uycjl